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01 September 2021 • Resources

How to reduce shipping costs and boost profits for your business: 13 strategies

How to reduce shipping costs and boost profits for your business: 13 strategies

Getting a firm grip on your ecommerce business’s overhead is essential for optimizing profits. For online stores, shipping costs are unavoidable. Furthermore, they can dramatically and unnecessarily erode your profit margin if they aren’t kept in check.

Today’s online shoppers often look for businesses that offer free shipping, which means that they expect the stores to cover those costs. Free shipping policies are so commonplace that you may lose potential customers if you don’t follow suit.

While shipping expenses are essential business costs, you may be paying far more for packaging materials, shipping fees, and more than what’s necessary.

High costs in this area can have an impact on your business’s ability to grow, such as being able to use your resources to expand your product line or manage your ecommerce marketing checklist successfully. 

For this reason, you must find ways to reduce shipping costs. There are several strategies that you can adopt to mitigate these costs effectively and immediately.

1. Build shipping costs into the price of your products

Online shoppers view free shipping as an incentive, and the psychological impact of this incentive is strong. Maintaining competitive prices is an important aspect of running an online business and achieving ecommerce success

However, some customers may be willing to pay a bit more for the perceived benefit of free shipping. You may also notice that your conversion rate increases slightly when you adopt a free shipping policy.

When you compare competitors’ prices, look at their shipping policies as well. Consider the benefit of increasing your products’ prices to account for shipping costs. 

Be sure to factor in all relevant shipping costs, including those for packaging. Then, offer free shipping to your customers as an incentive.

You may assume that incorporating shipping costs into your product pricing would price you out of the market. 

However, you can likely shave shipping costs down substantially when you employ the other strategies listed below. By doing so, you can maintain competitive prices and give your customers free shipping.

2. Avoid shipping to far-away destinations

For many small and medium-sized ecommerce businesses, international shipping fees might erode the cost effectiveness of doing business outside of the country. Even shipping to some domestic destinations or regions can be more expensive and prohibitive than others. 

You could avoid shipping to these destinations altogether to maintain competitive rates, but there is another option.

Third-party logistics companies can assist with getting your goods to fulfillment centers located strategically in various regions. The shipping costs from those centers to your customers will likely be more affordable. 

If you can tap into a large international market and expand your customer base as a result, utilizing an international fulfillment center may make sense.

3. Weigh products before listing them online

Do you know the exact shipping cost for each of your products? You can’t accurately know the shipping cost of your goods without knowing the total weight of the packaged item. 

After you weigh a product in its ready-to-ship state, you can research the actual cost to ship it to each region via leading carriers. This important step enables you to adjust your prices online to fully cover all shipping costs in your product pricing.

4. Use packaging provided by your chosen carrier

The cost of a single box or envelope may seem fairly negligible, but these expenses can mount quickly as your volume increases. Did you know that UPS, FedEx, and other carriers offer free shipping boxes and envelopes to their customers? 

You can request a delivery of bulk packaging materials online, or you can pick them up at your local shipping center. Before you decide which carrier to order shipping materials from, however, research their fees carefully. 

Keep in mind that rates are based on volume, region, shipping distance, and many other factors. Businesses with more uniformity in some of these areas will be able to identify opportunities for savings with specific carriers more easily.

5. Use lighter packing materials

Shipping fees are also determined by the dimensions of the packaging and the weight of the package. With this in mind, it makes sense to look for more affordable packing materials that are lighter and smaller.

Note that the type of packing materials extends to any protective filler inside the box or envelope. It also includes the product packaging itself.

While saving money on shipping is important, you should always prioritize the condition that the goods will be in when the customer opens the package. Using a mailer envelope rather than a box makes sense only if your product will be properly protected while it’s in transit.

6. Try online shipping

If your business ships packages through the U.S. Postal Service, consider signing up for online shipping to save money. With this service, you pay for priority mail and express mail online and print your own labels. 

By doing so, you can save a small fortune on rates for these shipping services. The U.S. Postal Service also offers free supplies through your local post office for additional savings.

As a perk, you can even schedule pickup service for all of your express and priority mail packages. This results in time and energy savings.

7. Buy shipping supplies in bulk

Using free packaging and shipping supplies from your carrier is always preferred, but these supplies don’t fit all needs. Shop around to find the best rate available on bulk supplies. This step can save you a tremendous amount of money on everything from bubble wrap to box tape, boxes, and more.

Remember that you don’t need to use the same type of packaging for all products. For example, it may be more affordable to use free FedEx boxes with FedEx shipping for some goods and large shipping boxes purchased in bulk for others.

8. Get discounted shipping rates

Many associations that your business may be affiliated with or could be affiliated with might offer discounted rates with various carriers. Start by researching the perks and benefits of associations of which you’re a current member. 

Then, extend your search to examine the benefits of organizations that you have been thinking about joining.

You can also edge into this from the other direction by asking your preferred carriers which organizations or associations they offer discounts through. This may save you time as you look for opportunities to reduce shipping costs.

9. Opt for prepaid shipping

Through carriers like UPS and FedEx, you can prepay for shipping and save a bundle of money in the process. Depending on the prepaid program that you use and your specific shipping needs, you could save as much as 20% on your related costs using this strategy. 

You will, however, need to buy and pay for shipping labels in bulk. Because you’re prepaying for shipping labels for packages with a specific weight, this is a smart strategy if most of your packages weigh the same.

10. Use poly mailers instead of boxes

If you’re shipping clothing or various other types of smaller, non-fragile items, consider using poly mailers. These are plastic packages that are durable, lightweight, and waterproof. 

Because of their lighter weight, the shipping cost may be much lower. In addition, the actual cost of a poly mailer compared to a box is lower on a per-unit basis.

11. Negotiate costs with transport companies

As your ecommerce business grows and your shipping needs increase, it’ll soon be time to compare pricing schedules for different providers. The high-volume rate printed on schedules may not be carved in stone. 

If your business is sending many packages through a specific carrier, reach out to a few other providers to discuss negotiating a more attractive rate. You may be pleasantly surprised to see how much money this step can save you each month!

12. Buy third-party insurance

Buying shipping insurance is not cost effective for all ecommerce businesses. If you’re shipping a few pairs of fuzzy socks in a poly mailer, shipping insurance may cost more than it’s worth to your business. 

On the other hand, this insurance is essential if you’re shipping expensive products, such as jewelry or electronics.

All major carriers offer shipping insurance, but their rates aren’t usually the most affordable option. Shop around to compare rates for third-party shipping insurance. In some cases, you can save 40% or more on this expense.

13. Look into regional carriers

While FedEx, UPS, and other major carriers ship to domestic and international locations far and wide, some regional carriers may offer more affordable rates for local or regional shipments. 

Committing to a single carrier for all of your shipping needs is generally not the most affordable solution for most ecommerce businesses.

However, your ability to negotiate a discounted rate based on volume may be minimized if you divide your shipments among different carriers. A thorough review of all options is essential.

Final thoughts

You can see that there are numerous ways for an ecommerce business to save money on shipping. There are so many areas of shipping on which you could be overpaying. For this reason, research all aspects of your current shipping expenses carefully to identify ways to save money.

Keep in mind that carriers’ rates, the cost of shipping supplies, and many other related factors will fluctuate. Successful ecommerce businesses always keep a sharp eye trained on their shipping costs and are constantly looking for new ways to save money.

Let us know in the comments below how you’re keeping shipping costs low for your own online store!

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