How Wholesale Shipping and Freight Works: A Retailer Guide

The Two Shipping Realities Every Wholesale Buyer Needs to Understand

When you buy wholesale, you're not buying product price. You're buying landed cost — what the inventory actually costs you by the time it's on your shelf. Freight is the variable most independent retailers underestimate, and it's the reason two suppliers with identical price sheets can produce meaningfully different landed costs.

This guide covers the mechanics of wholesale freight: FOB versus delivered pricing, when LTL makes more sense than parcel, how freight classes work, how to calculate your true landed cost, and what to do when a shipment arrives damaged. If you're still building your supplier evaluation framework, also read our wholesale supplier evaluation guide and our breakdown of wholesale pricing and payment term negotiation.

FOB vs. Delivered Pricing: Who Pays the Freight?

The most important freight term in any wholesale transaction is whether the pricing is FOB (Free On Board) or delivered. These two structures determine who owns the freight cost — and who bears the risk if something goes wrong in transit.

FOB Origin (FOB Shipping Point)

FOB origin means the buyer takes ownership of the goods the moment they leave the supplier's warehouse. The buyer is responsible for arranging freight and paying the carrier directly — or reimbursing the supplier for freight costs billed to the supplier's account. Risk of loss or damage in transit is entirely the buyer's from the moment the shipment is picked up.

FOB origin pricing is typically lower on the product side — the supplier isn't building freight into the margin. But the buyer needs to arrange freight (either through a freight broker, a third-party logistics provider, or the carrier directly), pay freight separately, and manage any claims if the shipment is damaged. For small retailers without established carrier relationships, this adds complexity and cost that can eliminate the apparent price advantage.

FOB Destination (Delivered Pricing)

FOB destination — also called delivered pricing — means the supplier retains ownership and risk until the shipment arrives at your door. The supplier arranges freight through their carrier relationships and either includes freight in the product price or bills it as a line item at their negotiated rate. Damage in transit is the supplier's problem to resolve, not yours.

Delivered pricing is simpler for the buyer. You get a total order cost, freight is handled, and claims go back to the supplier. The tradeoff: suppliers with delivered pricing have built freight cost (and sometimes freight margin) into their pricing structure. If the supplier's carrier relationship isn't competitive, you may be paying a freight premium embedded in the product price.

Which Model Is Better?

It depends on your order frequency and volume. Small retailers placing infrequent orders — a few times per year, typically under $5,000 per order — are almost always better served by delivered pricing. The administrative simplicity and damage claim protection outweigh any theoretical savings from FOB origin. As order volume grows and you develop carrier relationships of your own, FOB origin pricing can become more attractive.

AD Home Goods ships from our NJ warehouse on a delivered basis for standard wholesale orders. You receive a landed cost quote that includes freight — no surprise freight invoices after your order ships, no carrier coordination on your end.

LTL vs. Parcel: The Threshold That Changes Your Freight Economics

Wholesale freight moves on one of two carrier networks: parcel carriers (UPS, FedEx, USPS) or LTL (Less-Than-Truckload) freight carriers. Understanding when each applies — and why — is fundamental to managing wholesale shipping costs.

Parcel Shipping

Parcel carriers handle packages under roughly 150 pounds and 108 inches in any dimension. Pricing is based on weight (actual or dimensional, whichever is higher), zone (distance from origin to destination), and any accessorial charges. Parcel is well-suited to small orders: a $300 wholesale order of kitchen accessories might ship in 2–3 boxes via UPS or FedEx at a total freight cost of $35–$60 depending on zone.

Parcel advantages: simple, fast, door-to-door without additional handling, easy tracking, simple claims process. Parcel disadvantages: per-pound pricing becomes expensive at higher weights; dimensional weight pricing means bulky-but-light items (storage furniture, packaged textiles) cost significantly more than their actual weight would suggest.

LTL Freight

LTL freight is the carrier network for shipments too large for parcel but not large enough to fill a full truckload. Shipments move on pallets, are handled multiple times between origin and destination terminal, and are priced on a different set of variables than parcel. LTL is appropriate when a wholesale order exceeds roughly 150 pounds or requires pallet-level handling (fragile goods, oversized items, large carton quantities).

The rough threshold: most wholesale home goods orders under 150 pounds ship parcel; orders over 150–200 pounds shift to LTL economics. But it's not purely weight — freight class, pallet configuration, and accessorial requirements also drive the decision.

