Here’s a fact— as an E-commerce business, regardless of your size, you must deal with the unglamorous yet critical task of shipping. Ensuring that shipments are handled effectively is essential both for the satisfaction of its customers and the company’s success.
And shipping isn’t free. You need to pay the standard shipping charges if you use any courier service to deliver your products safely and timely.
But customers don’t like extra shipping charges. So, there are various ways to reduce e-commerce shipping costs.
In fact, extra costs are the number one reason why customers abandon carts during check-outs.
The best part— shipping doesn’t need to be expensive. There are ways you can use to save money on shipping without compromising anything.
And in this article, we’ll discuss strategies E-commerce businesses can use to reduce shipping costs, but first, let’s understand some basics.
Shipping Cost encompass all expenses involved in transferring a product from a shelf or warehouse to a customer’s doorstep. These expenses comprise, but are not restricted to:
Are you thinking about how to reduce shipping costs?
Let me help you with some interesting facts about how to reduce shipping costs for small businesses.
Shipping through effective carriers is considered to be the most effective way, as it deducts the cost of shipping. You can send the packages anywhere. You can send the packages with the assigned carriers or opt out for the carrier of your choice.
In this case, you can split the cost on the basis of the package's weight, size, and the destination it is being sent to. It makes it easy for the customers, saves a lot of money, and helps them with other benefits. This way, it will also help you learn about how to save on shipping costs.
If the parcel can be packed in a small box, do not pack it in a large box, as it will incur more costs. Do custom packaging when required. Look for the instructions, as some customers may not require the box packaging.
Do not do multiple layers of packaging when not required, as it will increase the weight of the package and result in a high amount of packaging.
Create a policy and make your customers aware of it so that it does not increase your burden, leads to less hectic schedules, and leads to a cost-effective process.
Stay updated on the prices being changed, as if you send the parcel at a higher amount, there will be chances to lose your customers, and if you sell it at a lower price, your business may bear losses, which could be avoided at first.
You can’t ask the customers to pay the shipping costs without annoying them. After all, no one likes to pay extra for anything. Now, are you planning how to reduce shipping costs?
This is where a few tips come in that can help you reduce the shipping costs, making it a win-win for both customer and the seller.
E-commerce shipping costs depend on multiple factors. It all depends on the methods that you choose. Some of the factors on which shipping costs are dependent are mentioned below:
Think about the carrier while you are offering shipping to your customers.
Decide the number of days on which the parcel will be delivered. An urgent parcel would incur more costs than a regular parcel that would be delivered as per the carrier service you opted for.
Be clear with your audience as to whether you'll be providing them with a free shipping service, flat-rate shipping, or charging through a different method.
The more the shipping distance, the more are the charges. Want to know why that is so? Here are the reasons why the shipping distance influences the shipping cost-
Shipping carriers charge based on the distance the package travels. The more the distance, the more fuel the carrier will need to use to transport the package, resulting in higher fuel costs and ultimately, higher shipping costs.
Longer shipping distances also mean more opportunities for packages to be mishandled, lost, or damaged. With more handling points along the shipping route, the shipping carrier will need to increase the amount of labor and time required to transport the package, ultimately resulting in higher shipping costs.
When shipping internationally, customs fees are charged based on the value of the package being shipped. Longer shipping distances can result in higher customs fees due to the increased value of the package being transported.
Now that you know how distance influences shipping costs, here are two things you can do about it:
The nearer it is to your customer base, the lower will be the shipping charges.
Chances are you’ll have customers from around the country. And if so, you should set up warehouses in all four directions so that the shipping distance could be less no matter where the order is coming from.
Also read: How Porter’s Five Forces helps in E-commerce Business Analysis?
Sending heavier packages usually costs more, except if you’ve chosen flat-rate shipping. If you’re handling the shipping process from your home, it’s a good idea to get a postage scale. This will help you know the exact weight of each package and calculate the shipping cost more accurately.
