6 Tips for Small Businesses to Reduce Shipping Costs

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Shipping cost is one of the prime expenses for many small businesses and e-commerce stores. Most carriers revise rates each year, and small corporations and e-commerce companies face the pressure of increasing shipping charges. High shipping rates are unappealing to customers.

Moreover, e-commerce giants like Amazon give tough competition to small enterprises by offering free shipping all over the globe. Hence, it becomes essential for small companies to learn how to reduce shipping costs. Low shipping cost allows you to generate higher profits and use the saved money in developing your business.

There are several different tips to reduce the cost of shipping; read on to find out how.

1. Negotiate The Shipping Rates with Carriers

• Compare Prices

You don’t have to be a large corporation to get discounted shipping rates. The higher the shipping volume, the more discounted rates. Comparing prices and negotiating with carriers for lower rates can benefit a smaller enterprise. Talk to multiple movers and take one’s offer to its competitor as leverage to negotiate your rates.

• Use Freight Forwarders

Many companies need to ship overseas, which is not cheap. Therefore, negotiating with carriers can have a significant impact on your costs. However, it is not an easy task to reach a deal with them for cost-efficient shipping rates. Here, you might need the help of global shipping and logistics companies. With decades of experience in freight forwarding, they develop long-term relationships with carriers at ports worldwide. As a result, they make the best use of their purchasing power by bargaining carrier rates and helping their customers reduce shipping costs.

2. Reduce Package Weight and Dimensions

• Buy a Postage Scale

Shipping heavier packages generally cost more unless you use flat-rate shipping. Therefore, you should consider investing in a postage scale. It helps you calculate costs accurately and gives you a better idea of the package weight. In this way, you only pay the required charges instead of a higher rounded figure.

• Use Various Sized Boxes

Most carriers charge for the dimensional weight of a package. It’s better to invest in various-sized boxes so you can reduce dimensional weight as much as possible. You can save a significant amount by using smaller boxes for lightweight items, better fitting packages that require less filler material and packing multiple items in one box.

3. Right-Sized Packaging

One of the cost-effective tips is to choose the right size of packaging for your product which can save you a significant amount of money. You might consider the following:

• Use a Custom Shipping Package

If you manufacture a product in high volume, you might consider custom packaging. It allows the shipping package to match the shape and size of the item, which results in less use of packing material. Additionally, if the product sells in high volume, the expense of designing a custom pack offsets the increasing shipping costs.

• Choose Poly Mailers

Another option that can help you reduce costs is using poly mailers. If you ship soft, small, and non-fragile goods like clothing, switch to poly mailer bags. They are cost-effective, take less space and require fewer packing supplies like conventional tape or bubble wrap. You can use different-sized polybags if your order contains different combinations of products.

4. Offer Local Delivery or Pickup

• Use Regional Carrier Instead of International Carrier

Research and find out where you need to ship your products. Regional carriers can be a more viable option for local deliveries than international carriers. These regional carriers operate in specific areas, single states, or multiple connected states.

• Use No Carrier

You can also opt not to use a carrier at all. Local delivery is a convenient option for small businesses that do not own a physical store. As an online retailer, you let the customers shop online and deliver their orders yourself instead of indulging in carrier services. In contrast, those who own a physical store can allow customers to pick up their online orders from the store themselves.

Offering local delivery by yourself allows you to connect with your local community, improve customer experience, and increase sales. In addition, self-pick-up will let you attract those customers who like to buy online but pick up in person.

5.  Check Out Hybrid Services

Using hybrid services can turn out to be very economical for small businesses. Hybrid services use different carriers that pick up your packages and pass them on to other major carriers. The closest post offices to the final destinations receive those packages and hand them over to the local mail carriers. They then finally deliver to the end consumer. Different movers involved in hybrid services significantly reduce shipping costs than a single carrier responsible for delivery. In some cases, hybrid services can reduce costs by 50%. 

However, in hybrid services, there are specific weight, volume, and dimensional restrictions for the package. They are also slower than usual delivery methods. Therefore, this might not be the best option for businesses that rely on fast and next-day delivery.

6. Consider Shipping Insurance with A Third Party

It is understood that some packages might be lost, damaged or stolen along the way. Hence, you might need to determine if you need insurance to cover the cost of these losses. Consider the value of your shipment; if losing one affects your bottom line, then shipping insurance can be a sensible option. In contrast, if the shipment product is at a relatively lower cost, then you may not need insurance.

If you finally opt for shipping insurance for your small business, it’s better to consider third-party insurers. They are usually inexpensive and, in some cases, can save you money by 50%, which is only applicable to items with significant value.

Final Word

While running an e-commerce business, you can’t avoid shipping costs. Therefore, learning how to reduce shipping costs and having the right strategy can help you grow and expand your small business. In this article, we have discussed several tips which can help diminish your shipping costs by a substantial margin. In addition, you must know what works best for your business and how to create a balance. You may also need to consider the fluctuations of the shipping costs and often revise your strategies accordingly.

Lower shipping costs can save you lots of money, but you may also need to consider other essential factors for the long-term growth of your online business. Some of them include continuous improvement with innovation, adaptation to changing consumer preferences, following e-commerce trends, investment in augmenting your website, marketing, and social media and buying a higher volume of inventory to increase sales. As a result, you can also beat your competitors and generate higher revenue.