Shipping cost is an important expense every small and medium-size business looks to cut down to increase their customer acquisition. With the increase in the number of e-retailers, many small businesses have started to face issues related to shipping expenses mainly because big companies like Amazon have started to offer free shipping to their customers. To optimize your online selling experience you need to reduce the extra shipping cost to maximize your return of investment (ROI).
To compete with the big e-commerce websites, crafting the right shipping strategy will help you to reduce extra shipping costs paid by most of the eCommerce businesses. Many of you may not know that there are more than 75 extra charges involved in shipping a product.
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In the initial stage, these shipping costs may not trouble you but with the increase in the number of orders, you may start feeling the pain of extra charges. While shipping bulk products, a small difference in the dimensional weight (DIM) can make you pay a huge amount which will directly reflect your revenue.
If you want to avoid shipping mistakes done by most of the eCommerce business then check our blog on 8 Common Ecommerce Shipping Mistakes To Avoid In 2020
In this article, we have discussed some important tips that will help you to reduce extra shipping costs that your eCommerce business might be paying. Using these tips you can provide cheaper shipping rates to your customers and it will also help you to save all additional charges that you are spending on the packaging and shipping of a product.
Tips to reduce the extra shipping costs of your e-commerce store:
1. Shorten the product shipping distance
In product shipment, your product weight and customer location play an essential role in determining the cost of the shipment. Many eCommerce businesses are paying an extra amount for shipping the products to long distances. You can save your extra shipment spending by optimizing and reducing the distance between you and your customer’s location.
Before shipping the product, you can determine the shipping zone of your customer. You can use your customer’s zip code to discover the shipping zone of the product. In the United States shipping zones are divided into 8 parts i.e. zone1 to zone 8 for domestic shipping. Your product shipment zone is calculated from where the product is being shipped. The location from where you are shipping the product is considered as zone 1. And depending on that you identify your customer shipping zone.
If you want to reduce extra shipping cost then try to target a single zone, nearby zone or a minimum number of zones instead by covering each zone. With the increase in the product shipment distance, your shipping amount will also increase and it will also slow the process of product delivery. If you stop shipping your product directly to higher zones you can automatically save a lot of money.
For shipping your product to farther aways zones, You can partner with any big company that has a fulfillment center near to your shipping zone. There are fulfillment centers like ShipMonk and more that can help you in reducing your shipment cost. You can also negotiate with them as they have higher shipping volumes.
2. Negotiate with various shipping carriers
Today, shipping costs play an important role in keeping an eCommerce business competitive in the markets. If you successfully reduce extra shipping cost then you can surely outperform your competitor in terms of revenue.
Most of the shipping carriers are offering shipment rates depending on the volume of packages which means higher the number of packages, lower will be the shipping cost. That’s why many small businesses hesitate to negotiate with the shipping company. One thing they don’t realize is that they can also negotiate with the shipping companies, even if they have fewer orders.
To trim your shipment charges you can negotiate with multiple shipping companies to know which company is offering cheaper shipping rates. whenever the shipment company realizes that some other carrier is vying for your business then they will surely negotiate with you by providing the reasonable charges. It all depends on you how you are negotiating with different shipment carriers.
You can also include Negotiation in your marketing strategy. Many online shoppers are dependent on the shipping cost provided by an eCommerce website. If the shipping cost is high then your customer may shit to some other eCommerce website. Negotiation is the most effective way to trim your shipment cost and it will also help you to attract more customers on your website. If your website is displaying less shipment amount then it will surely encourage your customers to buy the product. There are also chances that your customer may start recommending your eCommerce website to other people because of less shipping costs.
3. Don’t stick with the single shipment carrier
If you are looking to save money in shipment while delivering all your products on-time then it’s so recommended not to lock your eCommerce business with a single shipment carrier. You can select multiple carriers for different product shipments depending on location, cost, and more.
Selecting different shipping carriers will help you to get different benefits, some may offer faster delivery, some may offer cheaper shipping bases on the dimensional weight (DIM). If you are operating internationally then you can select different shipping companies for targeting different countries.
Many eCommerce businesses rely on USPS when it comes to delivering products to the customer at the cheapest cost. Yes, USPS provides the cheapest shipping rate but many times the shipping cost increases with the increase in the weight and size of the product. Shipping large products through USPS may not be a good idea due to high pricing. There are other demerits in USPS like slow delivery speed and shipment tracking problem and more.
That’s why selecting different shipping carriers for different packages will help you to reduce shipping cost. There are various shipping options like UPS, FedEx, and more. Selecting different shipping companies allows you to select the carrier based on your product shipment type. For example, if you are shipping product local customers then you can select the best shipping company for the local area. Whereas if you want to ship your product to a different country then it is recommended to select the shipping crier specialized in international shipping. Selecting the right international shipping company will surely help your woocommerce store to get orders from different countries.
