10 Ways to Reduce Shipping Costs
Entrepreneurs face a continual struggle to cut costs when it comes to shipping. As online shopping becomes increasingly prevalent, retailers seek e-commerce shipping company solutions
that allow them to stay competitive.
Businesses don’t just pay shipping costs for sending the final product to the customer – they also often pay for incoming materials. Whether businesses offer international fulfillment or only ship domestically, shipping eats into their profits. However, if businesses pass shipping on to the customers, it may cost them sales. Studies show shipping and handling fees are the number one reason buyers abandon items in their online carts, but sometimes free shipping cuts too deeply into profits.
As they seek to reduce shipping costs, e-commerce small business owners still are expected to provide fast, high-quality service. A customer’s experience with a brand can create repeat business or turn off big clients. When using shipping solutions for e-commerce and fulfillment shipping, there are ways to save and negotiate lower shipping costs.
Get to Know Your Shipping Representative
The shipping representative for your e-commerce shipping company is motivated to help you be successful. The more you ship, the more their company makes. A shipping representative can answer your questions and negotiate the best shipping rates. Shipping costs are usually assessed according to the following:
- How quickly the items need to be delivered
- Where the merchandise originates and where it’s going
- Any special handling and associated fees
- Tracking and delivery confirmation needs
- Tariffs and shipping taxes for international shipping
Learning how to negotiate shipping rates is essential. If your business does a lot of shipping, your rates are negotiable. Companies with smaller shipping volume might qualify for a discount as well. Keep in touch with your representative to find out about specials or rate changes that might apply to your business.
Use Shipping Rate Calculators
When you accurately calculate business shipping costs, you can plan strategically and avoid surprise fees when you go to ship merchandise. Most shipping providers offer an online calculator that lets you calculate cost for mailing in the United States and sending merchandise to other parts of the globe.
Make Use of Flat-Rate Shipping
Determine the average cost per package and offer clients flat-rate shipping. Many shipping companies provide flat-rate boxes free, which results in additional savings. Rates are competitive, and most packages arrive at their destinations quickly. Shipping companies determine flat rates by how far a package travels, often breaking shipping into zones. Your shipping representative can help you understand costs for shipping according to varying zones so you can compare pricing to determine the best rate.
Flat-rate shipping can help eliminate cart abandonment. If users know the rate for shipping each item before they enter the checkout screen, they are more likely to follow through with the
When you are up front with shoppers, it builds trust. You avoid the negative emotions people feel when they add several items to their cart only to experience sticker shock when they see the shipping costs or when they realize a minimum purchase is required to qualify for free shipping.
Make transparent flat-rate shipping part of your value proposition. The only drawback to flat-rate shipping is when customers want to order a small quantity or a single item. They may be hesitant to pay flat-rate shipping when it costs almost as much as their purchase.
Use Your Shipping Company’s Equipment
Many major carriers will furnish equipment like computers, scales and software. Software that automates processes and creates labels, packing slips, and barcodes for easy scanning, streamlines shipping and help prevent costly errors.
Consider How to Offer Customers the Best Value
As more retailers offer free shipping, customers begin to expect it, but it isn’t always the answer for every business. Evaluate whether charging full price for shipping will cost you sales, and consider how much paying for shipping eats into your profits. Sometimes a portion of shipping costs can be added to the price of the item, making the buyer feel like they’re still getting a deal. You may need to offer more than one shipping option. Consider some of these choices:
- Threshold-based promotions – Many retailers require a minimum purchase before the user can unlock free or discounted shipping.
- Promotions on key items – Charge regular shipping on items where shipping costs cut deeply into your profits, but make free shipping available on merchandise where profit on the sale makes it worth absorbing the cost.
- Email-only promotions – Instead of marketing shipping promotions to everyone, reward your best customers and encourage them to revisit your store by emailing customized shipping offers.
- Free store pickup – If you have physical locations, allow customers to avoid shipping when they accept store delivery.
- Offer VIP shipping – Customer loyalty pays. Drive repeat traffic by offering free or reduced shipping for regular customers, or allow them to pay a flat rate each year to cover shipping costs for 12 months.
- Analyze distribution center locations – If your shoppers are concentrated in certain parts of the country, relocating your distribution center could significantly cut shipping costs.
Look for Discounts on Shipping Materials
Boxes, padded envelopes, packing material, and labeling all add up. Regularly check to see if you can find a better price on these items. Some companies offer discounts on volume orders. Packing material is expensive to ship because of the amount of space it takes up. Some companies offer equipment that allows you to make packing supplies like bubble packaging and protective packaging pads at your facility.
Use One Company
Some vendors feel like they get a better deal if they use multiple shipping companies. Since discounts are based on volume, consolidating accounts often results in savings. Use the same provider for incoming and outgoing shipping to maximize volume and negotiate discounts based on the amount you use.
Shipping companies often offer incentives or subsidize the cost of switching if you consider using them as your main provider. Rates and technologies continually fluctuate, so at times you can renegotiate your agreement.
Ask for Refunds
Many shippers offer on-time shipment guarantees. If they experience delays, you may be eligible for a refund. Package auditing companies can monitor your packages and refund any amount you’re due in exchange for a percentage of what they collect.
Package auditing companies usually offer shipping reports and assistance with cost negotiations, which can result in additional savings. They may also monitor your bills to ensure you’re not
overpaying due to billing errors.
Reduce Dimensional Weight for International Shipping
Domestic shipping costs are based primarily on the package’s weight. International shipping carriers measure both the package dimensions and weight and charge for whichever is greater. Calculate dimensional weight by multiplying the package’s length, width, and height and divide that by the dim factor, which is currently 139. Reduce your costs by doing the following:
- Use the smallest box possible. A carton sizer cuts boxes down to fit your item. This reduces shipping costs, uses less void, and offers better protection for your merchandise.
- Don’t overfill with packing materials.
- If possible, ship in Tyvek bags. Carriers will rate your shipment based on weight, and Tyvek bags add no or minimal weight to the package.
- Offer international customers incentives to shop early so they can select longer shipping dates and receive reduced rates.
- Consider all shipping fees. Work with a shipping partner that can advise you on anticipated duties and import taxes and if there are ways you can reduce costs.
Understand the Real Cost of Shipping
It should be simple. You sell a product, package it securely, pay postage, and send it to the buyer. You should be able to calculate profit by figuring out what you spent on the merchandise
and shipping and subtracting that from what the customer paid. Misunderstanding the true cost of shipping could end up costing your revenue.
Calculate the cost of choosing the wrong shipping provider. Some companies find that when they pay bottom dollar for services, quality suffers. For example, low-priced shippers might leave packages at the curb next to the mailbox where they can be damaged or stolen. Customers don’t appreciate having to haul it from the street into the house.
If you’re taking your packages to the shipping company, consider the time and money you’re spending and its impact on your ability to run your company. Time is money and every second counts. Your business can’t afford any unnecessary loose ends. A shipping partner that picks up packages for you and delivers them to the shipping facility may make shipping more manageable and affordable.
As online sellers struggle to stay competitive, they have a continual need for affordable, efficient shipping. FirstMile offers shipping solutions for e-commerce and fulfillment shipping. If you need international fulfillment for your merchandise, we deliver to more than 220 countries. We offer flexible pickup times and a variety of shipping speeds, so whatever your business size, we offer e-commerce shipping solutions. Contact us to find out how much your small business can reduce shipping costs by having FirstMile as your e-commerce shipping company.
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