LTL Cost Variables

LTL pricing is more complex than parcel. Key variables include:

• Freight class: The National Motor Freight Classification (NMFC) assigns every commodity a freight class from 50 to 500 based on density, stowability, handling difficulty, and liability. Higher class = higher per-hundredweight (CWT) rate. Home goods typically fall between class 85 and class 150 depending on the specific item.
• Weight: LTL pricing is quoted per hundredweight (per 100 lbs). A 400-pound shipment at class 100 might be quoted at $35 per CWT, making the base freight $140 before accessorials.
• Lane: LTL rates vary by lane — origin terminal to destination terminal. Shorter lanes within a carrier's dense network are cheaper; cross-country or rural deliveries carry premiums.
• Accessorial charges: Residential delivery, liftgate service (if the destination doesn't have a loading dock), inside delivery, and limited-access delivery all add to LTL costs. A residential delivery surcharge alone can add $50–$100 to an LTL shipment.

Freight Class Basics for Home Goods Retailers

Freight class is one of the least-understood variables in wholesale shipping, and getting it wrong can result in a reweigh and reclassification charge on delivery — a surprise invoice that erodes margin on an order you thought you had priced correctly.

The NMFC classification for home goods breaks down roughly as follows:

• Class 50–65: Dense, durable goods. Heavy ceramic, cast iron, stone items often fall here. Lower class = lower freight cost.
• Class 70–85: Most kitchen hard goods, bath hardware, storage containers with reasonable density fall in this range.
• Class 100–125: Lighter kitchen textiles, packaged bath accessories, organizational products with lower density.
• Class 150–250: Furniture, large packaged items with high cube-to-weight ratios, fragile glassware that requires protective packaging adding to cube without adding weight.

The practical implication: a pallet of cast iron cookware and a pallet of packaged shower curtains weigh the same but have very different freight classes — and very different freight costs. When you're planning inventory orders, the category you're buying affects your freight costs per unit, not just the total shipment weight.

If you're arranging FOB origin freight, always confirm the freight class with the supplier before booking the carrier. An incorrect class on the BOL (Bill of Lading) results in a carrier reweigh and reclassification charge — typically 15–25% added to the freight invoice.

How to Calculate Landed Cost

Landed cost is the total cost of getting inventory to your location. It includes product cost, freight, and any other costs incurred to receive the goods — receiving fees, broker fees, accessorial charges. Here's a practical framework for calculating it before you place an order.

The Landed Cost Formula

Landed Cost = (Unit Price × Quantity) + Total Freight + Accessorial Charges

Then on a per-unit basis:

Landed Cost per Unit = Landed Cost ÷ Total Units

A Worked Example

Suppose you're ordering 48 units of a bath accessory set at a wholesale price of $14.00 per unit:

• Product cost: 48 × $14.00 = $672.00
• Estimated freight (parcel, 2 boxes, 85 lbs total, Zone 5): $52.00
• Total landed cost: $724.00
• Landed cost per unit: $724.00 ÷ 48 = $15.08

Your retail markup calculation should use $15.08 as the cost basis — not $14.00. If you target a 2.5× wholesale-to-retail multiple, your retail price should be based on $15.08 × 2.5 = $37.70, not $14.00 × 2.5 = $35.00. The difference is small on this order, but across your full inventory it compounds into a meaningful margin calculation error if you always use the product price as the cost basis. For more on markup calculations, see our wholesale pricing vs. retail markup guide.

Free Freight Thresholds

Many wholesale suppliers offer free or subsidized freight above an order value threshold. Common structures include free freight on orders over $500, $750, or $1,000. If your order is close to a free freight threshold, it often makes economic sense to add one more SKU to cross the threshold — the cost of the additional product is less than the freight cost you'd incur below the threshold.

AD Home Goods offers free freight on wholesale orders over $500. Orders below that threshold ship at a flat freight rate. The $500 threshold is worth targeting on most initial orders — the freight savings on a $490 order versus a $510 order typically exceed the cost of adding $20 more in product.

Wholesale Delivery Terms: Reading the Language in Your Agreement

Wholesale agreements and price sheets use specific freight terms that affect your rights and obligations. Here's what you'll encounter.

• FOB Origin / FOB Shipping Point: You own the goods and the freight risk once the carrier picks up. You pay freight.
• FOB Destination / Prepaid and Add: Supplier pays freight and adds it to your invoice at cost. You get the benefit of supplier carrier rates.
• Prepaid and Allowed: Supplier pays freight on orders meeting a minimum threshold. No freight charge to you if you qualify.
• Collect: Carrier bills you directly for freight — the supplier doesn't handle it.
• CIF (Cost, Insurance, Freight): More common in international trade; supplier covers cost, insurance, and freight to the destination port.

