7 Ways to Reduce Shipping Costs
Saving a little extra money can go a long way, but when you are in the depths of product and company development, how do you shave off some extra cash without disrupting the workflow?
INTRODUCTION
When you are looking for ways to cut down costs, what usually comes to mind? If shipping isn’t on your list, you are missing out. No matter how big or how small of a company you are, if you sell products online, you ship products offline. It’s one of those things that’s pretty non-negotiable unless what you are selling can be sent digitally. Shipping is more than just the box you put products in (but it’s part of it). Below you will find eight ways to reduce shipping costs so you can save money and put that extra cash into other areas of your business.
We can see the allure of choosing one carrier and sticking to them. It makes it easier and takes one thing off your to-do list. But does it really help you in the long run? When you don’t lock yourself into one carrier, you are giving yourself the opportunity to shop around and use the best carrier for each individual package. This may take a little bit of extra time, and it depends on how large your business is, but each carrier has different prices, and it’s wise if you are looking to save money to be conscious of these price changes. Take, for instance, USPS doesn’t charge residential fees, but FedEx and UPS do. What is a residential fee? It’s simply, literally, a fee that is tacked on for just shipping to a residential address.
2. Improve Your Packaging
Far too often people don’t put enough importance on the actual packaging of a product and how that could possibly increase (or decrease!) overall money spent. When it comes to saving money, make sure your packages are the right size. If you have ever personally shipped a package, you know that they will usually measure your package before anything else. That paired with how heavy the packaging is, and your rates can skyrocket. But when you are shipping hundreds of packages, the way packages are shipped aren’t always as exact in regards to size and weight. Speaking of weight, carriers used to charge based on the actual package weight but soon realized that they were losing money on larger, lighter-weight packages that in turn took up way too much space on trucks. So, instead, many have started using dim weight, which is the theoretical weight of a package. Since 2015, FedEx and UPS have started charging based on whichever is greater, the dim weight or the actual weight. You can end up being charged more for something that feels out of your control. To help combat this, start right-sizing your packages and providing the exact dimensions of each box to the carrier.
Another way to improve your packaging is to change your packaging type. Remember that a box that weighs two pounds and four ounces will be charged as if it weighed three pounds. A simple way to fix this is by decreasing the weight of the box by just four ounces. You can do that by switching to a different packaging type, such as a poly bag or a bubble mailer. It’s easy to forget that not everything you ship has to be in a box: it can be in anything that works for your product and keeps it safe on its journey to your customer.
3. Rethink “free shipping” (And the shipping choices you give to your customers)
Your customer has everything they want in their basket, their credit card information is in, and now they are ready to choose what kind of shipping they want. This is honestly one of the most important things to take into consideration when you think about the online shopping experience.
One of the best things a site can do is offer free shipping, but that comes at a price for you, the company. That’s when you have to start thinking about the type of shipping options you offer (overnight, two days, basic, you get it), and the monetary amount you want to attach to said shipping method. Free shipping costs money, and that’s why you see a lot of companies doing things such as, “Spend $75 and get free shipping” because, at that point, it works for the company more than against. If you can’t afford to offer any type of free shipping, there are other ways to make your shipping methods and their cost customer-friendly. Think about offering flat-rate shipping once the customer reaches a certain amount of money. That way, it looks good to the customer, and you still get paid for shipping, as well as earning more sales because the customer wants that flat rate shipping. Another way is to adjust the product pricing to reduce what may look like high shipping costs. This method is a little tricky but could be very successful if done correctly. What you would do is price your products higher so you can “lower” your shipping rate. Instead of charging $10 for an item, and then $8 for shipping ($18 total), you would switch it up a bit and charge $14 for the product and $4 for shipping (still $18!).
4. Buy discounted shipping supplies
If you are a smaller company and do a lot of shipping yourself, think about buying discounted or bulk shipping supplies. But wait! Isn’t buying packaging in bulk bad because not every product fits in the same kind of box? Exactly, that’s why you have to be smart! We’re talking about the stuff that goes into your packagings like packing peanuts or bubble wrap. And if you do want to buy boxes or mailers in bulk, make sure that they work with a variety of your products! It’s just common sense that buying in bulk makes sense, but only if it makes sense for you. Buying in bulk won’t help you if you end up stockpiling away boxes and mailers you will never use.
5. Consolidate
If you can, make sure to pack as much as you can together without risking breakage. The fewer the packages you ship, the better.
6. Be strategic about the location of your fulfillment center
It’s things like this that really make a difference, especially if you are a medium-sized company that relies on a fulfillment center. You may think having a fulfillment center fas close to your business is the best. There’s something to be said for being able to be somewhere in-person instead of relying on other people to report to you. However, if most of your customer base doesn’t reside close to your business location, it can cost more to ship. This is why you should consider finding a fulfillment center that is central to the places you ship. Having a centrally located center also allows you to get your products to your customers faster because you aren’t shipping from one end of the country to the other.
7. Make sure to ship to the right address
Undeliverable packages means you have to pay for the return postage and then pay for shipping again when you ship it to the right address. Sending to the wrong address causes more issues than just that, it can make customer service a headache. To help lessen the amount of packages delivered to the wrong address, try out some delivery point validation software before you ship. By doing this, you will be running the addresses through a system, and it will be able to pinpoint which addresses look fishy.
CONCLUSION
When it comes to cutting costs, make sure to think about shipping and all the costs associated with it. There are plenty of ways to make it a little bit cheaper so you can continue to grow your business in other ways.