Shipping costs are rising – and they are a huge expense for eCommerce retailers. Many online businesses are looking for ways to cut down on this expense and find the cheapest shipping options, regardless of the size of the business. If your online store is looking for a way to cut down on shipping costs, here are some tips for finding the cheapest shipping for small businesses available.
It’s scary to think about all the time and effort you’ll have to put into actually making, packing, and shipping your products after someone makes a purchase. However, once you’ve handed it off to the shipping company, you have no more say in the matter.
The shipping company is responsible for ensuring that your package arrives on time and undamaged. The customer may form a negative opinion of your business if they receive a damaged or lost package.
To understand the cheapest options for shipping as a small business, it’s important to understand everything that goes into shipping – which is more than just the postage!
Shipping costs include the money spent on getting a product to the buyer, like:
As an online retailer, you should determine and explain shipping costs on your website. Some of the most common questions you’ll get will be about shipping costs, timelines, and tracking. To get ahead of the questions, creating a shipping policy that sets expectations will help your customers understand how your company works.
Customers’ purchasing decisions are affected by shipping costs and speeds, in the world of free two-day shipping options on many major online retailers. Baymard Institute is a research group that found nearly half of all online shoppers abandon carts because shipping and taxes are too high.
While you have no control over local sales tax, there are steps you can take to minimize shipping costs in your eCommerce store to keep that sale.
When planning a shipping strategy, it’s important to take into account the specifics of the items being sent. Weight, distance, and shipping speed are typical factors in determining shipping costs. There are a variety of flat-rate packaging options available from various carriers that you can take advantage of depending on the size and shape of your products.
Shipping costs are heavily influenced by the total package weight. Dimensions, such as cubic feet, should be taken into account as well. United States Postal Service (USPS) First Class Mail is the most cost-effective shipping option for packages weighing less than 1 pound.
USPS Priority Mail is the most cost effective shipping method if your package weighs less than five pounds. FedEx Ground and UPS Ground are likely to be the most cost-effective shipping options for packages weighing more than 5 pounds.
It’s up to you to give buyers a choice of shipping speeds. Knowing the least expensive options will help you and your customers save money if you plan to offer express shipping options like two-day or overnight shipping.
Two-day delivery guarantees are not provided by USPS. Check out FedEx 2-Day Shipping for next-day business delivery and UPS 2nd Day Air if you’re interested in providing two-day shipping options to your customers. UPS and FedEx are your best bets for affordable and hassle-free overnight shipping. Major shipping providers have multiple overnight service options.
Regardless of the specifics of your shipments, a third-party logistics provider (3PL) can help you negotiate the most cost-effective carriers for cheap shipping at faster delivery times.
Depending on where you are and how quickly you need a package delivered, you can choose from several different shipping options. Some options will be cheaper than others:
Every company has its own unique shipping needs, so you can choose from any of these methods when setting up your shipping preferences during the checkout process. Some (like flat-rate and free shipping) are great because they help manage expectations for your customer and provide transparency, while others prioritize quick delivery over low prices.
Reduce the weight of packages. Package weight is a major factor in shipping costs. Shipping costs will increase proportionally with the product’s actual weight or dimensional weight. Although it may only be a few cents per package, multiply that by hundreds and you’ll see how quickly the savings add up. This is why saving money on shipping costs and increasing profits is facilitated by using lightweight packaging.
Tips to reduce package weight:
You can save weight on every shipment by switching to lightweight packing methods. In the long run, this could increase your profits by a significant amount and be a worthwhile use of your time and energy.
One way to save money on transport is to use different packaging.
It’s easy to find shipping materials that are just a little bit bigger than what you’ll be sending inside. As an alternative to a box, you could use a poly mailer or, if extra cushioning is required, a padded envelope.
The weight and size of the package determine how much it will cost to ship. Since cardboard is so heavy, any area where you can reduce weight will benefit you in the long run. Additionally, doing some research could help you save money if you are paying for your packaging. Many carriers provide packaging at no or low cost.
Knowing what kinds and sizes of packages you use the most frequently can help you save money whether you’re getting your packaging for free or ordering custom packaging. Looking at your order history will help you determine whether you’re selling one item at a time or several. Then, order packaging that would go with your typical orders.
The geometry and cost of shipping containers are constantly changing, but not in a way that will increase your profits. It can be hard for many businesses to keep up with all the changes. Due to rate increases, online retailers are considering flat-rate shipping to reduce shipping costs.
No matter the item’s weight, size, or shape, the shipping fee is always the same with flat-rate shipping. Converting variable costs into fixed costs is the immediate advantage of flat-rate shipping.
Therefore, you are aware of the cost in advance if you decide to ship 10 items that fall within the allowed weight range. You can use this information to set up shipping rates in the checkout area of your store.
