Your shipping costs significantly affect your company’s profitability. Most carriers tend to revise their rates yearly. Demand in the e-commerce sector leaves a shortage of everything from truck drivers to warehouse space.
Amazon makes small business shipping more challenging by raising the standard for faster free shipping — all of which becomes increasingly more costly to replicate for small businesses.
eCommerce companies should be aware that 83% of shoppers say convenience is more important than it was five years ago, covering in-store and online purchases. “Buy online, pick up in store,” and other elements increased your competition due to the pandemic. So, offering trustworthy, fast, affordable shipping options is more critical than ever.
The number one reason why people abandon online shopping carts is high shipping costs.
How can a small business compete with large companies regarding shipping?
Low shipping costs are an essential tool to improve your margins. Unfortunately, this is much easier said than done.
There are a bunch of different ways by which you can reduce your shipping costs. We get that. So, this is why we made this guide to help you reduce shipping costs, provide a better customer experience, and earn more profit for your business. Keep reading on to find out.
1. Avoid shipping by air more than what is necessary
Flat-rate shipping means the price is not connected to the item’s weight, shape, or size. It’s based on how much you can load into the carrier-issued box.
In addition to weight, carriers consider package dimensions when estimating shipping costs.
Using a box that is too big for a lightweight item will cost more than expected because of the package’s space. Larger containers can lead to larger dimensional weight, making shipping more expensive.
To reduce package weight (and reduce shipping costs), try the following:
- Minimize your product packaging. The packaging around your products is an essential part of your branding. Keep in mind that it also adds to the weight of your products. Look for creative ways to communicate your branding without adding much to your orders.
- Reduce the weight of your infill. Do some test runs and evaluate the weight of a typical order using several types of infill to find the lightest option. Use air-filled pillows whenever possible.
Small reductions in packing materials can add significant e-commerce shipping cost savings over time.
2. Lower the shipping distances
Many brands pay high shipping fees when they ship to far-away destinations.
The farther the shipping destination is, the higher the zone and the more expensive and slow it is to ship. In that case, you can save much money over time and profit from better shipping options with lower rates.
Fast shipping can mean the difference between winning a customer and losing one. We help e-commerce businesses stay competitive daily with fast delivery through world-class courier services. At SMS Fulfillment Solutions, we offer you multichannel delivery and direct injection points in different countries for faster shipping at affordable prices.
3. Stay on top of shipping carriers’ pricing changes
While a single-carrier strategy is a time-saver, using multiple shipping carriers offers several benefits. Busy shippers often choose a single carrier strategy and affordable bargain rates. This streamlines decision-making, as there’s no need to research rates online or request a spot quote.
Every year, major shipping carriers increase their shipping rates as part of the annual general rate increase. These increases vary by many things, such as service level, transportation, weight, and other variables, but are generally equal to about a 5% increase on average.
Also, carriers may implement surcharges at various peak season times (such as the holidays and Q4) when there is an overflow in packages being shipped. They also implement other surcharges annually, going from large boxes to signature-required surcharges.
Unfortunately, there is no way to reduce shipping costs for these rate surcharges and increases. You’ll either have to include them in the shipping fee you charge your customers or offset them some other way.
4. Consider a Multi-Carrier Strategy
Some carriers offer better options than others for different types of shipments. Using a multi-carrier shipping method, you can choose the best carrier for each shipment (domestic vs. international, oversized shipments, etc.).
You can switch to another when service goes terrible with one carrier in a multi-carrier scenario. This is useful if one carrier discontinues service to certain areas, becomes sloppy, loses a lot of packages up to their rates, or is impacted by bad weather.
At SMS Fulfillment Solutions, we understand that every business has different needs. We provide the flexibility to handle the rapid growth and high seasonality critical in the e-commerce industry.
We advise you on volume shipping best practices, enabling you to choose the most appropriate carriers to suit your product range or business model.
5. Encourage your customers to place orders early
It is wise to over-communicate with your customers during peak season, high-volume events, or periods for your e-commerce business (e.g., heading into Halloween for brands that sell costumes). They need to place orders online to ensure they get delivered on time.
The carriers have breaks for each service during the holidays to help prevent presents from arriving late. For customers who want to lower shipping costs, this will involve placing orders as soon as possible to avoid paying more for expedited shipping.
On top of running out of time as the dates approach, additional circumstances may impact breaks, such as labour shortages, weather conditions that prevent carriers from shipping, national holidays that close down operations, and other factors.
Any logistics company must make many steps over the months leading up to the holidays to prepare for peak season. If you are working with a 3PL, pay attention to their specific carrier cutoffs, inventory receiving cutoffs, holiday turnaround times, and general holiday schedules. Every brand must pay close attention to relay this information to its customers.
Conclusion
A third-party logistics (3PL) partner such as SMS Fulfillment Solutions can offer you economical shipping for small businesses! When you cooperate with us, we will ship your product to your customer from one of our closest locations to avoid extra zone charges and pass some of our negotiated carrier shipping discounts on to you.
We can also obtain fair shipping rates because we do bulk business with all major carriers. This way, there’s no negotiation needed on your part. Of course, that’s not all that we do. We provide custom packaging according to your brand! Contact us for a customised offer within 24h and the best in the market fulfillment rates.
