5 Small Business Shipping Tips to Help You Save Money
As a small business owner, you’re probably already familiar with just how expensive shipping can be. Paying for different small business shipping options can be a significant cost when you’re just getting your new ecommerce startup off the ground. This is especially true when you have to keep up with the expectations of modern consumers who have become accustomed to fast (and free) shipping from ecommerce giants like Amazon.
For example, according to data from reports cited by The National Retail Federation (NRF), “75 percent of consumers surveyed expect delivery to be free even on orders under $50.” Additionally, many consumers expect their shipping to be fast. As noted by RetailWire, “Free two-day shipping, what many see as the norm of online retail, was important to 79.3 percent of those surveyed.”
Being able to deliver fast and free shipping is crucial for gaining and keeping customers. However, this can bite deeply into your profits. So, what can you do to fulfill your customers’ expectations while keeping costs down? Here are a few small business shipping tips to help you save money while providing great service that earns loyal customers:
Small Business Shipping Tips
Tip #1: Know Your Shipping Zones
Whenever a package is sent from one location to another, it will cross through one or more shipping zones. A shipping zone is a geographic area defined by a carrier which includes a set grouping of address zip codes. These zones are dynamic so that the origin zone is always Zone 1 while the destination zone’s number will be higher the further away it is from the shipping zone.
For example, UPS bases their zone calculations from the first three digits of a package’s origin and destination zip codes. So, if you were to ship from a 335 zip code in Florida to a 902 zip code in California (or vice versa), then it would be going from Zone 1 to Zone 8. This would incur a larger shipping charge than going to a 341 zip code would be (which is Zone 2 from a 335 zip code).
Knowing your shipping zones is crucial when negotiating shipping rates with carriers. It’s also important for considering how you market your products and services—targeting “local” customers who are in nearby shipping zones can help you save on shipping costs in the long run.
Tip #2: Collect a Solid Estimate of Your Average Shipping Costs and Adjust Prices so You Can Offer Free Shipping
How much can you expect to spend on shipping for the average order? There are a lot of variables that go into this, such as the number of zones your packages cross, the average shipping weight of your products, the dimensions of your products, the speed at which you ship, and which small business shipping options you use.
Collecting information about all of the shipments you’ve made so far can help you establish a few key facts about your shipping costs—which can help you estimate what those costs should be moving forward. This can be invaluable for setting your product prices so that you can offer “free” shipping (by including the average cost of shipping in your product’s base price).
Why raise prices to create “free” shipping? Because, free shipping has a major impact on purchase decisions. In a survey cited by Digital Commerce 360, 50.2% of consumers surveyed cited “free shipping” as being more important than free shipping, and 47.4% said that both factors were “equally important.”
Other surveys cited by econsultancy.com stated that “74% of respondents had abandoned a basket due to high delivery charges.” Basically, the “sticker shock” of the additional shipping fees made the shopper abandon their purchase entirely. In many of these cases, shoppers may have simply purchased less instead of completely abandoning a shopping cart if the prices had accounted for the cost of shipping up front.
By including the cost of shipping in a product’s base price, it is possible to avoid last-second sticker shock that causes buyers to abandon their carts.
Tip #3: Consider Offering Free Shipping on Orders over a Certain Value
If including the cost of shipping in a product’s base price would raise it too high, you could alternatively offer free or discounted shipping on orders over a certain dollar amount. As noted in the NRF article cited previously, “65 percent [of customers say] they look up free-shipping thresholds before adding items to their online shopping carts.” People may end up buying additional products to their order simply to enjoy free shipping—making a bulk purchase to avoid the “shipping tax.”
The precise amount extra that people are willing to pay will vary from one transaction and person to the next. It may be necessary to experiment to find the sweet spot for a particular set of products.
Read this article for more information on offering free shipping and calculating your free shipping threshold.
Tip #4: Take the Time to Compare Each Carrier’s Small Business Shipping Options
Different carriers will have different small business shipping solutions that may offer you some unique advantages (or disadvantages). In the USA, this typically means choosing between the United Parcel Service (UPS), the United States Postal Service (USPS), and FedEx.
The choice of carrier may depend on several factors, such as:
- Typical Order Volume. For low-volume ecommerce businesses, the local post office may be sufficient. Higher-volume businesses may wish to use a different carrier, as you may be able to negotiate better rates.
- Delivery Speed. Customers want fast shipping. Here, choosing a carrier with high-speed delivery options that are also low-cost is a must.
- Packaging Material. The fragility of a product may demand extra packaging and protection. Almost all major carriers have a variety of packaging—though costs may vary.
- Package Dimensions. How big are the products being shipped? Carriers need to have the capacity to ship the bulkiest items the store at a reasonable rate.
- Package Weight. Check with each carrier to see what their rates are for different package weights. Try to identify the one with the best price for your store’s typical order weight range.
- Delivery Days. Some carriers (like USPS and FedEx) deliver Monday-Saturday without charging a premium (for certain package and service types). Others, like UPS, may deliver on Saturdays, but charge a premium for it. When evaluating options, consider if free Saturday delivery is available. It helps avoid making customers wait for a weekend.
- Package Tracking Options. Some carriers have free package tracking options, some have paid tracking that is more detailed, and others might have the bare minimum amount of tracking for packages. If your customers want to know where their products are at all times, using a carrier with a robust tracking option may be a good idea.
- Carrier Shipping Zones. How does the carrier define their shipping zones? Are the majority of your customers in a nearby shipping zone (Zone 2 or 3) or a more distant shipping zone according to the carrier?
Take some time to shop around with each carrier and find the best long-term deal for your shipping needs.
Learn more about small business shipping options and considerations for choosing a carrier in this post.
Tip #5: Consider Partnering with a Fulfillment Center
Instead of trying to figure out the vagaries of finding the best small business shipping solutions for yourself (and trying to negotiate with the different carriers for good shipping rates on small orders), you may want to consider partnering with a fulfillment specialist like The Fulfillment Lab.
The Fulfillment Lab can ship your products from centers near where your customers live—helping to minimize the number of zones they cross (and thus the cost of shipping). Additionally, fulfillment specialists like The Fulfillment Lab have longstanding relationships with carriers that allow them to negotiate highly favorable rates—not to mention the advantage of being able to do bulk business with carriers to streamline costs.
A fulfillment center can also help you market your products through fulfillment marketing—using custom packaging to create a custom unboxing experience for your customers. Learn more about The Fulfillment Lab and why we’re the best partner for your fulfillment needs by contacting our team today.