7 Ways to Save on Product Shipping CostsDon't let shipping costs eat up your profits. Here's how to spend less on boxes, packing materials and delivery.
Shipping costs and speeds influence sales at e-commerce businesses. A Morgan Stanley study discovered that 62 percent of shoppers rank free shipping as one of the most important factors when shopping online, and 80 percent said they’d buy online more if sites didn’t charge for delivery.
But offering free shipping comes at a cost. How do you meet customers’ expectations without giving up profits?
“Shipping costs can make an extreme impact on your bottom line,” said Brendan Binger, founder of Quarry Design Group, an e-commerce consulting company. “If you’re not careful about expenses, if you’re not renegotiating your relationships and accounts with providers and trying to find more efficient ways of packaging, the amount you’re spending might be unnecessary.”
Here are some smart ways to save time and money when shipping your products.
Check rates at all carriers for each shipment
Rates at shipping companies can vary widely. The cost to get a product to one place might be significantly higher at USPS than FedEx, depending on the distance and box size. Binger recommends comparing the costs at all carriers for every shipment you make.
“Many online retailers make the mistake of working directly with a single domestic carrier, yet it is far more advantageous to hold accounts with each of the major carriers, then compare their rate quotes on each individual shipment,” he said. “This is one of the quickest and most effective ways to save on shipping costs.”
It’s not as complicated as it sounds. Easy-to-use software, such as XPS Shipping Platform or Shipworks, will use your package’s size and weight, the delivery speed and final destination to determine the shipping costs at many carriers.
“With rate shopping, you are able to dynamically find the best rate for each individual shipment based on the shipment’s characteristics and delivery address. Most of these tools will easily integrate with many warehouse management systems and e-commerce platforms.”
Take advantage of each carrier’s competitive edge. Binger has found that USPS is the most cost-effective carrier for packages that weigh less than a pound and orders going to rural areas. A larger package destined for a major metropolitan area usually fares better with UPS or FedEx.
Negotiate with your shipping company
While rate shopping is the best way to save costs, some e-commerce entrepreneurs prefer the simplicity of working with a single carrier. Offering exclusivity puts you in a position to bargain.
“If you work exclusively with UPS and you don’t work with anyone else, then you have leverage in the relationship,” said Binger, adding that these negotiations tend to happen on an annual basis.
Estimate how much you plan to ship with that carrier in the upcoming year. Then speak to your account representative. He or she will have the power to offer options and discounts. The more you plan to ship, the bigger the discount you can ask for.
“It’s a game of negotiations. Get as much leverage as you can, then try to put it to good use,” said Binger.
Carriers usually charge significantly less to deliver one big box than two smaller boxes, said Binger. If a customer orders multiple products, ship them together whenever possible.
“This can obviously be accomplished by using a larger box. However, in some cases, it is possible to tape or band two identical boxes together to form a single package.”
Use exact-sized boxes
When you’re busy packaging a day’s worth of orders, it might be tempting to grab whatever box is nearby to ship a product. But remember: The larger the box, the more you’ll pay for shipping — and for packaging materials to protect the items inside.
“Using boxes that are an exact fit for the items and proper padding materials can significantly reduce shipping costs,” said Binger.
Stock up on perfectly sized boxes for your most popular products and typical order sizes. Save odd-sized boxes from incoming shipments — they might come in handy when a strange order comes in.
As for box shopping, Binger recommends one store: “Uline — they’ll have anything under the sun.”
Reuse boxes from deliveries
If your online store has a lot of incoming shipments from online returns and you have the space, stash any reusable boxes for future outgoing shipments.
“Recycling is an effective way to save money in business or at home,” said Binger. Not only will you reduce the amount you’re spending on shipping materials, you’ll also avoid hauling costs to remove unwanted materials from your property.
Don’t worry if the boxes you wish to reuse are emblazoned with another company’s brand, said Binger. “You can look into kraft tape to cover another brand. There’s also brown cardboard kraft spray paint you can use to de-mark boxes. A few cans of that will easily cover Joe Shmoe’s logo or whatever else happens to be on the box.”
Pad shipments with bubble wrap
“The thing about padding materials is that you always want to be cost effective, but at the same time you want to make sure the material you choose is up to par with the material you’re trying to ship,” said Binger.
Many e-commerce businesses rely on paper to protect their products during shipment, but Binger has found that the low costs of this shipping material don’t necessarily help store owners save money. “Paper condenses during shipping and it will create a lot of room. That can lead the item being jostled around and potentially damaged.”
He recommends bubble wrap for a low-cost way to protect items in boxes.
“Bubble wrap tends to be one of the more cost effective padding materials. Unlike air bags, bubble wrap has hundreds of little bubbles, so you’re never going to run into a situation where all the bubbles pop. It’s one of the most durable options.”
If you’re doing a high volume of shipping, you may find it’s worth investing in an aeration machine. “It depends on how much capital you have. The machines are one to two grand. But the deflated rolls are half the price of regular bubble wrap, and you can blow them up at your warehouse. You get much more from a single roll, and you pay less.”
Choose the right tape
The way you seal boxes may impact your labor costs and the potential for damaged goods.
“I recently worked with a client and we did an analysis on their shipping operation. Not only were they paying too much to use regular clear packing tape, it was not working that well and it was cutting into labor. The tape guns would jam and make staff less productive,” said Binger.
Once the client took his suggestion and switched to kraft tape, their shipping operations sped up, the boxes were sealed more effectively and they spent less money on tape.
“Kraft tape requires a bit of investment up front. It comes on dry roll and gets loaded into a machine that applies hot water to activate the glue. The machine will dispense the exact amount of tape you need for a box.”
Shoppers love getting a package in the mail. With these tips, their box will arrive unscathed, and your bottom line will be protected (as if by bubble wrap).