Shipping Zones 101: How Distance Affects Ecommerce Fulfillment Costs & Time in Transit

The concept of a shipping zone is important to grasp in the world of order fulfillment, yet many ecommerce business owners struggle to understand how zones work.

In this article, we’ll dive into some of the most common questions around shipping zones, so you can gain insight into the right shipping strategy for your online store. Let’s break it down!

How shipping zones work in ecommerce fulfillment

Here are some of the most common FAQs about shipping zones in the US.

1. What is a shipping zone?

Shipping zones are the geographical areas that carriers ship to, spanning from Zone 1 to Zone 8 for domestic shipments in the United States. Shipping carriers use zones to measure the distance a package travels – not in miles but rather groupings of zip codes – from the point of origin to the destination.

The location from which an order is shipped is the point of origin and located in Zone 1. The address it’s shipped to is the destination zone. The destination zone number will depend on how far it is from the point of origin, with Zone 8 being the farthest away.

2. How do you calculate shipping zones?

Zones are dynamically calculated based on where your package is shipped from. This could mean that two different points of origin that are shipping to the same destination address can be shipping to completely different zones.

For example, if you ship from Los Angeles, California to St. Louis, Missouri, you are shipping to Zone 7. However, if you ship from Dallas, Texas to St. Louis, Missouri, you are shipping to Zone 4.

Want to determine shipping zones for your orders?

3. How do shipping zones affect cost?

Shipping carriers use zones to calculate rates for certain services. Some services use a flat rate, letting you pay the same price regardless of the destination (as long as it’s within the United States).

USPS breaks down which services are zoned (Priority Mail Express, Priority Mail, USPS Retail Ground, and Bound Printed Matter) and which are not (First-Class Mail, USPS Marketing Mail, Library Mail, and Media Mail).

For services that are zoned, the greater the zone, the greater the cost in most cases.

4. How does order weight affect shipping cost by zone?

Besides the carrier and service used, as well as the origin and destination zip codes, exact shipping rates will also depend on order weight and dimensions.

If all of your shipments weigh less than a pound, you won’t see much cost savings as zones increase. This is because orders under one pound can ship for a flat price across the entire country, regardless of the zone they are shipped to.

However, for shipments over one pound, you will see a lower shipping cost if you ship from a location closer to the end customer.

Let’s take the following example of shipping a 20 lb. box with the dimensions, 4 x 9 x 12 inches. This box is particularly heavy and will be expensive to ship.

As we can see from the chart below, the higher the zone, the greater the shipping cost. The lower the zone, the more manageable the cost for you and your customers.

Shipping cost by zone example - ShipBob

A note on dimensional weight: Shipping carriers use this pricing technique to estimate weight calculated from the length, width, and height of a package, using the longest point on each side.

The shipping cost will be based on whichever number is greater: the actual weight of the package or its calculated dimensional weight.

5. How can ecommerce companies afford to offer free shipping?

It may seem counterintuitive to offer free shipping when it can be so expensive to send orders to high zones. Ecommerce companies that incorporate free shipping into their pricing strategy must be strategic in their decision to ensure it won’t hurt their margins. Typically, it’s done using one of the following options:

  • They bake the cost of shipping into the product price (using the average shipping cost)
  • They require a minimum dollar amount to be spent (to increase the average order value)
  • They ship orders weighing under one pound (so zones aren’t used to calculate rates)
  • They reduce the number of zones they ship to (more on that below)

[Related article: There’s No Such Thing as Free Shipping: Choosing the Right Pricing Strategy]

6. How do shipping zones affect delivery speed?

If a package is sent nearby (e.g., Zone 1 or Zone 2), it will almost always arrive in fewer days than a package sent to a higher zone, like 7 or 8. Reducing time in transit is important, because slow shipping can cost you customers. In fact, 73% of shoppers expect affordable, fast deliveries and 24% of customers cancel an order due to slow shipping.

[Related infographic: The State of Ecommerce: What You Should Know About Online Shoppers]

Customers today believe the maximum amount of days considered acceptable to wait for their order is only 4.1 days (as compared to 5.5 days back in 2012).

If all of your inventory is fulfilled from one location – for example, out of New Jersey, as seen in the map below – it can take 5-6 days to deliver an order to a customer in Oregon.

shipping zones - shipbob

Image source: UPS

[Download: The Guide to Offering Affordable 2-Day Shipping]

It’s no surprise that same-day shipping and delivery can only ship to the lowest zone(s).

7. Where is the best place to fulfill orders to reduce shipping zones?

If you outsource fulfillment, as compared to fulfilling orders yourself, you will have more flexibility over choosing a fulfillment center location. The location from which you ship orders should be near your customers, as determined by analyzing your past order history.

If your customers are geographically distributed, fulfilling orders in large cities can help you reach a high volume of people faster, as opposed to shipping from a less densely populated area that can’t efficiently reach as many people.

8. How does increasing the number of fulfillment centers used affect shipping zones?

If you have products in multiple fulfillment centers that are close to your customers, you can reduce the time in transit for a greater number of orders.

In the maps below, we compare the use of one fulfillment center in the continental United States with three fulfillment centers. The legend shows the color of each shipping zone, with dark green representing the closest and cheapest zone to ship to.

As the zones increase, the colors shift to orange and darker shades of red. The yellow dots represent fulfillment center locations.

Comparing 1 and 3 fulfillment centers shipping zones - shipbob

When using one fulfillment center (in Los Angeles, California, as seen on the map to the left), we see one region of the country is green, yet much more is red. If you’re shipping to any of the dark red regions, the shipping rates will be higher, since it will go to Zone 8.

When using three fulfillment centers (in San Francisco, California; Dallas, Texas; and Brooklyn, New York, as seen on the map to the right), there are many more green areas.

We’ve also eliminated any states in Zones 7 and 8, leaving only a couple of areas that are in Zone 6. These three fulfillment center locations also provide coverage in highly populated states (e.g., California, Texas, and New York).

Additionally, using multiple fulfillment centers can help you offer two-day shipping via ground in more regions, instead of relying on expensive air shipping.

[Related article: 3 Benefits of Using More Than One Fulfillment Center]

If we look at the chart of the 20 lb. box from the example mentioned earlier in this article, great cost savings would be realized by eliminating the highest shipping zones.

Utilizing three fulfillment centers as compared to one would enable more orders to be shipped to lower zones. In other words, the average shipping cost per order would dramatically decrease with the addition of each fulfillment center.

To learn more about how distributing inventory across fulfillment centers can transform your logistics, check out this webinar.

9. How does a 3PL automate fulfillment and optimize shipping zones?

A third-party logistics (3PL) company can improve fulfillment by providing a geographic footprint that most ecommerce companies could not afford on their own.

A tech-enabled 3PL can automate the order fulfillment process using powerful algorithms that route each order to the optimal fulfillment center. As each order is shipped, the tracking information and each step of the shipping process is sent to your store and shared with your customer.

Conclusion

If you understand zone shipping, you can adjust your fulfillment strategy to better meet customer expectations around speedy and affordable deliveries. Not only will this help you improve efficiency by reducing distance and time in transit, but it can also help you generate more sales and improve your bottom line.

To keep shipping costs down, you must effectively use zone shipping to your advantage. Learn how ShipBob helps ecommerce businesses do this by fulfilling orders from their network of fulfillment centers in the largest US cities to effectively reach customers.

Learn more

Learn how to compete with giant retailers by meeting customer expectations around inexpensive 2-day shipping. Download “The Guide to Offering Affordable 2-Day Shipping.”

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