4. Automate you shipping process
After selecting multiple carriers for your eCommerce store, the next tough job is to manage those shipping carriers in one place. Without using the right automated software and tool for your shipping process, handling all the functionality of different shipping carriers manually can cause lots of problems.
If your eCommerce website is using multiple shipping channels then handing them manually will require more hands which will increase your shipping budget. Remember most of the eCommerce websites lose their customers & sales because of excess shipping charges.
That’s why we recommend all the eCommerce businesses out there to shift your manual shipping process to the automated shipping process. There are various shipping software and plugins available that can help you to optimize and manage your eCommerce website shipment process.
Product shipment management is an essential part of an eCommerce store. Shifting to automated software will help you to calculate shipping cost automatically depending on the carrier policies, you can import all the order related data from different selling channels, you can easily and automatically generate the shipping labels and more. So, shifting to an automated shipping process will not only cut down extra shipping costs but it will also allow you to manage your eCommerce more efficiently.
5. Shift to Prepaid shipping
Another way to cut down extra shipping costs is by investing some money in prepaid shipping. FedEx and UPS offer a 20% discount to all the eCommerce businesses ready to invest some money in prepaid shipping. Just you have to buy the shipping labels in advance and fix them to the packages and whenever your eCommerce website receives an order you can ship the package.
If you are a small or medium-sized eCommerce business owner and struggling with the excessive shipment costing the Prepaid shipping is the best option to save extra shipment costing. You can determine the weight and dimension of your package to make this process easier for your store. To make things simpler, you can analyze the previous DIM (dimensional weight) of your product to know the shipping cost in advance.
6. Use packaging material offered by your shipping company
Instead of using your packaging material, you can use packaging materials offered by the shipment company. it will not only help you to save money but it will also help you to avoid those extra-dimensional charges.
Many times eCommerce businesses use their packaging material to pack the product which results in an extra-dimensional weight of the product. Remember once you receive the product order then you can ask your customer to pay extra charges for extra weight. If the weight of the shipment exceeds then you have to pay the extra shipping charges.
Almost all of the shipping companies like UPS, FedEx, USPS, and more offer free boxes and bags to pack the product. There are many reports from eCommerce businesses claiming that using the boxes provided by shipping companies have helped them save 60% of their packaging amount. You can shift to flat rate shipping to trim your extra packaging charges. You can buy recycled materials to get the packaging materials for a cheaper rate.
Once you successfully negotiate the shipment cost with the shipping company then it will surely benefit you in many ways. You can negotiate by offering the shipment costing you got from other shipment carriers and you can also ask for additional benefits that you will get if you select their shipping company for product delivery.
7. Reduce your packaging size
Almost every eCommerce business knows that reducing the size of the package reduces shipment costing. Many of you may not know that shipping a cushion will cost more than shipping a 20 kg dumbbell. Yes, you heard it right shipping a pillow weighing between 3 or 5 pounds can cost more than a 20-pound dumbbell.
Most of the shipping companies determine the cost of shipment based on the dimensional website of the product. FedEx and UPS depending on your product DIM (dimension weight) to know the package shipment charge. So if you are shipping small products in big boxes then it can increase your shipping cost which may affect your ROI.
Adding unnecessary dimensional weight to your package will directly affect your shipping cost. That’s why it is recommended you use light-weighted packaging material that can protect your item and save your shipping cost. Using too many protective cushions or paper filters in a secured package can add extra weight to your package.
Today many companies make mistakes by using big boxes and an extra layer of protective cushion to pack the product. Not only that, but most of the time customers also get frustrated while opening these types of packages. Therefore to reduce the shipping cost you can reduce the dimensional weight of the package. The best way to do it is by using the packaging material provided by the courier company.
8. Partner with fulfillment centers
If your small or medium-sized e-commerce business is looking to reduce shipping cost then it is recommended to partner with a fulfillment company. A fulfillment company provides inventory management, warehousing, and all the other necessary e-commerce facilities that can assist you to save extra shipping cost and compete with large eCommerce businesses.
Selecting the right fulfillment partner will help you to negotiate with shipping carriers like USPS, DHL, FedEx, and more for bulk orders. Fulfillment companies are already in touch with large shipping companies so it will help you to get better rates for express delivery, international delivery, and more.
Most of the fulfillment companies around the world provide free packaging which can allow you to save extra charges on buying packaging material. You can check the quality of packaging material and based on that you can decide whether you are going to use your packaging material or the material provided by them.
Before you partner with any fulfillment company make sure to check their warehouse location. If their warehouse is located in various parts of the country then it will help you to cut down your product delivering time and cost.
Therefore if you want to increase your product reach then you should look for a professional fulfillment company that can assist you in managing your order shipment, reduce extra shipping costs and help you in solving all the warehouse related issues.
9. Identify extra shipping charges
Most of the initial stage eCommerce website owners make a common mistake by not knowing extra charges behind shipping a product. You may feel surprised by knowing that shipping companies have more than 75 special charges like takes, fuel charges, extra charges for delivering on weekends, fees for taking signatures from recipients and more.
