Shipping costs are on the rise.
Every year, carriers increase their rates, while the growing demand in ecommerce leads to shortages in key areas like truck drivers and warehouse space. On top of that, Amazon’s push for faster and free shipping sets a high standard that can be tough for small businesses to compete with, especially those fulfilling orders from home.
This leaves many of us asking: How can I cut down on shipping expenses?
In this blog, we’ll tell you exactly how!
Let’s get started.
10 Best Ways To Reduce Shipping Costs and Improve Efficiency
Shipping costs can be influenced by numerous factors, and when managing fulfillment in-house, hidden expenses often add up.
However, there are strategies to help tackle these challenges. If you’re looking for the best way to reduce shipping costs, here are some practical ideas that could help lower your average shipping expenses and improve your overall efficiency.
1. Familiarize Yourself with Shipping Zones
One reason many businesses face high shipping costs is due to shipping to distant locations.
Shipping zones are geographic areas that carriers use to determine pricing. The further the destination, the higher the zone, which means more expensive and slower shipping.
By reducing shipments to higher zones, you can significantly cut costs and take advantage of more affordable and faster shipping options over time.
2. Weigh Packages and Optimize Dimensions
Understanding how to calculate shipping costs is key to saving money.
Heavier packages will always cost more unless you’re using flat-rate shipping. If you’re shipping from home, investing in a postage scale can help you accurately weigh your packages and select the right shipping labels, preventing unexpected costs.
Besides weight, carriers also factor in the dimensions of your packages. Using oversized boxes for lightweight items increases the dimensional weight, leading to higher shipping fees.
To reduce costs, consider using custom packaging that fits your products snugly to avoid paying for unnecessary space.
Additionally, “ships in own container” (SIOC) packaging, where the product’s packaging serves as the shipping container, can also minimize costs.
Finally, reusing sturdy old boxes for non-commercial shipments is a great way to save on packaging materials while cutting down shipping expenses.
3. Source Discounted Shipping Supplies
Many carriers, like USPS, UPS, and FedEx, offer small businesses free or discounted boxes and envelopes for specific shipments. Additionally, buying packing supplies like boxes, bubble wrap, airfill, dunnage, and poly mailers in bulk can help you save money.
While the upfront cost might seem high, it’s worth the investment since you won’t need to restock frequently, ultimately lowering your average cost per shipment over time.
4. Negotiate for Discounted Shipping Rates
Shipping carriers often offer pricing discounts based on the volume of shipments, and you don’t need to be sending out hundreds of thousands of orders each month to take advantage of these savings.
It’s worth reaching out to negotiate volume discounts by committing to a single shipping provider. Naturally, the more packages you ship, the better the rates you’ll receive.
As an e-commerce store owner, it’s essential to pursue lower shipping costs, provided that these savings don’t compromise service quality or prolong delivery times.
5. Opt for Prepaid Shipping
Using prepaid shipping can save you up to 20% on costs, allowing you to purchase a set number of shipping labels in advance. You can attach these labels to packages only when it’s time to ship the individual orders, which helps streamline your process and reduces expenses.
Note: Keep in mind that this strategy is most effective when you frequently ship items of similar weight and dimensions or when you have this information readily available to calculate accurate shipping costs.
6. Consider Third-Party Insurance
Reducing shipping costs can often be achieved by eliminating unnecessary services, including shipping insurance, depending on the value of your products.
If you find that insurance is necessary for your shipments, consider using third-party package insurers, as they typically offer lower rates than your shipping carrier, sometimes even at half the cost. This approach is especially beneficial for shipping high-value items.
7. Explore Discounts from Your Ecommerce Platform or Marketplace
Investigate whether the ecommerce platform or marketplace you use provides any bulk shipping discounts or programs.
Many of these platforms offer features like real-time carrier rate comparisons, shipping applications, and integrations with fulfillment software that can help you access better shipping rates and improve your overall fulfillment process.
8. Explore Hybrid Shipping Solutions
Consider using hybrid shipping services such as UPS SurePost and FedEx SmartPost.
These services collect your packages and collaborate with other carriers like USPS for transportation to sorting facilities or post offices. From there, your packages are delivered to residential areas for the final leg of their journey. This approach can potentially reduce shipping costs by up to 50%. However, it’s important to keep in mind that the trade-off may be longer delivery times.
Note: Be aware of specific requirements regarding volume, weight, and dimensions.
9. Opt for Poly Mailers Instead of Boxes
For small, non-fragile items like clothing, using poly mailers or envelopes can be a more economical shipping option compared to boxes. These mailers are smaller and take up less space in delivery trucks, resulting in lower shipping costs.
Additionally, they require fewer packing materials, such as tape and bubble wrap, allowing you to save even more. If you frequently ship a variety of products, consider using different sizes of poly mailers to accommodate your orders efficiently.
10. Monitor Changes in Shipping Carrier Pricing
It’s crucial to keep track of pricing adjustments made by shipping carriers, as they typically raise their rates annually. These increases can differ based on factors like the carrier, service level, package weight, and more.
Additionally, carriers often impose surcharges during peak shipping periods when package volume spikes, as well as other annual surcharges, such as those for large packages or requiring signatures upon delivery.
Unfortunately, there’s no way to avoid these rate increases and surcharges. As a result, you’ll need to either incorporate these additional costs into your shipping fees, absorb them yourself, or find alternative ways to offset the impact on your bottom line.
FAQs: 10 Proven Methods to Lower Your Ecommerce Shipping Expenses
What long-term benefits can you expect from reducing shipping costs?
By effectively managing shipping costs, you can improve profit margins, enhance customer loyalty through better service, and ultimately reinvest those savings into growing your business.
Are there specific times of the year when shipping costs spike?
Yes, shipping costs often increase during peak seasons like holidays or events. Planning ahead can help you mitigate these spikes.
Is it worth investing in shipping software to manage costs?
Absolutely! Shipping software can provide valuable insights into carrier rates, help automate shipping label creation, and allow for better tracking of shipments, ultimately saving you time and money.
Can you negotiate shipping rates with carriers?
Yes, many carriers are open to negotiations, especially if you ship a high volume. It’s worth reaching out to discuss potential discounts or better terms.
Conclusion
In the ever-evolving landscape of ecommerce, understanding how to reduce shipping costs is crucial for maintaining profitability and competitiveness.
By implementing these strategies, you not only lower your expenses but also enhance customer satisfaction through more efficient and reliable shipping options. Remember, every small adjustment can lead to significant savings over time, allowing you to allocate resources toward growth and innovation. Embrace these practices, stay informed about industry changes, and continuously seek new ways to optimize your shipping process.
