There are many factors that affect shipping prices. When fulfillment is handled in-house, there are also many indirect expenses. The following are some suggestions that may help reduce your overall shipping costs.
Reduce the number of miles freight must travel
When sending products to remote locations, many companies incur substantial shipping costs. When sending packages within the United States, carriers divide the country into nine different “shipping zones,” or regions, from Zone 1 to Zone 8. The number of zones a shipment must pass through to reach its destination.
The higher the zone, the greater the shipping costs and the longer it takes to reach the destination. We will talk more about how to work with businesses that have multiple fulfillment centers and how eliminating shipping to higher zones can help you save a ton of money over time and take advantage of better shipping options at lower rates.
Weight your packages and minimize their size.
Weight increases the cost of shipping, so using a flat rate box can save money. An investment in a postage scale can help you accurately estimate shipping costs and save money when printing labels and sending packages from home. When determining shipping costs, carriers also factor in the package’s dimensions in addition to its weight.
When shipping something light, it’s wasteful to use a large box, so the shipping cost ends up being higher than it should be. Larger boxes can increase shipping costs due to their higher dimensional weight.
You can lessen the weight of your packages and thus save money on shipping by doing the following:
Optimize your dimensional weight by using the smallest possible packaging by designing a package that is specific to your product (i.e., make it a more snug fit as opposed to having items rattling around in a box, which leads to you essentially paying for air in the box).
Ship your product in its original packaging with just a shipping label affixed; no need for additional boxes. This is known as “ships in own container” (SIOC) packaging.
Repurpose empty shipping containers. A sturdy box can be used multiple times if you’re sending packages to close friends or relatives (and packing materials).
The short version: Don’t transport more air than is required.
3. Shop around for cheaper supplies
Packing materials can be expensive for small businesses, but shipping companies like USPS, UPS, and FedEx may offer them for free or at a reduced rate. Boxes, dunnage, bubble wrap, air fill, and poly mailers can all be purchased in bulk quantities to help you save money.
Don’t be put off by the larger initial investment; you won’t run out anytime soon, and your average per-shipment cost will go down. Perhaps even some free packaging materials will be available.
Achieve lower shipping costs
You don’t have to ship hundreds of thousands of orders every month to take advantage of the volume discounts offered by most shipping companies. The possibility of obtaining volume discounts in exchange for continued service from a single shipping provider should be explored. You can save money on shipping costs by increasing the number of packages you send.
Those who run online shops should try to find the most cost-effective shipping options available, provided that these options don’t compromise customer service or delivery times.
5. Look into what your selling platform or marketplace is offering to see if there are any bulk shipping discount services or programs you can take advantage of. You may be able to get better rates and fulfillment services from them because they have features like real-time carrier rates, shipping apps, built-in features, and integrations with fulfillment software.
Admit risk by obtaining outside insurance
In order to reduce shipping costs, it is possible to forego optional extras like shipping insurance if the item you are sending is of low value. Third-party package insurers are typically less expensive than going with your shipping carrier, sometimes by as much as half the price, if you need shipping insurance for your orders. Obviously, this is most relevant when discussing expensive items.
The Seventh Suggestion is to Use Prepaid Services
When you buy a certain quantity of shipping labels in advance from UPS or FedEx, you can save up to 20% on shipping costs. Do not attach them to a box until it is time to ship the individual order. It’s a win-win because it cuts down on both time and money.
Please keep in mind that this only works if you regularly ship orders with the same weight and dimensions, or if you know this information in advance.
8. Use poly mailers instead of boxes
There is no need for expensive boxes when sending orders for small, non-fragile items like clothing. The smaller size not only frees up valuable cargo space in the delivery truck, but also reduces the amount of packing materials, like tape and bubble wrap, needed for transport.
You may want to use poly mailers of various sizes if customers are ordering a wide variety of products in a single order.
9. Consider utilizing a mix of traditional and online resources
Orders are picked up by hybrid shipping services like UPS SurePost and FedEx SmartPost, which then coordinate with other carriers like the United States Postal Service to deliver the packages to a sorting facility or post office for final mile delivery to customers’ homes. In some cases, this can reduce expenses by half. But the delivery time is usually longer.
Please be aware that there are minimum and maximum requirements for size, weight, and capacity.
ten. Keep up with the fluctuating rates charged by shipping companies
Each year, as a part of the annual general rate increase, the major shipping companies raise their shipping rates (GRI). Prices go up by an average of 5% (though we’ve seen higher during the pandemic) depending on factors such as the carrier, service level, weight, and other factors.
It is also possible for carriers to impose additional fees during busy shipping periods (such as the holiday season, Q4, or the early days of the COVID-19 pandemic) when there is an unusually large number of packages being delivered. Extra fees, such as those for large packages or for requiring a signature, are added every year.
Since there is no way to avoid these rate increases and surcharges, you will need to factor them into the shipping fees you charge your customers or absorb the extra expenses yourself.
