The National Retail Federation reveals that about 75% of consumers expect free shipping, even on orders costing less than $50, according to Merchant Maverick.
As you are fully aware, free shipping is never free. Providing shipping at no cost on the wrong orders can reduce your revenues or even lead to a loss on a sale. That’s why learning how to cut shipping expenses is crucial for your business.
However, with carriers revising their rates every year due to increased demand in the e-commerce sector, reducing shipping costs can be tricky. Moreover, large corporations like Amazon offer free shipping and guarantee faster delivery. This move makes shipping more expensive for startups.
So, how can you expand on-demand delivery services while keeping shipping costs low and increasing profit margins? Here are tips on how you can make shipping affordable for your small business.
5 Ways You Can Make Shipping Affordable For Small Businesses
1. Reduce Shipping Distance
The distance covered between the shipper’s address and the client’s address affects shipping costs significantly. Note that carriers set prices based on zones for domestic shipments.
Typically, you’ll pay more for shipping if your customer’s destination is far away from the point of origin. You can save money to reduce the number of zones a package must travel to before it’s delivered to the recipient. This step entails partnering with third-party logistics and fulfillment companies (3PL) located close to your clients.
That way, you can share costs with other merchants looking to reduce the cost of shipping. Given 3PLs fulfill shipment orders for many businesses, they receive high discounts from carriers, which they pass on to clients. Moreover, you’ll be able to deliver products to customers faster, hence satisfying their expectations.
2. Consider Optimal Packaging Dimensions
Unless you have settled for flat-rate shipping, expect to pay more to ship heavier packages. Therefore, pay close attention to your packaging dimensions. Consider packing your products in slightly smaller boxes. If you’re like many business owners who print their labels and ship products from home, invest in a postage scale.
This tool will help you determine the weight of each package, which is essential for calculating the cost of shipping accurately. Getting rid of packaging boxes altogether is another excellent way of reducing shipment costs. Opt for cheaper options like poly mailer bags or envelope mailers if you ship small and less fragile items like t-shirts.
3. Negotiate Rates With Courier Services
Sticking with the first carrier you come across might sound perfect, but it’s a wrong move. Consider obtaining multiple quotes from different shipping companies within your region. Spend time learning how they operate, the costs they charge for shipment based on weight, order volume, and location.
Also, think about the delivery options carriers offer and how much they charge for each. For instance, if you’re looking at priority shipping, find out the extra fees you’ll pay, the cost of packaging, and the weight you can ship.
Once you have landed a discounted offer, don’t settle for it immediately. Use it as leverage to negotiate with other carriers. This step helps you land better and affordable shipping deals.
4. Shift Shipping Costs To Consumers
Many businesses have embraced free shipping to stay afloat in the competitive market. However, you must be careful with this option as it may lead to low-profit margins on sales. With this in mind, consider transferring shipping fees to your customers.
Make it a habit to calculate how much it costs to ship a product to a specific location. And then include the shipping rates in each product’s upfront price. This trick might drive demand upwards or reduce conversion rates.
So, evaluate how high product prices will impact your venture before implementing this policy. Also, study different strategies for providing free shipping and settle for one that suits your business model and meets client expectations.
5. Choose Prepaid Shipping
Prepaid shipping is an excellent way for any small business to reduce packaging and shipment costs. You can get discounts of up to 20% by buying shipping labels in bulk and sticking them on packages when they are ready to ship.
This option saves you a considerable amount of money because you don’t have to pay shipping costs every time you have an order to deliver. It’s also perfect for a business that ships packages of the same weight consistently.
Small businesses benefit a lot from reducing shipping costs. By lowering shipping rates, you can use the extra funds to expand your business. As a general rule of thumb, reduce shipping distance, go prepaid, package your orders right, and negotiate rates.
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Author: Charolette Danzig