Approach to Price Online Sales in Buckets

Problem - What is the basic price per volume that a logistics company with online sales can charge to cover delivery cost?

Approach

Step 1: The logistics company with online sales need to share their 2 or more most common box sizes. There will be a smaller box (let’s call it volume x) and bigger box (volume y)

Step 2: The logistics company with online sales can also tell us the volume (as in all the length, breadth, and height) of their deliveries for online sales every day. We can then find out the volume for each product that is delivered.

Step 3: For each delivery volume every day, sort by volume. Using the sorted data, we can then check how many of this volume fit in smaller boxes (with volume x each), the rest will be by bigger box (volume y). Another bigger box is used for the next product if the volume of the previous product occupies more than half the bigger box previously.

Step 4: We can do it for say a few months to get a statistically significant data and identify trends

Step 5: Show trend data and discuss with the logistics company with online sales projected in shipments to confirm the future number of smaller boxes and larger boxes.

Step 6: Base on either future projected combination of smaller and larger boxes, find the volume.

Step 7: Compare the volume found in step 6 with the lowest volume found in Step 4. Decide on the volume to use to calculate the minimum price per unit volume with the logistics company with online sales

Step 8: Get the cost of each delivery from The logistics company with online sales, factor in projected fuel increases, etc… and divide it by the volume decided in Step 7. Base on this cost per unit volume, the online store can charge in 2 step sizes or more. Presto, we have the minimum to charge using per unit, per small box or large box J

We are essentially putting in more space (volume) with 2 or more common box sizes for the logistics company with online sales to price it more easy in a step rate, and yet still cover cost, or even profit from it by leveraging on online consumers’ purchasing mentally.

A parallel run of this approach is needed to ensure that the number of small and big boxes used are accurate enough.

Note: If more than 2 box sizes, we can approximate the number of each boxes using relative volume of each box