13 Ways To Save on Shipping Costs
When you start your own eCommerce business, there are a lot of expenses. One cost that will be ongoing, of course, is shipping. Unfortunately, shipping is also one of the most costly expenses you'll need to take on. Shipping costs will vary based on the following:
- Delivery speed
- The number of shipping zones the package crosses
- The weight and dimensions of the product and its packaging
- Delivery insurance
- Delivery confirmation/package tracking
That’s a lot to consider. But, did you know you may be able to reduce your shipping costs with little effort? Here are some of the ways to save big on small business shipping!
1. Negotiate Your Rates
Many small eCommerce businesses assume they don’t ship enough to qualify for carrier discounts. But, it’s important to know that you don’t need to be shipping packages like Amazon do get a better rate! Discounts can often be negotiated with your carrier if you’re making as few as 100 shipments per month by contacting their contract shipping services department and speaking with a representative about your business. When you do this, be sure you or your shipping manager know your numbers: shipping needs, volume, and projections. That will get UPS, FedEx and other carriers to pay attention.
Also, be sure to negotiate with multiple carriers to get the best deal. If one carrier knows you're considering switching, they may be willing to play ball to reduce shipping costs and keep your business.
2. Claim Refunds
The bad news: According to Multichannel Merchant, in 2019 more Than 6% of FedEx and UPS parcel shipments were late. The good news: Their Money-Back Guarantee policies state that you are entitled to a full refund on that shipment, even if it’s only minutes late! The catch, of course, is that they make you initiate the refund process and many companies don't bother (or don't know about it).
Yes, monitoring your account can be very time-consuming, however, if you're doing a lot of shipping, requesting credits for service failures, overcharges, weight discrepancies, and more can really add up and significantly reduce your shipping costs. It's also important to note that you have a window of 15 days from the date of invoice to claim those refunds, so you don't have to be on top of it daily.
3. Consider Pick-Up and Delivery
You’re already busy—why spend more time and gas money making a trip to your carrier’s location to ship your products? Look for a carrier that will make pick-ups and deliveries at no cost to save you time and money. You’ll be locked into their pick-up schedule, but it just may be worth it!
4. Print Postage at Home
You may know that shipping labels can be printed at home, but did you know you can also print postage at home? Of course, different carriers have different rules about printing postage for packages.
However, once you understand them, you can save money by printing them right from your computer. Some carriers also offer special software that integrates with your own to make the process even easier.
5. Choose Affordable Packing Materials
While some packaging materials are necessary, especially when you’re shipping something that’s fragile, the costs can quickly add up. Of course, while branded packaging is great and adds to the customer experience, it may need to be something you put off until you’re generating more revenue. Instead, purchase plain, traditional packing materials such as boxes, bubble wrap, air pillows, and more in bulk to cut your shipping costs.
6. Use Third-Party Insurance
One way UPS, FedEx, and other carriers make their money is by overcharging customers for insurance costs. If you’re shipping valuable items, you probably know that insurance can get pricey. Carriers generally charge approximately 80 cents for every $100 of insurance. However, there are other third-party companies like Parcel Insurance Plan (PIP) and U-PIC Shipping Insurance that charge a fraction of this, usually about 45 cents per $100. That can save you almost half!
7. Watch Your Dimensional Weight
Applying dimensional weight to shipments is fairly new for carriers, and many small businesses don't know what it's all about. Here's how it began. About five years ago, carriers noticed they were losing money on large – yet light – items. These large items took up a lot of space on their trucks, but netted them little money. So, they’ve begun applying this “theoretical” weight to packages based on how much volume the package occupies, charging for whatever earns them more money – the actual weight of the package or the "dimensional weight."
If your packages tend to weigh less than the dimensional weight, the cheapest way to ship oversized packages will most likely be to find a carrier that doesn’t follow this practice.
8. Use Carrier Packaging
When you use your own packaging, it’s possible to incur the aforementioned dimensional fees if your box exceeds the size regulations of your carrier. When you use your carrier’s packaging—even if it’s just to put your own package inside of theirs—these fees can often be avoided.
9. Calculate All Shipping Costs
Before you bill customers, be sure that you’re factoring in all shipping fees. Carriers have more than 75 special charges, such as fuel surcharges, signature fees, and weekend delivery fees. Unless you’re trying to offer your customers a sweet deal, be sure to include these costs in your pricing structure so you don’t wind up absorbing them yourself.
10. Increase the Price of Your Product
Are you offering free shipping and finding it to be too expensive? Up the price of your product and continue to offer free shipping! This may seem counterproductive, but remember customers like the simple pricing structure of a free shipping model. They may not notice that the product costs more. Instead, they’ll be attracted to the free shipping angle. In fact, the Wharton School of Business shows that free shipping that saves a customer $6.99 is more appealing than a discount that cuts the purchase price by $10. Again, it comes to simplicity and not having to do any calculations.
11. Consider a Multi-Carrier Strategy
Often, busy shippers will simply choose a single carrier strategy and negotiate a reasonable rate. This streamlines decision-making, as there’s no need to research rates online or request a spot quote. While a single carrier strategy is a time-saver, using multiple shipping carriers offers a number of benefits of its own.
- More Negotiation Power. Without an exclusive carrier, business owners are more likely to keep up with the services and prices others offer. In addition, carriers may not offer existing customers their most competitive service options or rates, similar to cable companies.
- The Right Service for the Right Job. Some carriers are better than others for different types of shipments. Using a multi-carrier shipping approach, you can choose the carrier that’s best suited for each particular shipment (domestic vs. international, oversized shipments, etc.).
- Risk Mitigation. In a multi-carrier scenario, when service goes bad with one carrier, you can switch to another. This is useful in case one carrier discontinues service to certain areas, they become sloppy and lose a lot of packages, up their rates, or are impacted by bad weather.
12. Know Your Shipping Zones
Shipping zones are the geographical areas that various carriers ship to. For example, there are nine USPS shipping zones. The more zones your package crosses in transit, the more you're charged for shipping. Major carriers allow you to enter your zip code of origin and destination to determine the number of zones your package will be crossing – which you can use to calculate your shipping rates (USPS Zones Pages | UPS Zones Pages | FedEx Zone Pages).
If you do this and see that most of your orders are coming from across the country, you may want to consider using a fulfillment center that's closer to your customers to reduce the number of zones your product crosses and the amount you spend on shipping. This is a good point to conclude with our lucky shipping tip # 13.
13. Use a Fulfillment Center
A third-party logistics (3PL) partner such as The Fulfillment Lab can also save you a bundle, offering low-cost shipping for small businesses! When you work with us, we will ship your product from one of our locations that are closest to your customer to avoid excess zone charges and pass some of our negotiated carrier shipping discounts on to you.
Because we do bulk business with all major carriers, we’re also able to obtain favorable shipping rates. This way, there’s no negotiation needed on your part. Of course, that’s not all we do (we can get you that customized packaging for less!). Check out our blog, 10 Reasons to Use a Fulfillment Center for Your Ecommerce Shipping, and then contact us to learn more.