When reviewing a supplier's wholesale terms, "prepaid and allowed over $X" is the most retailer-friendly structure — you get free freight above the threshold and the supplier handles the carrier relationship. "FOB origin, collect" is the least retailer-friendly for small accounts without established carrier rates.

Handling Freight Damage Claims

Freight damage happens. LTL is particularly susceptible because pallets are handled multiple times between origin and destination. Knowing how to document and file damage claims correctly is the difference between recovering costs and absorbing a loss.

At Delivery: What to Do

Inspect before signing the delivery receipt. Once you sign the delivery receipt without notation, you've accepted the shipment in good condition. That's the end of your visible damage claim. Always inspect cartons and pallet wrap before signing — even if the driver is impatient.

If you see damage:

1. Note it on the delivery receipt specifically: "3 cartons visibly damaged, right side of pallet" rather than just "damaged." Vague notation weakens claims.
2. Photograph everything: the pallet as delivered, damaged cartons, damaged product, the delivery receipt with your notation.
3. Refuse delivery of severely damaged items if practical — a refused delivery is the cleanest claim outcome.
4. Contact the supplier immediately, before the driver leaves if possible.

Concealed Damage

Concealed damage — damage discovered after the carton is opened — is harder to claim because you've already signed the delivery receipt. Most carriers require concealed damage claims to be filed within 5–15 days of delivery. File as soon as you discover damage, photograph the packaging and product, and contact both the carrier and the supplier.

Under FOB destination pricing, concealed damage claims go to the supplier — it's their risk until delivery is complete. Under FOB origin pricing, you file directly with the carrier. This is one reason delivered pricing is preferable for smaller accounts: you have a supplier intermediary to navigate claims with.

Prevention

Reduce LTL damage risk by ensuring cartons are properly palletized and wrapped (ask the supplier about their pallet standards), using pallet overhang to protect carton edges, and requesting fragile labeling for glass or ceramic goods. Some suppliers use pallet covers or corner boards for additional protection — worth asking about for high-value or fragile orders.

How AD Home Goods Handles Shipping from Our NJ Warehouse

AD Home Goods, operated by Richards Homewares, ships wholesale orders from our warehouse in New Jersey. Our NJ location gives us competitive freight rates to the northeastern US, Mid-Atlantic, and New England — regions where independent retailers in our core market are concentrated — while remaining cost-effective for national shipping.

Our standard wholesale shipping process:

• Small to mid-size orders (under $500): Ship parcel via our preferred carrier. Flat freight rate billed at cost — no freight margin added.
• Orders over $500: Ship freight-included (prepaid and allowed). No freight charge on qualifying orders.
• Large orders requiring LTL: We use established LTL carrier relationships with negotiated rates. Freight is quoted before the order is finalized so there are no surprises.
• Fragile or high-value goods: Glassware, ceramics, and other fragile categories are packed with appropriate protective materials and clearly marked. Damage rates on fragile goods are tracked internally — if we see a category with elevated damage in transit, we change the packaging protocol.

We ship on FOB destination terms for standard orders — you take ownership when the goods arrive at your door. If a shipment arrives damaged, contact us directly. We handle carrier claims and work to replace or credit damaged product without requiring you to navigate carrier claim bureaucracy on your own.

Lead times from NJ vary by destination: typically 2–3 business days to the Northeast, 4–5 business days to the Midwest, 5–7 business days to the South and West on standard parcel. LTL transit times are 3–5 business days regionally, 5–8 days nationally.

Browse our full product catalog to understand what we carry before reaching out. When you're ready to discuss terms and get a freight estimate for your location, submit a wholesale inquiry.

Freight Summary: What to Get in Writing Before Every Order

Before finalizing any wholesale order, confirm these freight details in writing:

• Delivery terms: FOB origin or FOB destination? Who arranges freight and who bears damage risk?
• Freight cost: Fixed rate, percentage of order, or actual carrier cost? Is freight included above a threshold?
• Freight threshold: What order value qualifies for free or subsidized freight?
• LTL vs. parcel: Which carrier type applies to your order? What are the transit time estimates?
• Accessorial requirements: Will delivery require a liftgate? Is your address residential? These add cost.
• Damage claim procedure: Who do you contact if the shipment arrives damaged? What's the claims window?

Freight is rarely the most interesting part of a wholesale relationship, but it's often the part that creates the most friction when it's not handled clearly. Suppliers who can answer these questions cleanly are suppliers who have their operations in order. Those who can't are telling you something about how they run the rest of the business.

If you want a freight estimate before committing to an order with AD Home Goods, include your zip code in your wholesale inquiry and we'll quote total landed cost upfront.