One of the main issues facing eCommerce businesses is the cost of shipping. How can small companies and startups compete with the likes of Amazon?
Every year, shipping rates continue to increase, yet consumers demand low to no shipping costs, but more prominent brands get shipping discounts. So how can you compete?
This guide gives you tips on how to cut small business shipping costs while still providing the customer experience and fast delivery time expected in today’s busy world.
Tips to How to Cut Small Business Shipping Costs
For businesses that want to optimize their shipping rates, it’s essential to understand the following:
- What are your current shipping costs per product
- Know the basics of shipping and delivery experience for customers
- create cost-effective shipping strategies that benefit you and your customers
- Be transparent about your shipping costs and delivery times
There are many variables to consider with shipping, including the hidden costs. If you’re handling fulfillment entirely in-house, then here are some ways to help reduce the cost of shipping.
1. Set Up Shipping Zones
It’s no secret that shipping fees increase when shipping to destinations that are far away from your home base. With shipping zones, you can create geographical areas that carriers quickly ship to within the United States. Zones are made based on the distance a shipment would have to travel from a particular location, labeled Zone 1 through Zone 8.
If a zone is a higher cost, it’s likely because the distance is far away and will cost you and slow down your delivery. That’s why it’s crucial to identify where shipping to higher zones will cost you more, then develop a plan to partner with companies with multiple fulfillment centers to cut shipping costs to these higher zones.
2. Discounted Supplies
Many shipping companies like UPS, FedEx, and USPS offer boxes and envelopes for free to small businesses or at a discounted rate depending on the packaging supplies. In addition, you should be purchasing all packing supplies like bubble wrap or air-fill in bulk to cut down on costs.
Having your packing supplies helps you reduce your average per-shipment cost over a more extended period, but investing in bulk, discounted supplies does have an upfront cost.
3. Negotiate Lower Shipping Rates
If you do enough business, most shipping companies have pricing discounts available based on your volume. You don’t have to ship millions of items per year either. Many discounts are available depending on your volume, so there’s a reason not to try and negotiate volume discounts in exchange for loyalty to a shipping provider.
4. Weigh Packages and Choose the Right Dimensions
Are you shipping packages that are difficult to transport? Unless you have to ship items in oddly shaped, large packages that weigh a ton, you should avoid irregular shipping packages. You should invest in a postage scale to plan for costs and purchase shipping labels according to weight and dimensions.
If you’re using unnecessarily big boxes for the items you ship, you’ll also pay more because of the additional space that the package takes up in transport. Larger containers also create more significant dimensional weight.
5. Try Prepaid Shipping Labels
If you know that you’re shipping a certain number of items with the same weight and dimensions, you can also pre-purchase shipping labels upfront and get around a 20% discount on shipping costs from FedEx and UPS.
You can use the labels anytime, so as soon as your order is ready to ship, you already have a label ready to go. However, this only works if you mainly ship orders containing the same dimensions and weight or if you know this information ahead of time for many orders.
6. Understand Psychology of Online Shopping
Everyone knows that adding “Free Shipping” can increase your sales, but there is actual psychology that people will pay more for items with free shipping than for a lower-cost item with $8.99 in shipping.
So when customers see value with free shipping, shipping costs have likely been factored into the overall price instead. This means that you can adjust the product price to include shipping cost and offer free shipping, but this only works on higher cost or novelty items.
You can also offer a flat rate shipping fee to all customers that blend an average of shipping costs according to your average order value. You can increase the average order price slightly and lower your flat rate this way.
In other cases, stores require a minimum amount to be spent before unlocking free shipping. This works out multiple ways for your business as you’ll increase the average order value and deliver value with fast, free shipping.
7. Change Shipping Carriers
If you're not getting any discounts or offers from your current shipping carrier, consider switching to a carrier that offers more areas to ship to and discounts. There are many shipping calculators from major shipping providers, such as UPS, USPS, FedEx, and DHL, that you can use to see how much your shipping costs would change.
8. Use the Right Packaging
New companies make a few packing mistakes when shipping products that just inherently increase your shipping costs. For example, you may add to package weight using a particular type of paper filling. You may also use boxes when a poly mailer is just as efficient.
If you are struggling with shipping costs, you may want to cut down on custom branded boxes, branded inserts, shredded paper filler, and other custom filling items that increase your total shipping weight.
How Will You Grow Your Business This Year?
There are many ways to increase your business growth, whether through analyzing your shipping costs more closely, improving your inventory management, or securing financing.
For small businesses looking to increase sales, hiring an e-marketing consulting company can help you implement the strategies and tactics to grow your business in today’s ever-changing digital world.