10 Tips for Reducing Your Shipping Costs

Apr 27, 2018

Did you know that 48% of online shoppers have bought or spent more than planned when shopping online? Yes, customers love shopping online, but they love free shipping even more. 24% shoppers are ready to spend more to qualify for free shipping, and 63% of suburban shoppers share that shipping costs are their least favorite part of online shopping.

Few dollars of shipping costs for one order seems small, but if you multiply it by 100, or 1000 orders, you will see that shipping can be one of the most complicated (and costly) activities for any business indeed. Since your profit is linked to how much – or how little – you spend on courier services, you will need to reduce the shipping costs as much as possible. Here are the top 10 tips!

Negotiate shipping rates with multiple logistic companies

negotiate

The one and only rule for all shipping companies’ pricing: The more you ship, the lower your rate. But all too often, small businesses don’t realize they also may have negotiating power. If you ship large numbers of packages, compare prices and try to persuade logistic companies to offer a discount.

It’s also a great idea to name the carrier that has proposed a lower rate. If one shipping company knows you’re looking at a competitor, they are likely to provide incredible incentives to get your business. Carriers know that once you start using a specific logistic company, the inconvenience and cost to switch will keep you a customer for a long time.

Consider regional shipping companies

canada map

You do have other choices than UPS, DHL, and FedEx. Regional carriers often provide the same courier services at a reduced cost because they cover a small geographic area.

Cut down packaging costs

 

packaging_supplies

Packaging is the biggest factor you can change. Try to:

– Reduce the size of your package. Don’t use a large box if a smaller box or bubble mailer will do. Pack it tighter!

– Use your shipping materials wisely. Every box, every roll of bubble wrap and every roll of tape costs money. You can also: Ask your shipping company if they provide them free, Buy them in bulk, Find a smaller supplier that will bend over backward to get your business, and Reuse and recycle.

Consolidate orders when possible

packaging

Consolidating multiple orders into a single shipment and minimize the number of packages it sends provides benefits such as:

  •  Lower shipping supply expenses
    •    Greater fuel efficiency
    •    Less time needed to receive, handle and restock orders

A little planning and visibility go a long way!

Use 3rd party insurance

insurance

Shipping companies charge more for shipping insurance than third-party companies, which is about $0.90 for every $100 of insurance. On the other hand, third-party companies charge about $0.55 cents for every $100. This savings can add up, especially if you ship expensive items.

Pick the right shipping option

shippingoptions

Think about your real needs. Then take into consideration the weight and characteristics of the shipment, the destination, pricing and fees, and loss or damage concerns. Choosing the right service will help your business maximize shipping costs and customer satisfaction.

Consider shipping to PUPs (Pick Up Points)

local-store

If you’re shipping to a number of customers in a single area, why don’t offer a discount for those who are willing to pick up from a, for example, local store? You just reduced both your shipping and your packaging costs.

Change your shipping policy

shipping policy

We all know that customers love free shipping, but if you can’t afford it, here are some shipping strategies to help you put the costs on them:

– Free shipping with conditions, such as for orders over a certain order amount or a minimum number of items purchased.

– Flat rate shipping – shipping remains the same no matter how big the customer’s order.

– Adjust the pricing of your products. Let’s be honest, if the shipping costs are too high, even you will think again about your order. Increase your products’ price to reduce the shipping costs will give customers the impression that they’re still getting a great deal.

Maximize shipping and inventory space

warehouse

One of the biggest money wasters in logistics is partially filled trucks or warehouses. Try to order larger shipments at once to fill trucks and hold inventory on hand to reduce the need for expedited shipments due to a shortage of stock.

Put the latest technology to work

 

technology

Ever heard of supply chain management software? Services that help you to track inbound and outbound shipments? Blockchain technology? There are new applications being developed specifically to help companies simplify supply chains and reduce shipping costs.

Credit images: LamplighterLight Bulbs and Laughter.