It’s also a good idea to try and make the package as small as possible. Some shipping companies charge based on the size of the box used for shipping. This means the bigger the box, the more are the shipping charges. So by using smaller boxes, you can save a lot of money.
Here are other things you can do to reduce the weight and dimension, and ultimately shipping cost:
Small E-commerce companies are usually under the impression that they need to ship hundreds and thousands of boxes per month to be eligible for discounts from shipping companies. However, that is not true.
Shipping companies offer discounted rates even to small businesses that sell 100 packages a month. But the trick here is to contact these shipping companies and speak with their representative about the business. Explain the shipping needs, projections and volume and negotiate for a better shipping rate.
Some logistics providers also offer discounted rates for loyalty to only them. But keep in mind to contact multiple shipping carriers and get the best rate possible.
During the initial stage of the business, finding and sticking with one shipping company seems easy. It helps in streamlining the decision process and ticking off an item from the task list. However, this might be doing more harm than good.
A multi-carrier strategy means staying on top of the rates for multiple shipping companies. Yes, there is a lot of work involved in researching, requesting quotes and maintaining data on the same. However, the benefits of a multi-carrier strategy offset the time involved. Here are the benefits:
If you’re selling small, non-fragile items like clothing then rather than using boxes for shipping, you may want to consider using mailer envelopes or poly bags. This option is way more cost-effective because the smaller dimensions take up less space on delivery trucks, which can save you money.
Plus, using these types of packages usually requires less packing supplies, such as tapes and bubble wraps, which also can help you save bucks. If you have different combinations of products that you need to ship, it may be helpful to think about using different sizes of poly mailers. This way, you can easily accommodate different orders and make shipping more efficient.
Every year, the big shipping carriers hike up their shipping rates as part of the general rate increase (GRI). These increases can vary depending on the carrier, service level, weight, and other factors, but on average, they tend to be around 5% (although during the pandemic, we’ve seen higher increases). By doing so, you will learn how to reduce shipping costs for small businesses.
On top of these rate increases, carriers may also add surcharges during peak times, like the holidays and Q4, when there’s a surge in shipping. They may also add other surcharges annually, such as large package surcharges or signature required surcharges.
Unfortunately, there’s no way to avoid these rate increases and surcharges. You’ll either need to include them in the shipping fee you charge your customers, absorb the costs, or find another way to offset them.
Also read : How to increase e-commerce sales?
During peak seasons like holidays or festivals, it is important to encourage the customers to place their orders early to ensure they receive their packages on time.
Shipping companies often enforce a cutoff time for placing orders to ensure the packages are delivered on time. Post the cut-off, they would charge a higher shipping fee to guarantee on-time delivery.
Therefore, communicating to customers adequately to place orders early to avoid high shipping fees will help you prepare for the peak season with minimal hassle.
Choosing a shipping partner that offers pickup and delivery services can be very helpful in multiple ways. For example, it can save you time, effort, and money by eliminating the need to travel to a carrier location to drop off your products. This can also offer you more flexibility with shipping times, as you can schedule a pickup at a time that works best for you.
Additionally, pickup and delivery services can boost your overall efficiency by allowing you to focus on other aspects of your business. Also, providing faster delivery and greater convenience to your customers can also lead to better customer service, which can ultimately lead to increased satisfaction and loyalty.
Most shipping companies offer small businesses certain boxes and envelopes for either free or at discounted prices. If you still need to buy supplies like boxes, bubble wraps, air-fill, etc., you can buy in bulk to get at discounted rates.
Don’t let the investment stop you from providing good packaging. After all, if anything happens to your products while shipping, it will ultimately be your loss.
Yes, your customers aren’t going to be happy if they need to pay shipping charges. However, if you use the right way, you can still pass on the charges to your customers.
Here are a few ways you can pass on the charges to your customers without losing them-
Before jumping into offering help or an explanation, take a moment to listen attentively. You’ve probably been in a similar situation yourself, where the cost of shipping made you hesitate to buy something you really wanted. It’s totally understandable to acknowledge this frustration before moving on to any solutions or explanations.