Eleven. Urge clients to make advance purchases
Overcommunicate the deadlines by which customers need to place online orders to guarantee on-time delivery during peak season or other high volume events or periods for your ecommerce business (e.g., leading up to Halloween for brands that sell costumes or leading up to Thanksgiving for businesses that sell turkeys).
For the holidays, each shipping company has its own deadlines in place to ensure that presents are delivered on time. Customers who wish to save money on shipping should place their orders before the respective cutoff times.
Time constraints aren’t the only thing that can have an effect on deadlines; factors like labor shortages, weather events that prevent carriers from shipping, COVID outbreaks, federal holidays, and other factors may also come into play.
If you’re working with a 3PL, it’s important to keep in mind not only their cutoffs for specific carriers, but also their cutoffs for receiving inventory, turnaround times during the holidays, any SLA extensions, and the general holiday schedule. In the weeks and months leading up to the holiday season, any logistics company needs to make significant progress in preparation for peak season, and any brand needs to pay close attention to relaying this information to its customers.
Here are 5 questions that can be asked to cut shipping costs.
The aforementioned suggestions may not all work for your company or boost profits. Answering the following questions about your current ecommerce shipping process will give you a better idea of how you can reduce or recoup shipping costs.
1 How much are shipping costs?
The amount you charge customers for shipping can have an impact on your profit margin regardless of how much you actually spend on shipping the orders.
It’s fascinating to consider the psychological factors at play in online shopping habits and consumer preferences. You can show customers two options where they would pay the same amount, but one would incur a higher shipping cost, and they would choose the one with the higher shipping cost.
Customers are more likely to make a purchase if they believe they are receiving a good deal or excellent value.
Shipping costs a lot of money, but customers don’t want to pay them. To make up for the price of shipping, think about implementing the following strategies:
Raise the price of the product to cover shipping expenses and provide free delivery (only if you sell expensive products).
Provide free shipping or a discount on shipping costs to customers while raising product prices by a small amount (e.g., charge customers half the price of shipping but bake the other half into the product price).
Give all your customers the same shipping rate based on the average shipping cost of your orders.
In order to qualify for free or fast shipping, customers must spend more than the average order value on your site.
In order to more accurately reflect the true cost of shipping, parameters should be set up for orders that meet various criteria (e.g., charge different shipping fees for orders going to different countries, one shipping fee for orders that are over a certain cart value, etc.).
Always keep an eye on your return rate and evaluate your e-commerce returns policy to see if you need to start charging customers for return shipping.
Have you considered switching to a different service?
It’s not always in your best interest to be loyal to the shipping company or carrier that happens to be geographically nearest to you. It’s possible that you could save money by switching shipping companies, depending on the destinations your shipments frequent.
To learn more about shipping prices, check out the following resources:
Cost Estimator for UPS Shipping
Shipping Rate Estimator for USPS
Calculate Your FedEx Shipping Costs
Is DHL’s packaging adequate?
Too many small businesses make simple packing errors that drive up their expenses, like using package dimensions or weight that are too large for their products. Some people use boxes when a poly mailer or padded envelope could accomplish the same thing with much less bulk and size.
If you’re having trouble keeping shipping costs low and you use custom branded boxes, inserts, and other fancy packing supplies like shredded paper filler or custom tissue paper, you could probably save money by getting rid of those.
If you insist on using branded boxes, make sure their dimensions are within the range of what the major carriers consider to be a “standard box size,” or you may be charged more.
The cost of transport can be reduced by simply sticking a label on the package if the product is packaged in a way that allows it to be shipped without further preparation.
And finally, where do most of your shipments end up?
If you look for trends in where your shipments are going, you can figure out where the best base of operations is. If international shipping is a major expense for your business, you may want to reevaluate your strategy or seek out a global fulfillment partner like ShipBob.
While you can’t always anticipate or control where domestic orders will be shipped to, you do have some say in where they’re fulfilled. By partnering with a 3PL provider, you can store and ship your goods from distribution centers strategically located near your customer base.
When you apply the savings from this to all of your orders, you can see a significant decrease in your average shipping cost.
We partnered with ShipBob to expand our business in the United States, and as a result, our shipping expenses have decreased by 30 percent. By precisely identifying the product weight and destination zip code, we can confidently assign a shipping cost to each order. Fulfillment by ShipBob makes it much simpler to predict expenses than when shipping from Canada to the United States.
Bathorium’s CEO and co-founder, Greg MacDonald
Fifth, have you looked into working with a fulfillment or shipping company?
For small businesses that handle their own shipping, many companies like ShipStation and Stamps.com offer free trials.
Utilizing a third-party logistics provider (3PL) to store stock, pack orders, and ship packages on your behalf can save you a lot of time and money.
Prymal’s monthly sales hit $40,000 in July. Just four months after making the switch to ShipBob in November, our monthly revenue has increased to $160,000. This is an increase of 300 percent. In addition, monthly fulfillment cost savings of $8,000 are realized.
Prymal’s co-creator and CEO Courtney Lee
In addition to the obvious savings on overhead expenses like postage, outsourcing shipping and fulfillment frees up your time to concentrate on revenue-generating activities.