11 Smart Ways To Reduce Shipping Costs for Small Businesses

11 Smart Ways To Reduce Shipping Costs for Small Businesses

Due to the increased use of online shopping, there are many organizations that have embraced the e-commerce in order to reach their customers across the globe. Thus, ecommerce has become an inevitable part of our lives and has revolutionised the way we shop and do business from small scale businesses to large scale enterprises. But along with e-numerous commerce's benefits come new difficulties, one of which is delivery. In this article, we will explain what e-commerce shipping is and how you can work out shipping costs as well as which carrier to use. We will also suggest ways on how to enhance the satisfaction aspect of your customers through the enhancement of your delivery process. Now grab a coffee, and let's get started!

Know the basics of shipping cost

Shipping costs in ecommerce entail all the costs that are associated with transporting goods to clients, such as 

• Packaging costs which include the cost of sellotapes, packaging cartons and stickers

• Courier fees for pickup and delivery

• Fees paid to different governments in international shipping

For any online shop, shipping might be an overwhelming burden. Once a sale is made, you have to spend time producing, packing, and shipping your goods. But, it is up to the shipping company to deliver your product on schedule and in pristine shape once you have turned them over to them. Your consumer can have a negative opinion of you if the package is late or comes damaged.

Determining and disclosing your website's ecommerce shipping costs is essential as a business owner. A clear shipping policy that explains shipment timeframes and charges can help customers who frequently have shipping-related issues by setting their expectations and reducing complaints or misunderstandings. 

You may convince your clients that they can rely on your shop to fulfill their items with care and effectiveness by developing a dependable shipping policy.

11 ways e-commerce stores can reduce shipping costs

Here are the top ways in which you, as an ecommerce store owner, can reduce your shipping costs.

1. Decrease the shipping distance

For many businesses, shipping fees can quickly grow to be a considerable expense, especially when sending goods to far-off or remote areas. Domestic shipments in the US are separated into eight shipping zones, with Zone 1 serving as the origin zone from which the first departure occurs. The shipping charges increase as the zone number rises since the shipment must travel a greater distance.

Where possible, try to avoid sending to higher zones to lower your shipping costs. If you have several warehouses or fulfillment centers, for instance, you can strategically place them in areas that are nearer to your clients, cutting down on the distance and shipping expenses for each shipment. To decrease the total number of shipments, you can also provide incentives to consumers who select slower shipping alternatives or group several items into a single transaction.

It must however be noted that having a third party logistics provider (3PL) that may have access to a cheaper shipping rate or may have some form of pre-negotiated agreements with the shipping companies may be cheaper in some instances. You may improve your shipping procedures and also may decrease your shipping costs by employing the best information and helpful tools that are given to you by a 3PL.

2. Weigh your packages and reduce the dimensions

Weighing your packages and making the most of their dimensions are two of the most efficient strategies to save your shipping costs. By making your packages lighter and smaller, you can reduce the weight and size of your packages and significantly lower the shipping costs that shipping carriers generally charge for heavier and larger packages.

Image reference:- https://www.ups.com/assets/resources/webcontent/images/shipment-size-weight-measure-package-B-1224353-Q421.jpg

To precisely weigh your packages, start by making a dependable digital scale your first purchase. This will enable you to decide on the carrier and the method of shipping that will be most economical in each of the deliveries. You may also consider using materials which could be as light as possible while at the same ensuring that they are strong enough to protect the items during the transportation.

Using the proper size box or envelope for each shipping is another approach to reducing the size of your products. Avoid utilizing excessive packaging because doing so can result in wasteful spending and lost space. Use packaging instead that tightly fits your products while still leaving space for protective elements.

You may lessen your environmental effect by using less packaging material and saving money on transportation by weighing and shrinking your products. It benefits both the environment and your company.

3. Negotiate for discounted shipping rates

Negotiating discounted rates with your carriers is one of the best strategies to save your shipping costs. Businesses that ship often or in large quantities can qualify for volume discounts or other special rates offered by shipping firms. You can reduce shipping costs significantly by haggling for a lower price, which could result in greater earnings for your company.

Image reference:-https://blog-assets.freshworks.com/freshdesk/wp-content/uploads/2018/08/Art-of-negotiation-in-customer-service.png 

To begin, get in touch with your shipping provider or carrier and enquire about any discounts or price schemes they may be offering. To help them decide whether you are eligible for savings, be ready to share with them information concerning the amount of shipments, frequency and geographical locations. Another option that is available to you is to work with the third-party logistics provider which has the ties with carriers and which can negotiate better rates on your behalf.

It's crucial to keep in mind that haggling over shipping costs takes tenacity and forbearance. Finding a solution that satisfies your needs may take some time and work, but the potential cost savings can make it worthwhile. To discover the greatest bargain for your company, don't be scared to shop and check rates from several carriers.

4. Don't stick with one, consider building multi-carrier strategies

This is where one should consider building a multi-carrier strategy in order to curb the shipping costs. It is possible to improve the efficiency of your shipping and reduce its costs by choosing more shipping services and using the best features and minimizing the drawbacks of each of them.

One carrier might, for instance, provide better costs for ground delivery, while another would provide better rates for express or international goods. You may reduce the cost of each cargo while still satisfying the delivery expectations of your clients by strategically utilizing both carriers.

When service with one carrier fails in a multi-carrier scenario, you can switch to another. This is helpful in the event that one carrier stops serving particular areas, is careless and loses a lot of parcels, raises fees, or is hampered by severe weather.

