Businesses often focus solely on their products and neglect to factor in shipping costs. This can lead to unexpected costs that can derail small businesses, especially those that operate online.
Shipping costs can add up quickly, and many small businesses find themselves struggling to find a balance between offering competitive prices and maintaining profitability. It’s important for small businesses to assess their costs early on and develop a sound shipping strategy.
This guide covers the best strategies for reducing shipping costs so your small business can remain competitive.
Calculate Your Shipping Costs
How much your business spends on shipping directly affects your bottom line. Few companies can afford to waste money in this area.
The best way to reduce shipping costs is to know how much those costs are in the first place. This will give you a number to work from, and as you make changes, you’ll see whether your efforts to reduce shipping costs are paying off.
Shipping costs are determined by package weight and dimensions, origin and destination, delivery times, duties and taxes, special handling, insurance and carrier. Take the time to properly calculate your shipping costs.
5 Ways to Reduce Shipping Costs
Whether you are selling books, electronics or anything else, you can reduce shipping costs for your online business. Check out the options below to learn more about how to keep costs to a minimum.
1. Use Efficient Shipping Methods
First, consider the methods used to ship products for your e-commerce business. You might find that there are better and cheaper options available.
Decrease Distance in Shipping
Shipping to faraway destinations can increase shipping costs. Shipping zones are geographical shipping areas numbered Zone 1 to Zone 8. When you have to ship to zones that are far away, the cost increases. It can be helpful to partner with companies that have several fulfillment centers. This allows items to ship from different destinations depending on where the package is going and can keep the shipping costs down.
Switch from Boxes to Poly Mailers
Boxes tend to be heavier, bulkier and more expensive to ship. Poly mailers can work well for a wide range of products, and this can help cut back on the expenses of shipping.
Reduce Package Dimensions
In most cases, the larger a box is, the more it will cost to ship. Reducing the size of the boxes being used to send your products can result in reduced shipping costs.
Reevaluate Product Packaging
Optimizing product packaging also can help reduce shipping costs. Choosing lightweight packaging materials can help minimize shipping fees by reducing the package’s weight.
2. Leverage Shipping Discounts
Finding discounted shipping can reduce your overall delivery costs.
Check Offers from Your Selling Marketplace or Platform
In some cases, the platforms that power your e-commerce store or the marketplace where you sell your products might offer bulk discounts for shipping. They could have shipping apps and integrations with fulfillment software that may give you better rates.
Consider Going Prepaid
Opting for prepaid shipping could help you save up to 20% from carriers like FedEx and UPS. It is possible to buy shipping labels upfront and add them to your packages as you need them.
Insure Shipments with Third Parties
You can also reduce the number of services, such as insurance for packages. Not all packages may need to be insured. For those that do, consider a third-party insurance company. These will often be more affordable than using your carrier and could reduce insurance costs by up to 50% in some cases.
3. Optimize Shipping Methods
Look for ways to optimize your shipping.
Use Third-Party Logistics Fulfillment
Working with a third-party logistics (3PL) fulfillment company can be a huge benefit and provide cost savings. Allowing experts to take care of this aspect of your business can save time and money. You won’t need to rent a warehouse, hire more staff or pay extra for utilities. The shipping and fulfillment is handled for you.
Shop Hybrid Services
It might also be a good idea to look into hybrid services such as FedEx SmartPost and UPS SurePost. They can connect with other carriers to provide last-mile delivery. This has the potential to reduce shipping costs substantially but delivery can take longer.
Invest in Automated Shipping Solutions
By automating processes such as label printing and order fulfillment, e-commerce businesses can minimize the time and resources required for shipping. The automation process also reduces the possibility of human errors, which can lead be costly. By investing in technology and software that streamlines these processes, e-commerce businesses can reduce overhead and focus on core operations to improve their bottom line.
4. Negotiate with Shipping Companies
Negotiating with shipping companies is another way to cut costs. Businesses can often secure discounted shipping rates. To successfully negotiate shipping rates, businesses must understand their shipping needs, including package weights, dimensions and shipping zones. This knowledge will enable them to compare rates and identify the most cost-effective shipping options or carriers. It’s also essential to choose the right fulfillment partner to manage shipping and secure volume discounts.
5. Consider Introducing Free Shipping
While offering free shipping may seem counterintuitive, it can encourage customers to spend more and help offset those costs. You can also consider offering flat-rate or tiered shipping options to make costs more predictable for both you and your customers.
Partnering with a 3PL to Lower Shipping Costs
If you’re looking for ways to cut shipping costs for your small business, it may be worth considering the services of a third-party logistics (3PL) provider. These companies specialize in providing businesses with everything from transportation and warehousing to order fulfillment and inventory management. And when it comes to shipping costs, a 3PL can deliver major savings for small businesses.
Benefits of Working with a 3PL
One of the advantages of using 3PLs is that they have a great deal of buying power. Because they deal with such large volumes of shipments on a daily basis, they can negotiate better rates with carriers than most small businesses can on their own. By taking advantage of these rates, a 3PL can help small companies save a significant amount of money on their shipping expenses.
But saving on shipping costs is just one way a 3PL can benefit a small e-commerce business. The range of services 3PLs offer can help businesses optimize every aspect of their logistics operations.
From managing inventory levels and handling returns to providing real-time tracking and delivery updates, a good 3PL partner allows a small business to focus on its core competencies while leaving logistics to the experts. A 3PL can provide a level of efficiency and cost savings that most small businesses would be hard-pressed to achieve on their own.
Choosing Print Bind Ship as Your 3PL Partner
If you are a business owner looking to outsource your logistics and supply chain management processes, you know how important it is to choose a reliable 3PL company. That’s where Print Bind Ship comes in. We are a top-tier 3PL company that provides a wide range of services to help streamline your business operations.
Print Bind Ship understands that each business has unique requirements when it comes to logistics and supply chain management. That’s why we offer a range of services to meet your specific business needs. We can provide help with production, picking and packing, inventory management, warehousing, shipping, reverse logistics and freight shipping — regardless of the size of your business or the complexity of your logistics needs.
We use the latest technology to manage your inventory, track your shipments and optimize your supply chain. Contact us today to learn more about our shipping services and how we can help you achieve your logistics goals.
Consider negotiating better rates with your shipping carriers, using flat-rate boxes or envelopes, optimizing package weight and dimensions and offering free shipping promotions with a minimum order value.
While it’s not mandatory, offering free shipping can attract more customers, increase conversions and improve customer loyalty. Make sure to carefully evaluate the financial impact on your business and find ways to balance the costs.
Common mistakes include not accurately weighing and measuring packages, not selecting the most cost-efficient shipping option, not using delivery confirmation or insurance and not properly packaging fragile items.
Most shipping carriers offer tracking options, which you can integrate with your e-commerce platform or website. Consider sending automated shipping confirmation emails with estimated delivery dates, tracking links and customer service contacts.
You can improve shipping efficiency by using shipping software or platforms, optimizing packaging materials and supplies, creating shipping workflows and schedules and outsourcing fulfillment to third-party logistics providers.