Customers may not always understand the intricacies of shipping, so it’s important to explain things clearly. The easiest explanation, assuming it applies to your situation, is that you’re only passing on the actual shipping costs to the customer.
Different shipping services offer varying levels of speed, reliability, and coverage, so it’s helpful to share information about your shipping partners and why you’ve chosen to work with them. Ideally, you should add a comprehensive shipping policy page on your website that you can direct customers to for more details.
If the customer is in a location that’s more expensive in terms of shipping, or if they’ve chosen a product that’s more costly to ship, it’s useful to share that information with them as well. Being transparent about the costs can help to build trust and prevent any misunderstandings.
It’s better to provide context for your shipping prices to alleviate any concerns that customers may have about being overcharged. Comparing your shipping prices to that of your competitors can be a great way to reflect that your prices are fair and competitive.
Another useful strategy is to link directly to the shipping provider’s page, so customers can see the base shipping price for themselves. This way they’ll know the real prices and will also not feel annoyed while paying for the shipping costs.
Providing explanations for why your shipping works the way it does can be helpful for some customers. For instance, separating the shipping cost from the product cost can become a part of your transparency values, which can build trust with your customers.
Moreover, if you’re using more expensive shipping because it results in fewer damaged products, you can emphasize how this decision benefits the overall customer experience. This can be a great selling point and let customers feel confident in their purchase, knowing that the product will arrive in good condition.
Offering ways for your customers to reduce their costs or get more value for their money is a great way to enhance their shopping experience. Some examples of ways to do this include:
While addressing shipping complaints one-on-one is sometimes necessary, you can reduce the number of such inquiries by having a clear and comprehensive shipping policy page on your website. This can help customers answer their own questions and feel confident in their purchasing decisions.
You don’t have to do it all by yourself. There are companies like ANS Commerce that can take care of the entire shipping process and get your products delivered to your customers in the best way possible. All you need to do is focus on the production part, and your logistic service provider will manage the rest.
Spread across India, we provide fully equipped storage facilities with cutting-edge warehouse management systems (WMS) and order fulfilment capabilities: pick, pack, dispatch, and return management. On top of this, we have partnerships with all major national carriers, and you’ll get the most favorable rates in the market.
Of Course, this is not all; as India’s best E-commerce enabler, ANS Commerce offers end-to-end solutions to manage your online business-from performance, marketing, and marketplace management to warehousing & logistic services!
To know more about how ANS Commerce can help you with warehousing and logistics support, book a free consultation today!
The strategies mentioned above are proven ways to help small businesses save money on shipping while improving their delivery times and boosting their customers’ experience. Thus, whether you’re just starting your business or looking to optimize your existing shipping processes, employ these tips to take your business to the next level.
Shipyaari is known to be one of the best and most well-known courier service providers. It has one of the best teams and also offers its customers a same-day delivery option for all eCommerce and D2C businesses.
Bluedart is one of the other courier services provided. The headquarters of Bluedart are located in Mumbai; however, Bluedart has earned a good reputation throughout the nation for its shipping services. Since 2002, it has been considered an official partner of DHL.
The next on the list is an in-town service provider, Delhivery. Its headquarters in Gurugram remain at the apex of all leading eCommerce courier companies in India, with 7,500+ partner centers.
One of the popular courier service providers has been offering shipping services since 1990. After some years of establishment, it has shown its presence around the globe. DTDC courier charges are pocket-friendly, and the service can easily be availed of by the common man.
Delivery costs can be minimized by focusing on the packaging and the vehicles through which the delivery is made. It can also consider the location as one of the primary factors when it comes to delivery costs.
There are multiple factors that need to be kept in mind at the time of shipping. Some of the best ways that will help you save on shipping are:
Shipping costs refer to all the expenses incurred from the physical shipping to all the background activities taking place, like:
