Shipping is a necessity in growing your business. With the growing population of remote lifestyles brought by advanced technology and other factors, people demand more and more from shipping services. But shipping doesn’t come cheap; businesses must find the balance between customer satisfaction and company profitability.
Giving your customers the best shipping experience and saving company costs at the same time is possible. What you need is the right approach: understand the factors that raise the bar of shipping rates and build effective strategies based on them. It is not easy at first, but you need to get started aboard the correct ship and keep sailing in the right direction.
This article serves as a helpful guide for saving on shipping costs. We’ll break everything down below.
What Influences Shipping Costs?
To build effective strategies, one must understand the factors that control the cost of shipping first, from packaging dimensions to location-based rates and regulations.
The size and weight of your package determine shipping costs. This starts with a simple rule: the bigger and heavier the package is, the more you have to pay for shipping. You needn’t always be so wary with heavy packages though. Packages that cost more and can be shipped at higher volumes can be a profitable method.
When weighing the dimensions, you should think of packaging security as the main priority. More than rates, it’s essential to ensure that the package is safe and sound until its arrival to the customer.
Prominent shipping companies such as UPS, FedEx, and Canada Post provide online shipping calculators to help give you an idea of how weight and dimensions affect rates. Try them out and see for yourself.
The locations you ship from and the package’s destination affect shipping rates as well with a similar condition to packaging: the further away a location is, the higher the cost. In international shipping from Canada to the U.S., consider the changes in rates due to customs fees and additional charges.
Again, shipping calculators are handy when it comes to calculating these factors.
Customs and Duties
Customs and duties are essential, especially with international shipping. Additional charges, fees, or taxes are involved as soon as the packages reach the country of their destination. The customers will most likely have to foot the bill, so they need to be informed as soon as possible.
Method of Shipping
Different shipping methods have different shipping costs. Some are expensive, and some are more suitable for small businesses. The expensive methods offer faster shipping, which customers want the most. But if you’re short on the budget for premium shipping, you can always look at other options.
Businesses add cargo insurance and package tracking to their shipping services to maximize customer satisfaction and package security. These are certainly beneficial, but they also come at high costs, affecting shipping rates.
Businesses run in-house labor that could expand as the brand grows, demanding a considerable part of your costs. Some eCommerce businesses trying to launch their brand also familiarize themselves with fulfillment by starting in-house. Labor is helpful to keep the business running, but it’s essential to monitor your finances and ensure this factor doesn’t hurt your profitability.
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Save Money on Shipping With These 10 Effective Tips!
Now that you understand the factors influencing shipping rates, here are helpful tips on how to deal with them. The inevitable increase in shipping rates doesn’t automatically mean a loss for your business. Save money and give your customers a fulfilling experience at the same time through the following strategies.
1. Practice Smart Packaging
Reduce costs and innovate your packages. Since heavier packages cost more, it’s best to use a postage meter or scale. This machine helps you weigh and determine the exact weight and charges, and prints shipping labels for the package. If you can predict the exact dimensions before the carriers get the package, you can prevent adjustments that will require additional fees.
You can also choose a custom size and design for your package. Courier and packaging companies offer online tools that allow you to adjust dimensions to fit your item and select from a variety of templates for your preferred design. Yes, it requires an initial cost, but it will be a good investment and will save you more money in the long run.
Another option is to go green and be an eco-friendly business. Customers love products with an environmental purpose. You can save shipping costs if you find a way to reuse the material from packaging.
2. Provide Information on Custom Charges Beforehand
Certain required payments related to shipping distance are inevitable. These are called customs and duties, which are mainly present in international shipping. Your customers will have to pay for these additional fees, so let them know about them beforehand. Put up a page on your eCommerce website that contains detailed information on custom charge regulations. This way, they can decide whether or not to purchase your product after weighing all essential information.
3. Spot Discounted Rates
Take the opportunity to find discounted supplies and master the art of minimizing shipping costs. Several shipping companies, such as FedEx and USPS, offer saving programs to help you cut costs on shipping. These programs range from free packaging boxes for specific supplies or 30% off shipping costs for a certain number of months.
4. Collaborate With Third-Party Insurance
If you don’t wish to cut off insurance for your shipping services, it’s best to work with a third-party insurance company. A 3P can save up to 90% of the shipping coverage compared to carrier insurance. They are also more internationally flexible and provide less hassle on filing claims, while still allowing you to track all shipments conveniently.
5. Think Out of the Box
Rather than defaulting to boxes, ensure you are using the right type of packaging for your product. There are poly mailers, padded envelopes, mailer boxes (these are smaller than the standard box), and more options you can use for packaging. Many of these decrease the weight and dimensions of the packages, which in turn reduces shipping costs.
6. Partner With Regional Carriers
Regional carriers help reduce shipping costs with their lower rates compared to major carrier companies. However, keep in mind that they have a more limited scope of operations since they only serve smaller areas. If your products are delivered within their target locations then this is a good option to look at.
7. Slower Shipping
Customers demand fast delivery. However, not all products have to be delivered within 24 hours, especially if you’re a business that doesn’t have enough of a budget to compete at that speed yet. What you need to do is to set expectations. Let your customers know the delivery time frame and rates. That way, they can choose a time that suits their preference. Don’t fret; not everyone gets angry about a package that takes a few days to be delivered!
8. Avoid Fees from Mistakes and Lack of Preparation
You can keep your shipping costs down with excellent preparation and accuracy. Shipping mistakes come with a cost, so you need to be meticulous when checking everything before taking the next step in the process. Nailing this aspect helps you build a good business reputation as well.
Practice proper inspection of your shipment before delivery. Record any damages you can find, no matter how big or small. Another factor to prepare for is the freight class. This is the standard system to determine a material’s transportability. The freight class serves as a definitive source for smoother negotiations between shippers and carriers. It is confusing at first, so it’s better to familiarize yourself beforehand and choose the class that fits your packages best.
Overlooking these factors will keep adding to your costs. You will pay for damages and get charged for a reclass. Avoid making these mistakes and be prepared with accurate data.
9. Buy in Bulk
Buy in large quantities and save more money on shipping costs. “Buying in bulk” allows you to negotiate for a lower rate and saves you money in the long run. It doesn’t seem feasible for small businesses, but there’s no need to worry. Some companies offer bulk discounts not solely based on volume but for specific package dimensions and weight. You only need to find the conditions that perfectly match what your business is capable of.
10. Research Before Taking Action
It’s always a better approach to gain enough knowledge of everything before taking any action. There are many significant factors and options for you to learn. Research on subjects about shipping you aren’t familiar with yet before building your strategies. The shipping industry is ever-evolving, so the learning never stops. When the correct information guides you, you will less likely experience an unwanted loss of finances.
Thinking ahead of the game is a massive advantage for any business. Rather than starting on a rush, take it slowly and surely. Enjoy the process of learning, open your door to a wide variety of options, and you will successfully grow your business.
About The Guest Author
Jayce is the managing director of Seller Interactive, an Amazon advertising agency committed to building brands on Amazon. His content marketing expertise has led him to work with brands such as Toyota and GoDaddy, producing content that has reached over 20M views in a month. He is ready to assist D2C brands by offering services in Amazon suspension to PPC management.