Why Does Amazon Seemingly Not Care About Box Size?

Amazon DIM Weight Example

If you’re an Amazon Prime member I bet this has happened to you. You order something small or a combination of small things. The box that you receive is gigantic with a bunch of unnecessary packing material. This happens relatively frequently to me. The protein bars in that picture above I order somewhat regularly. Each and every time the box is a wildly different size, ranging from almost perfect to way off like that one.

The more I thought about this, the less it made sense. We put a ton of effort into optimizing everything shipping related, and one of those things that has become increasingly important to account for is dimensional weights, or DIM weights.

DIM weights are the shipping carriers’ solution to large, light packages that would cost very little to ship if they were rated solely on their weight, but should cost more in theory because they take up a lot of space. For any package shipped with UPS or FedEx, and for some shipped with USPS, you calculate the package volume (length x width x height) and then divide it by a dimensional divisor provided by the shipper (often 166 or 139). If the resulting number is greater than the weight of the package, you’re billed at that weight instead of the actual weight.

An example would be a 2 lb shipment in a 12″ x 12″ x 12″ box. With a dimensional divisor of 139, the DIM weight is 12.43 lbs and you would in turn be billed the 13 lb rate if you shipped that package instead of the 2 lb rate. Here are the reference pages with more information from UPS, FedEx, and the USPS.

This obviously ups the stakes for picking proper box sizes – no need to pay a higher rate for dead space – and makes Amazon’s apparent apathy for box size all that more perplexing. We stock over 40 different boxes, ranging from 6″ x 3″ x 3″ to 24″ x 24″ x 24″ in size. I’ll often get packages from Amazon and think “we have a better box for this”, which doesn’t make any sense given our minute scale relative to Amazon.

Either they don’t care about these costs (unlikely) or there is some non-obvious reason why they don’t care much about box size. My first inclination was to think that maybe Amazon has negotiated DIM weights out of their rates, that they simply pay by weight. But Fulfillment by Amazon very clearly charges it’s customers DIM weights so that doesn’t seem like the answer (unless they’re skimming the DIM weight profits off the top), plus it’s hard to believe that the shipping companies would cave on this despite Amazon’s bargaining power.

My best guess is that there is some sort of operational trade off that they make. What seems like sloppiness is actually well calculated. This is more like the Amazon way. We know that they use chaotic storage. In looking at this picture from a tour of their warehouse, it looks like the packer only has a dozen or so box options. My guess is that it’s cheaper to ship the item out from the closest packing station, which probably is right near a truck loading station, then it is to move it throughout the warehouse to a location where there is a better fitting box.

Then again, that seems like a solvable problem too. Or, maybe they just don’t carry that many box sizes…but why? Boxes are cheap and don’t take up that much space relative to the cost savings of lower shipping rates, less packing material, and less damages (at least, we have less damages with better-fitting boxes).

I’m genuinely curious about this! If you have any insight, especially if you use FBA, please let me know in the comments.

5 comments on Why Does Amazon Seemingly Not Care About Box Size?

  1. Dale says:

    I agree Adam. I’ve always wondered.

  2. Peter says:

    Hi Adam. This is Peter here from the toy store. I do think that amazon has that much bargaining power and is either getting full truck rates + some local delivery or they do skip dim overall. I am sure they profit off dims they charge FBA customers.

    Just look at fedex, they have computer/laser processing to measure out dim and weight at the main hub, so when we process our orders, we always put the low side on weight/dim, because their computer will catch it and bill us correctly. If mistakenly I type 10 lbs on a 1 lb package, FedEx’s computer/billing doesn’t correct my typo and charge me 1 lb, they charge me 10 lbs.

    Another indicator you know that UPS/FedEx is hurting for dim is because they lowered that dim formula from 166 to 139. Fuel has not been more expensive. If fuel cost has been a lot higher, I can understand why they would lower the dim formula to make them more money. Since fuel isn’t the factor here, you know they’re losing dim to someone, so they have to lower that formula to charge more on everyone else like us. The number at 166 has been that way for a decade or more (I used to work in logistics, and we always used 166 domestically) and that hasn’t changed till now. So I honestly think they are being hurt by big corporations like Amazon and have to find the money on companies like us to make up the difference.

    However, I just think this puts the carriers like FedEx at a even worse position as companies like us, if we don’t have a good customer base or discount, we have no choice but to choose FBA or similar because we simply can’t compete on shipping cost, then Amazon becomes bigger and bigger and harder to control for them. At the same time Amazon is trying to cut them out by buying more and more logistics companies so they don’t have to use FedEx/UPS.

    Either way, I hope carriers come to their senses and make it fair for smaller companies like us to offer fair rates and only then we wouldn’t have to rely services like FBA, which will make carriers more profitable in the long run.

    /rant

    • Adam McFarland says:

      All good points Peter, I maybe underappreciated the total dominance/ruthlessness of Amazon.

      So I honestly think they are being hurt by big corporations like Amazon and have to find the money on companies like us to make up the difference.

      This larger point is more concerning. It’s hard to see it going any other way than Amazon gaining more control and the carriers being more and more desperate…especially as Amazon sets up distribution centers with their own fleets, buys their own planes, etc.

  3. Rob says:

    I use FBA but I’m not sure that gives any particular insider knowledge!

    1. I wouldn’t assume that just because they charge storage and weight to FBA sellers that they’re getting billed the same on the other end. It could very well be that they’re skimming it. After all, the same FBA fees are paid on each item regardless of how many items ship to a customer in one go and you’re not telling me there’s no economies of scale there. I think it’s very likely they’ve got special deals with freight companies, especially considering they have their own fleet (Amazon Logistics – here that means Polish 25 year olds in rented panel vans who are always in a rush)

    2. Amazon likely saves more on simplifying box selection and speeding up the packing process than they would save in shipping.

    3. Don’t ever assume that the left hand knows what the right hand is doing with Amazon. From conversations with ex-Amazoners and talking to many people who use FBA, the whole thing is much more of a mess inside than you might expect given the image they put out. Lots of stuff doesn’t sync up properly, lots of people don’t have authority to do things that they should be able to, lots of things make no sense at all. I believe there are over 100 teams working on the software side of seller central (what 3 party sellers use to manage their accounts) and stuff breaks all the time.

    It’s definitely concerning the way Amazon is integrating and I’m trying hard this year to move away from Amazon as a sales channel. Short term it’s great, but long term it’s not a relationship I want to be part of.

    • Adam McFarland says:

      Great insight Rob, thanks for sharing! Especially #3. I think I probably was making that assumption 🙂 Amazon does such a good job with their public image that I overlooked how gigantic they are.

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