5. Switch from boxes to poly mailers

It can be much less expensive to ship orders in a mailer envelope or poly bag than it is to ship them in a box if you offer small, non-fragile items like apparel. They require less packing materials, such as tape and bubble wrap, because of their reduced size, which also frees up less space on a delivery vehicle.

6. Stay on top of shipping carriers' pricing changes

It's crucial to monitor price changes made by your shipping providers if you want to successfully lower your shipping costs. Fuel prices, demand, and carrier policy are just a few of the variables that might cause changes in carrier rates. 

Signing up for carrier newsletters or email notifications is one way to remain informed. You can stay ahead of price changes because many carriers often alter their rates and offerings. 

Also, carriers may impose surcharges during certain peak times (such as the holidays, the fourth quarter, or as we saw during the early stages of the COVID-19 outbreak) when there is a sudden increase in the volume of goods being transported. They also throw on extra fees every year, like large package surcharges and signature levies.

You can make wise judgments regarding your shipping operations and lower your overall shipping costs by keeping track of pricing changes and evaluating your shipment data.

7. Encourage your customers to place orders early

Understand that to ensure that gifts arrive on time over the holidays, and each carrier has its own set of cutoff times for each service. To avoid paying more for expedited shipment, clients who want to save money on shipping should place their orders as soon as possible.

You can reduce delivery expenses by encouraging your clients to submit their orders as soon as possible. You may more effectively arrange your shipment schedule and steer clear of rush shipping fees by giving customers a specific delivery window and rewarding early orders. 

Offering free or reduced shipping for orders placed before a specified date will encourage customers to place their orders sooner and help you avoid paying for expedited shipping. 

Encourage early ordering to avoid stockouts and delays that could result in dissatisfied consumers and higher shipping expenses. Promoting early purchasing is a straightforward but efficient strategy to lower shipping costs while enhancing customer satisfaction.

8. Choose packaging provided by the carrier

Using the packaging that is provided by your carrier can enable you to reduce the cost of shipment. Carriers often offer free packaging facilities and this solves the problem of acquiring the boxes and the packaging materials at a relatively cheaper price. By packing your product using the carrier’s packing, you stand to be protected from extra charges that might arise from large or even overweight package through strict conformity to the allowed size and weight by the carrier.

It also ensures the products are well secured and protected while in the carrier hence reducing the risks of lost or damaged goods in transit. If you decide to get the services of carrier to transport your goods, consider using their free packaging services which can help you to save a lot of money besides ensuring that your goods arrive early and intact.

9. Choose a provider with pickup and delivery services

This way therefore ensures that you are able to minimize on time and cost that may be incurred by choosing a shipping company that provides pickup and delivery services. There are occasions when a company can arrange to be picked up directly from the firm to eliminate the need to deliver packages to a carrier site, thus cutting on costs and time spent on transport.

Moreover, your customers will be able to get delivery services and this is a convenient and cheaper way to get other possible shipment, like the next day or the two days delivery solutions. This will help you to gain the trust of your customers while at the same time reducing the amount of money used in making shipments.

10. Pass on the charges to customers

For small firms, shipping costs represent a considerable expense. Unfortunately, consumers always turn down offers that involve the added cost of shipping; at other times, passing on the additional cost in the form of shipping charges can be counter-productive. The delivery fees can, however, be integrated into the product offering in the following ways;

This means that either the product price should be raised to accommodate the cost of shipping as well as freeing the shipment costs. However, this strategy proves to be effective especially for firms dealing in expensive products. The other decision is the possibility of slightly increasing the price of the product and, at the same time, offering clients a low shipping cost. For example, you may for instance include your buyers to pay half the cost of the shipment and the other half as the cost of the item.

The third type of delivery surcharge is to set a fixed fee for delivery that covers all your customers independent of the delivery cost of all your orders. For free or quick shipment, you can also set a minimum purchase threshold on your website.

You may determine whether it's reasonable to require customers to pay return shipping fees by keeping an eye on the sentiments of your customers. You can monitor your social media handles for this. Angry customers normally vent their anger here, and you can take swift action if you see that your new shipping policy is not working.  

11. Partner with a third-party logistic service provider

For small businesses, therefore, involving a third party logistics (3PL) service provider is an excellent way of reducing cost on shipping. This is because, through the warehousing, transport and fulfillment services offered by the 3PLs, businesses are able to enjoy the services of professional logistics and supply chain managers.

Small firms can reap benefits of the economies of scale through partnership with a 3PL because the 3PL can secure reduced shipping rates because of its large shipment volumes. Thus, 3PLs can also help firms in reducing their shipping costs as they can help them in optimizing their deliveries and grouping them in a single shipment.

This way small businesses can save their time and money that can be invested in other activities and focus on their core competencies and business growth.

It is therefore imperative that small firms exercise caution when selecting a 3PL service. They have to look for a supplier who will be able to meet their specific needs to shipping and fulfillment and has good track record of reliability and customer service.

Wrap up

Though shipping costs may have a negative impact on a company’s profit margin, there are numerous measures which can be taken to reduce these costs. Therefore, small businesses can control their shipping costs and improve the company’s profit by, for instance, negotiating cheaper rates and using multiple carriers. As we have discussed in this blog, there are ways on how companies can retain their clients while minimizing their expenses.

Remember that in ecommerce every dollar matters, so don’t be afraid to experiment with the shipping options and make changes to minimize the costs.