No matter the business, one of the most consistent desires in the retail industry is to reduce shipping costs. Consumers nearly faint when they discover their $30 purchase comes with an unpleasant $15 shipping fee. Sellers are often perplexed when determining how to keep shipping costs low and profits high.
Yes, shipping costs are the Achilles’ heel of ecommerce— but how do you keep them from chipping away from your profits?
You could try increasing your order fulfillment costs, but then you risk losing sales. A 2009 University of Florida study indicates that 60% of consumers abandon an order when they see the cost of shipping.
So, you can’t increase charges on your customers— what do you do?
Here are six tips to reduce shipping costs, and keep your overhead low.
1. Master The Art of Negotiation:
If you’re shipping large quantities of product, you have most likely established an account with a major carrier like, FedEx or UPS.
• Get in contact with a representative from your carrier, and negotiate your shipping rates.
• Citing your expanding volume of orders is a great opening move.
Just remember, these companies don’t want to lose your business to their competitors, so all you have to do is ask.
2. Hybrid Isn’t Just For Cars:
Sometimes you need to mix and match to reduce shipping costs. Both UPS and FedEx provide delivery systems which leverage USPS for final delivery. According to Practical Commerce, by utilizing hybrid delivery systems, you could be saving up to 50% on a single order.
Alternatively, by employing regional carriers you can cut out large carriers all together if most of your orders are localized within a specific region.
3. Measure Twice, Cut Once:
Shipping costs are already causing decreases in total profit, the last thing your business needs is to re-deliver the same product because your shipping and handling process was ineffective.
Discovering inefficiencies and discrepancies in your process is a detail oriented task, one which requires data—and lots of it.
• Use the reports provided to you by your carrier to their fullest extent. The better information you have, the better choices you can make in the future.
• Also consider incorporating third party analytics into your systems to learn about all aspects of your product handling process.
4. Learn How To Pack Your Briefcase:
Ineffective packaging methods are perhaps the most obvious, yet often overlooked causes of higher than expected shipping costs.
• Start out with choosing the smallest packaging form factor you possibly can— doing so will save you from paying oversized packaging fees.
• Invest in a scale, so there aren’t any surprises. Focus on the small missteps, and start to inch away from your total shipping costs.
5. Being In the Right Place Helps:
If you belong to any trade organizations— you might qualify for discounts. Also, dependent on your industry—carriers may offer some lenience in rates. Give your carrier a call, and see if your business is approved for any discounts.
6. If the Pizza’s An Hour Late, It’s Free:
If your carrier provides an on-time delivery money back guarantee, try to dedicate some resources to ensure that each delivery not properly fulfilled is filled for. Holding a carrier to their word is one of the best ways to reduce shipping costs. According to an Entrepreneur article a small business could recover about $4,000 to $6,000 in fulfillment costs.