Keep up with pricing adjustments to avoid having your profits affected. Every year, shipping companies review their pricing and raise prices to reflect rising costs for things like labor and fuel. Every January, new prices go into effect, but they can also do so at other times.
Having a logistics partner to keep up with rate changes can help you be in the know – and even help negotiate discounts for your packages.
Choosing not to use a carrier at all is one way to cut shipping costs. People are now increasingly choosing to shop at small, locally-owned businesses, a trend that has emerged since the COVID-19 pandemic.
Local delivery allows customers to purchase your products from an online store and have them delivered to their homes. Customers could also pick up their online orders in person from your business. You can save money by using local delivery and pick-up instead of shipping with a carrier.
Additional benefits of local delivery and pick-up can include:
Removing the barriers to purchase by offering local delivery options to customers has a positive effect on your bottom line. You have the opportunity to increase customer loyalty and cut shipping costs as well.
In supply chain management, a 3PL’s responsibilities can include everything from order fulfillment to reverse logistics and quality control services. Because a 3PL is so comprehensive, outsourcing your order fulfillment to a logistics company can relieve you of a lot of responsibility and free up your time to run your business.
There are many advantages to working with a 3PL in order management to help you lower shipping costs.
Shipping zones range from Zone 1 to Zone 8 for domestic shipments within the United States, with Zone 1 covering a 50-mile radius (and no more) from the fulfillment location. In general, the package delivery time and cost will increase proportionally as the package’s distance from the shipping zone’s origin increases. If you avoid shipping to higher zones, you can save money while taking advantage of superior shipping options. Working with a 3PL that has multiple, conveniently located warehouses is one option.
When sending bulky items, you’ll want to look into flat-rate shipping to save money. Right-size packaging is a technique that can be used by a 3PL to help with cost prediction and reduction. Because of the high volume of orders they place with carriers regularly, 3PLs typically negotiate discounted shipping rates for their client brands.
General rate increases (GRIs) are annual price increases implemented by major shipping companies. These increases can be as much as 5% on average but can be significantly lower or higher depending on the specifics of your situation (carrier, service level, weight, etc.).
During busy shipping periods (like the holiday season and the fourth quarter), carriers may impose additional fees. Large package surcharges and signature-required surcharges are just two examples of the additional fees they add every year.
These rate increases and surcharges can only be avoided in shipping costs by including them in the shipping fee charged to customers, absorbing the costs yourself, or finding some other way to compensate for them. If you’re having trouble estimating your shipping costs, or figuring out how to factor them into the price of your product, working with a 3PL that monitors changes in carrier prices can be a huge help.
An experienced 3PL will offer discounts based on shipping volume, so you can take advantage of those benefits as well without having to negotiate with carriers yourself. A 3PL’s longstanding relationship with carriers allows them to negotiate volume discounts, which they then pass on to their customers.
3PLs can save you money on shipping costs and other packaging expenses. Companies typically invest between 10-40% of the retail price of the product in its packaging. Boxes, dunnage, bubble wrap, airfill, and poly mailers can be expensive, but by partnering with a 3PL, a business can save a significant amount of money.
Depending on the value of the product being shipped, working with a 3PL can help you save money on shipping by eliminating the need for services like shipping insurance. The shipping insurance offered by a 3PL can often be significantly less expensive than purchasing it independently. If you sell high-value items, this could be a huge benefit for your store.
More than $761 billion worth of goods were returned to online retailers in the United States in 2021. For high-volume brands, returns can be a significant source of stress and financial loss. Working with a 3PL that specializes in eCommerce fulfillment shipping services can help you drastically cut down on returns by ensuring that orders are picked and packed correctly.
Reverse logistics management (or returns management) services are another way in which a 3PL can reduce the stress of returns.
Small, non-fragile items, such as clothing, can often be shipped in a mailer envelope or poly bag. This method is more cost-effective for stores selling lightweight, non-fragile items because it takes up less space on delivery trucks and requires fewer packing supplies like tape and bubble wrap.
If you run an online store, it’s important to remind customers well in advance of the deadline for placing orders during your busiest sales periods. To guarantee on-time holiday gift delivery, carriers implement various service cutoff times. Customers can save money on shipping by placing orders as close to the cutoff time as possible rather than opting for faster shipping at a higher cost.
Time constraints aren’t the only thing that can affect deadlines; things like a lack of available workers, bad weather that prevents carriers from delivering, or national holidays that force businesses to close could also play a role. A 3PL can help communicate this to you so your store is prepared for the holiday season.
If you’re ready to partner with a 3PL to lower your shipping costs, AMS Fulfillment is ready to help. From small businesses to large enterprises in B2B and B2C eCommerce, we can help you find the right shipping strategy to reduce expenses, improve efficiency and keep your customers happy.
Get in touch today to start discussing how we can help find the cheapest shipping options for your business.