Tips on Shipping for Small Business: How to Save Money
I’m a Small Business, What Can I Do?
Shipping is the lifeline of e-commerce, but prices keep going up year after year. Managing cost is critical for small businesses to survive, especially when competing for business with the big players in the industry. As Don Anderson, vice present at Tompkins Associates – a North Carolina logistics firm – puts it: “Effectively managing shipping costs directly affects a small business’s bottom line.”
But how can companies cut their costs when prices keep rising? Even with local courier services or alternative carriers, there’s no getting around the fact that shipping can be expensive. It’s also completely unavoidable. For every price hike the carriers launch, there is something you can do to cut costs.
What Goes Into a Price?
Before we look at ways to save, we need to understand what determines your price in the first place. Here are the big-ticket items that factor into the quote you get from your carriers:
- How long it takes to deliver. (Overnight, 3-day delivery, etc.)
- Origin and destination. (Some carriers call these “zones”)
- Size of the package.
- Whether or not the package is insured.
- Tracking information.
- Handling for fragile items.
These are universal across all carriers, but if you rely on one carrier, you might also be increasing your own price.
Choosing the Right Carrier – Hint: It’s USPS
You might think that all carriers price the same, or at least close enough to the same, that it isn’t an important factor. But thinking that way only raises your shipping costs. Put quite simply, if you’re using UPS or FedEx, unless you’re particularly high volume, you’re probably paying too much money.
For most packages, USPS is the cheapest carrier. This is particularly true for small businesses. Now, before you drop all business with FedEx, keep in mind that individual package rates may be cheaper with the other carriers. But on average, especially for lightweight items, USPS pricing can be half the price of other carriers.
USPS offers a few pricing tiers itself, and they’re important to understand. Your base retail rate is what you pay when you go to the post office and costs the most. Commercial base pricing (CBP) is your base tier for buying from the USPS website. Commercial plus pricing, or CPP, is for favored customers who ship higher volume. Finally, there’s cubic pricing, which is only for the biggest shippers, and bases price on box size.
Negotiate Your Rates
All carriers offer favorable prices to high-volume customers. Sometimes, this can mean as little as 100 packages a month. Your business is never too small to negotiate, so no matter who you work with, get in touch with that carrier’s small business team and see if there are any offers they can give you.
It’s also important to understand your shipping requirements – does your package have any special care needs? How does your carrier handle those situations? Returning to Don Anderson, he comments that “businesses that don't work with their carrier to map out shipping criteria can spend as much 40 percent or more in fees than those that do”.
You may be wasting 40% by not communicating with your carrier.
Reduce Your Postage Cost
You can reduce your shipping costs by up to 20% annually just by using a postage meter. If you guess your package weight, you’re almost certainly overpaying for postage. Don’t guess, leasing a postage meter is cheap and can significantly cut costs.
It may seem small, but if you’re overusing packing materials it can add up over time. There’s no need to use heavy packing paper, try lightweight material like bubble wrap or Styrofoam.
While we’re on the subject, most carriers offer free packing supplies in their offices. If you use pick up or delivery, you can order these supplies in bulk instead.
USPS might be the cheapest carrier on average, but it’s not always the best deal. Heavier packages, for example, can sometimes cost you more with USPS than with FedEx or UPS. But researching every single shipping deal can take more time than it’s worth.
That’s where a company like FirstMile comes in. FirstMile offers a multi-carrier e-commerce solution designed for small businesses to cut the cost of relying on one carrier. This service works with your shipping to optimize your carrier services. Even with a negotiated rate, sometimes individual shipments can be cheaper with another provider. FirstMile’s solution will help you find the cheapest deals on any package.