More companies are reducing shipping costs to maintain a competitive edge and increase profit margins. On average, small to medium-sized businesses overspend on their shipping by about 13% every year. While the amount a company can save on shipping costs varies based on the business’s size, many factors affect shipping costs.
It may seem quicker to boost gross income by changing a business model or product price, but factoring in new shipping costs can be pretty straightforward. The style of packaging, carrier and quantities shipped are a few factors that can help you find that perfect balance to save on shipping costs.
Consider Weight and Dimensions
Businesses looking for ways to reduce shipping costs should first understand the average size and weight of the packages they ship. Carriers estimate shipping costs by looking at the size and weight of the box. Often smaller products arrive at their destination in packaging that is quite big because this offers the best protection. Start by measuring products and calculating their weight. The product proportions determine the correct dimensions for the box they will ship.
Choosing suitable packaging material is crucial in reducing weight and dimensions. Reducing the size and weight of packages as much as possible can significantly reduce shipping costs for businesses. Here are two common options that can lower shipping costs based on measurements and reduce packages’ weight:
- Lightweight interior packaging: Choose a lightweight, protective solution that meets all the requirements for product protection, using the necessary weight and dimensions.
- Use corrugated boxes: These are lighter than regular cardboard boxes and strong enough to protect contents. It is best to match the box size to the shipping product.
Compare Carriers
Getting the best value for money in shipping requires some negotiation skills. Two essential pieces of information that carriers will consider when putting together a cost estimate are the weight and dimensions alongside the origin and destination of the packages.
Shipping carriers also adjust their pricing based on the volume of packages you need to ship out. You can often negotiate a lower price per package when shipping higher volumes. A few points that can help one carrier stand out from another include:
- Online payment discount: Some carriers offer discounts when you pay for shipping online instead of at a physical store.
- Insurance: Note how much the courier charges for insurance. Sometimes third-party insurance can be more cost-effective than insurance directly from the carrier.
- Flat-rate costs: Most carriers offer flat rates on packages that meet certain weight and size requirements.
- A pickup service: Well-established carriers offer a pickup service, eliminating the need to take all orders ready for shipping directly to the carrier.
Choose Prepaid Shipping
If your packages generally weigh the same, buying prepaid shipping can offer a discount of up to 20%. This option involves purchasing bulk labels before you ship packages. Businesses can still use the packaging they trust and often issue return labels with prepaid shipping.
Another option is to use flat-rate shipping to change more variable costs into predictable fixed costs. This alternative streamlines cost estimating since it’s easier to calculate costs ahead of time and eliminates surcharges. Flat-rate shipping with a carrier also simplifies the online order process by offering flat-rate shipping to customers. Ensuring no overcharging or undercharging customers with standard shipping rates is essential.
Buy Bulk Supplies
Keep an eye out for discounts on bulk supplies. Purchasing materials like shipping labels and stickers, shipping forms and boxes in bulk can offer additional savings. Bulk purchasing drives down unit prices, which helps cut costs. It’s easy to buy in bulk when your packages are consistently the same shape or size.
Packing materials tailored to products are another supply that can reduce shipping costs when buying in bulk. Additional cost savings in purchasing frustration-free packing materials in bulk include increased packing efficiency because order packing speed is less when products already fit into protective packaging.
Use At-Home Shipping
Printing labels at home can save on costs. Home printing also provides more flexibility, as labels are on-hand as orders come in. Small businesses that run an e-commerce store can also check for offers on bulk shipping services or solutions. Website plugins and other platforms often have features that share real-time carrier rates or integrate with fulfillment software.
Local delivery is another option to offer that supports the cost-saving efforts of home shipping. The business can offer this delivery service directly by basing the delivery area on postal codes close to its location and offering customers reduced rates or next-day delivery.
Calculate Shipping Costs Beforehand
The overall cost of shipping comes down to more than picking the suitable carrier. Additional expenses like fuel surcharges, signature fees & even weekend delivery fees are standard variables. Calculating these fees makes determining pricing easier, ensuring the business does not absorb the costs. Consider all factors before deciding on final pricing:
- Packaging: Packaging includes any protective inserts, tape, labels and stickers
- Labor: This is what you pay employees for processing and packing every order
- Courier costs: The shipping cost may include insurance and varies depending on the delivery turnaround time
- International costs: International costs are the import and export fees for packages shipping outside the United States
- Third-party insurance: This cost is only relevant if another provider offers better value for money on package insurance
- Unexpected costs: Additional costs may include unforeseen taxes, sudden shipping delays and any other factors not covered by insurance. Set aside a budget to help offset losses in case extra costs pop up.
