In conversations with small business owners running online stores, we often hear shipping is one of their biggest frustrations and most challenging expenses. It can be a complicated expense from choosing the best box size to determining the right shipping carrier.
Here are a few tips you can use in your small business to reduce your shipping expenses while also regaining your sanity.
#1 – Integrate real-time shipping rates
By integrating real-time shipping rates into your shopping cart’s check-out process, you are offering your customers the best shipping rate available. If you take your packages to the USPS, FedEx Office, or the UPS Store, you may be paying the full retail price or upsold on additional shipping services. Many popular shopping carts such as WooCommerce and Shopify offer real-time shipping rates from multiple carriers.
There is a downside. By offering shipping through multiple carriers, you are not building a longterm relationship and shipping volume with a specific shipping carrier. Many carriers provide discounted shipping rates for businesses shipping large volumes.
Once your business reaches a sizeable shipment volume, consider reducing your shipping options to the carriers you ship with most. You will have enough shipping data to make an informed decision and negotiate a better rate among carriers. Not only will this help reduce your shipping costs by way of discounts, but it also helps to streamline your shipping process by minimizing the numbers of carriers handling your shipments.
#2 – Dimensional vs. weight-based shipping
Small businesses just getting started with their online store tend to base their shipping rates on actual weight. This assumption could be a costly mistake! You need to know how your shipping carrier charges for your shipments — dimensional or weight-based.
Dimensional shipping is based on your package’s actual size (length, width, and height), while weight-based shipping is based on, you guessed it, the actual weight. Some carriers use a combination of both.
For shipping carriers who base their rates on dimensions, you will want to try various box sizes and configurations. Try to get the contents into the smallest box possible while ensuring a minimal but adequate protective cushioning. For this type of shipping rate, you’re paying for air with any of the unused space.
For weight-based carriers, consider breaking large orders into smaller shipments. Some shipping carriers round up to the next weight threshold. For example, a box weighing 31 pounds may round up to 50 pounds. Also, take into consideration the weight of your box and packing materials. Try lowering your shipping boxes’ grade and using eco-friendly air bubbles instead of packing paper to reduce the weight.
These may seem like small things right now but will add up as your shipping volume increases.
#3 – Manage your shipping supplies
Don’t overlook your actual shipping supplies when exploring ways to reduce shipping expenses.
Shipping boxes, bubble mailers, tape, labels, polybags, and packing material are necessary expenses that can quickly add up. Shop around for a better deal, consider delivery charges, and take advantage of bulk discounts.
When we first started our e-commerce business several years ago, we purchased all of our shipping supplies from a single vendor. We thought it was a smart business move. We were wrong. This big brand vendor had the supplies we needed, but their delivery charges were ridiculous for us as a small business. After shopping around a bit, we identified several other vendors with lower prices and more affordable delivery rates. We saved quite a bit of money by shopping around and purchasing our most-needed supplies in bulk quantities from multiple vendors.
You also never want to rely solely on one vendor. Eventually, your vendor will run out of stock, experience shipping delays, or go out of business. You don’t want to be left scrambling to find a new one, especially if you’re in the fourth quarter!
Some of the small businesses we have worked with are surprised to learn carriers often offer free or discounted shipping supplies. Here are links to a few of those carriers:
#4 – Avoid residential delivery surcharges
Some shipping carriers have a surcharge for delivery to a residential address. The USPS does not charge for delivery to a residence where shipping carriers such as FedEx and UPS do.
However, you can eliminate this surcharge by using a service such as FedEx SmartPost or UPS SurePost. When using these services, your shipments ship from your location to a delivery zone where they are then picked up by the USPS to complete the “last mile” of the delivery. In this case, the “last mile” is from a USPS facility to your customer.
#5 – Ask suppliers to ship on your shipping account
This tip is incredibly helpful if you are trying to grow your shipping volume. Any shipment, inbound or outbound, counts toward your total shipping volume. It is worth asking your suppliers if your inventory orders may ship on your shipping carrier account. Some of your suppliers may be padding their shipping rates. When suppliers ship on your account, you cut out this padding, and you get credit toward shipping volume.
These are just a few ways to lower your shipping expenses. As shipping costs continue to rise, and customers expect quick delivery times, small businesses need to take creative approaches to manage their shipping expenses and develop a shipping structure to meet customers’ expectations.
If you are struggling to find ways of reducing your shipping expenses or need guidance in developing a shipping structure for your online store, please don’t hesitate to contact us. We love helping business pioneers create and implement digital strategies to grow and achieve digital success within their online business.
What tips do you have for small businesses looking to reduce their shipping expenses? Leave your suggestions in the comments section.