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.
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.
What is shipping cost and what does it cover?
Shipping expenses 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:
- Expenses of boxes, packaging, tape, and labels,
- Cost of fuel, tolls, and other transportation expenses,
- Expense of hiring a worker to select, pack, and dispatch the item,
- Insurance expenses against damages or loss during transit,
- Fee charged by a courier to retrieve and transport the item, and
- Expenses of import/export charges when shipping internationally.
How to save on shipping costs?
You can’t ask the customers to pay the shipping costs without annoying them. After all, no one likes to pay extra for anything.
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.
Here are a few ways you can save on shipping costs-
Decrease the shipping distance
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-
Fuel costs: 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.
Handling 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.
Customs fees: 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:
Strategically choose your warehouse’s location: The nearer it is to your customer base, the lower will be the shipping charges.
Set warehouses in all four directions: 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.
Weigh your packages and reduce dimensions
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:
- Use corrugated boxes for packaging your products. Corrugated boxes are lighter and stronger than usual cardboard boxes.
- Create custom packaging with smaller dimensions to fit your product, rather than using bubble wraps and air pillows to secure your product during transportation
- Use the “ship in own container” strategy, meaning use the product box for shipping. No need to pack it inside another box.
Negotiate for discounted shipping rates
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.
Don’t stick with one, consider building multi-carrier strategies
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:
- Greater negotiating power – Keeping up with the services and prices of multiple shipping companies offers business owners more negotiating power. When a carrier knows that businesses are in the market for rates, they might offer a better rate to stay competitive.
- Choosing the right carrier – Not all shipping carriers similarly handle products. Some might be better than others. Eg, in handling fragile items. Therefore, having multiple carriers ensures that businesses choose the right carrier for the right product.
- Offsetting risks – No one can predict the future. Similarly, no one ever knows when a shipping company’s service goes bad. In that case, a multi-carrier strategy helps in switching from one shipping company to another without compromising on the quality of customer service.
Switch from boxes to poly mailers
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.
Stay on top of shipping carriers pricing changes
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).
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.
Encourage your customers to place orders early
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.
Choose provider with pickup and delivery services
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.
Choose to package provided by the carrier
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.
Pass on the charges to customers
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.
Explain the reasons behind the prices
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.
Provide direct comparison
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.
Share your approach
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.
Offer alternative options
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:
- Offering discounts at certain times or for certain types of customers.
- Providing bundles or bulk purchase options to reduce the per-item shipping cost.
- Allowing customers to pick up their orders at a local store, if that’s an option.
- Suggesting lower-cost product alternatives that may be similar to what the customer is looking for.
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.
Partner with fulfilment centers
You don’t have to do it all by yourself. There are companies like ANSCommerce 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.