Small business owners always face an uphill battle when it comes to growing their companies. Cutting costs without reducing the quality of products or services can be incredibly challenging, but it’s a necessity as small retailers graduate to larger audiences. Packing and shipping costs are some of the most substantial expenses for both online and brick-and-mortar retailers, so this article will focus specifically on how to cut back on them.
1. Understand Shipping Options
Shipping carriers usually offer multiple options to meet different clients’ needs and budgets. For retailers ordering large amounts of inventory from the same suppliers, relying on full-truckload or FTL trucking services is the best option, but there’s little sense in shipping only a few small items in an otherwise empty truck. The costs would be astronomical.
Because not all shipments require a full truck, many carriers also offer less than truckload or LTL shipping. That’s a better option for any merchant who prioritizes cost-effectiveness. However, it may take a little longer for the orders to reach their destinations, whether they’re being shipped to warehouses, fulfillment centers, or stores.
2. Factor in Shipping Fees
Whether retailers plan to ship packages directly to customers or need to account for the overhead of ordering large lots of inventory to their own stores, it’s always a good idea to factor in shipping fees to the cost of products. Keep in mind that most shipping companies charge a lot of extra fees, from fuel surcharges to increased costs for weekend deliveries. Failing to account for those costs will leave retailers to absorb them instead of passing them on to customers.
Online business owners also have the option of posting shipping costs separately. Customers may appreciate the transparency indicated by telling them how much they’re paying for the product itself versus the cost of shipping it to their doorsteps.
3. Shorten Shipping Distances
ECommerce store owners often keep their products in multiple warehouses throughout their service areas. This helps to cut back on shipping fees in two ways. First, the cost of shipping the goods from the original manufacturer to the warehouse is often lower since companies can store large amounts of inventory themselves. Second, it costs less to ship items to customers from nearby warehouses than it does to pay cross-country shipping fees for each small item separately.
Of course, not all eCommerce business owners can afford to maintain their own warehouses scattered throughout the country. Smaller businesses usually rely on third-party fulfillment centers. Finding a partner company that offers a full variety of services, from warehousing products to shipping them in its own fleet vehicles is a great way to save money on shipping, as well.
4. Consider Third-Party Insurers
Retailers shipping high-value products should always take out shipping insurance policies. That said, they don’t have to do it through the shipping carrier. Choosing a third-party insurance company can cut a policy’s cost substantially, sometimes by as much as 50%. Keep in mind, however, that the savings associated with third-party insurance providers apply primarily to high-value items.
5. Work With Regional or Lesser-Known Shipping Companies
It’s very common for merchants to assume that the best way to get products where they need to go is to work with a shipping industry giant like FedEx or UPS. In fact, it’s often more cost-effective to work with regional carriers or freight shipping companies that are still developing reputations for themselves.
While working with regional carriers can save money, it’s important not to spread resources too thin. Using a different carrier for every region can wind up reducing a merchant’s bargaining power. It’s usually best to find a company that covers most, if not all, of a retailer’s region.
6. Look Into Hybrid Shipping
Hybrid shipping is a model that involves using multiple carriers to get packages where they need to go. One company picks up the order, then transports it to another carrier. Once the package reaches the carrier’s regional sorting facility, it can then be shipped using last-mile delivery services to the store or the customer’s home. Hybrid shipping models can cut back on costs by as much as 50%. However, that reduced price tag has its trade-off. Hybrid shipping takes much longer and is subject to specific weight, volume, and dimensional requirements that vary by provider.
7. Change Up Packaging
Some items really need to be shipped in heavy-duty cardboard boxes with plenty of padding. Fragile electronics, glass products, dinnerware, and musical instruments are just a few examples. However, non-fragile items don’t need as much protection. Companies that are currently shipping non-fragile items like clothing in cardboard boxes should rethink their packaging strategies. Poly mailers are a much more affordable solution.
They are more cost-effective to buy in bulk, take up less space on trucks, and require fewer supplies to get them ready for shipping. Similarly, considering measures you can take to improve your efficiency and improve safety and space utilization can effectively bring your costs down. Working with a packaging supplier to receive and utilize strapping for large boxes can allow you to fit more products into a confined shipping unit or prevent damage from boxes tumbling around during transit, reducing the volume of goods deliverable to customers and increasing your costs.
8. Ask About Shipping Discounts
Just about every shipping company offers volume-based shipping discounts, and retailers are often surprised to find that qualifying for those lower prices doesn’t require shipping hundreds of orders every month. Unless merchants plan to ship only a few items using a regional carrier, it’s worth asking about bulk discounts.
There’s no harm in trying to negotiate. Just keep in mind that the rates are often set to the number of packages sent at once and/or per month. It’s also relevant to note that some discounted shipping methods extend delivery times, which may not be acceptable to some business owners.
Start Investigating Options
Whether they sell goods online or from brick-and-mortar stores, retailers don’t need to resign themselves to high shipping costs cutting into their bottom lines. There are plenty of ways to reduce the cost of shipping goods without risking damage, extending delivery times to unacceptable lengths, or settling for less than the best when it comes to customer service. Take the time to investigate available options instead of just assuming that working with the largest shipping companies will be the best use of resources.