If you want to save extra shipping charges then it is recommended to factor in all the small shipping charges then display the shipping cost that you users have to pay. Not counting these charges in the final billing can make you pay for those extra charges which will directly affect your income from that product.
Therefore, before displaying any shipping charges on your website consult with your shipping carriers and identify all the small charges included in shipping a product. Remember if you are shipping multiple products in bulk then these small changes can make up a big number.
Shipping cost is an essential part that can make and break your eCommerce business. Today most of the customers make their purchase depending on the shipping cost. If your eCommerce store is displaying excess shipping charge then your potential may shift to your competitor’s website. To run a successful eCommerce business you should have an effective shipping strategy that can help you to provide cheaper shipping costs to your customers.
In the eCommerce industry, there is an abundance of ways that can be used to trim the product shipping cost. We have listed some tips that will surely help you to reduce extra shipping costs paid by your eCommerce store. Making use of these tips will not only help your customer but it will also help your eCommerce business to save the additional shipping charges.
Frequently asked questions:
1. How do you determine the shipping cost?
If you are looking to determine the cost of the shipping for your customers. then you can do it by measuring the product (including boxes and protective cushion). You can determine the cost by measuring the DIM (dimensional weight) of the package. Once you are aware of the DIM then your package shipment cost will be automatically calculated using the customer’s location and measurements.
2. How do you pack and ship heavy products?
If you are shipping heavy items then you need to pack the product in the middle of the box so that the product doesn’t tilt or damage when your shipment takes it for delivery. Make sure that your package is tightly packed, you can use a protective cushion-like air pillow and more to fill the gap inside the boxes. You can also place those cushions around the corner to make your product packaging damage free. Many eCommerce website owners commit a mistake by putting packaging papers around the corner, during shipment those papers will get compressed which can damage your product.
3. Does UPS Charge by weight or size?
If your eCommerce business is delivering products through any shipping carrier then both the weight and size of the package matters. However, UPS has set a specific limit for the weight and size of the product to deliver through its small package delivery network. Well, there is no limit to the number of products and the weight of the shipment. But make sure that you avoid the common mistakes done by most of the eCommerce business by selecting the right boxes for your product. Don’t select too heavy boxes for smaller packages.
4. What are the 3 types of packing?
Corrugated Boxes, paperboard or boxboard and paper bags are the three types of packing used by all small and large scale businesses to pack their products. Corrugated boxes are meant for shipping heavy products like motorbikes, appliances, goods, etc. Remember the following 3 P’s of packing (Protection, preservation, and promotion) will always help you to deliver your product safely without any damages.
5. How do you ship orders to customers?
If you have recently started a new eCommerce business then you need to know how to begin the shipment process. Using the below tips you can identify how you can ship product to the customer:
- After receiving all the order, you can create a list that tells about the product shipment details (package ready to ship)
- Next, you can preview and check your packaging and all the details including printed labels and address with the invoice. Recheck and fill all the missing information in your package (a small mistake can lead to the big problem)
- You can print the shipping label on the plain paper or if you want to save time then you can shift to a thermal label printer that allows you to directly stick the label on the package.
6. What is a fulfillment center?
In simple words, fulfillment centers act as a logistic warehouse where incoming order is received and processed by the fulfillment companies. Many eCommerce businesses opt for these types of services to increase the reach of their products. Leading eCommerce retailer Amazon has a chain of fulfillment centers that manage, process and deliver products of their partners through their FBA (fulfillment by Amazon) program.
8. What is the cheapest way to ship a package?
There are various ways you can use to ship your package but FedEx Ground or UPS Ground is the cheapest option for delivering products. These types of shipments are carried out on surface methods (trucks) which may take time to deliver your package. But you can inform your audience in advance about the estimated delivery time between 3-4 days. If you are shipping products under 2 pounds then USPS will be the better option than FedEx or UPS.
9. How much should you charge for shipping?
It depends on the dimensional weight (DIM) of the product and the location where you are shipping. If you are using woocommerce then you can determine the DIM and shipping location to know the charges behind shipping the product. You can also opt for flat rate shipping to deliver your products to your customers. The charges of the flat rate shipping are determined by the shipping company. There is some condo that you have to follow for flat shipping like you have to pack your product in the boxes provided by your shipment carrier company.
10. How can I reduce my shipping costs?
Today every eCommerce company wants to trim their extra shipping charges. Using the below tips you will be able to save additional charges that you are paying to your courier partner.
- You can negotiate with various shipment carrier to select the best and cheapest carrier for your eCommerce store
- Use the packaging materials provided by your shipping carries. using your packaging material can add an extra-dimensional fee.
- Shift to automated shipment process
- You can use prepaid shipping to reduce your shipping costs. Many courier services provide additional discounts to eCommerce businesses paying the product shipment cost in advance. You can get up to 20% discount if you go with a prepaid shipping