E-commerce is growing rapidly as a choice for vendors worldwide. Digital retail allows a business to reach a much larger market for a much lower cost. At the same time, however, the benefit of a larger market also means the added downside of costly shipping and delivery for small businesses. Without an effective e-commerce shipping strategy, vendors will find it challenging to stay afloat in the highly competitive world of e-commerce. Luckily for e-commerce vendors, a variety of tips and tricks can directly translate to saving money on small business shipping and higher ROI.
Why Shipping Is So Expensive
To understand where money can be saved, a business must first know where their quote price is coming from. The factors that contribute to a shipping price are:
- Delivery time
- Origin and destination
- Weight of the item and packing material
- Extra features like insurance or tracking
These are the pressure points for shipping costs, which rack up expenses – but they are also where the most savings can be found.
One of the most popular options for delivery, the free shipping model, is an expensive prospect. At the same time, customers expect free – or cheap – shipping more and more, and are willing to pay less for quick delivery. For the small e-commerce vendor, this requires a creative approach to offering shipping to customers.
Many options for small business shipping exist and can save money for vendors, including choosing to forgo free shipping altogether. Charging a flat rate, or rate based on your customer’s destination, allows some cost to be recouped, especially if paired with fast, two day shipping to ensure customer satisfaction.
Choosing a Carrier
There may not appear to be any differences between the three major carriers, but judging based on appearance is a way is a great way to lose money. In most cases, USPS is the cheapest way to ship a package. Prices sometimes are lower as much as 50%, particularly on lighter deliveries.
That said, it pays to shop around – USPS is not ideal for heavy, bulky packages traveling long- distance. Shopping around, however, can cost just as much time as money is saved, which is why e-commerce shipping services like FirstMile offer multi-carrier shipping optimization.
Regardless of who you choose, you can save more money by reaching out to the carrier’s small business department. Most carriers offer negotiable rates for high volume customers. Don’t be scared of the term “high-volume” either, as this can mean anywhere as low as 100 packages a month. E-commerce shipping firms can also leverage further discounts due to their premium rate deals with different carriers, saving you even more money in the long run.
A surefire way to save money is to avoid making costly mistakes. Overpaying on postage happens more often than you might think, and can cost businesses up to 20% more annually for their shipping costs. This is why it pays to lease a postage meter for your deliveries – these machines will weigh and price your packages before you ship them, meaning you won’t overestimate costs and over-pay.
Overstuffing your package is another common mistake that costs you money. When packing items, make sure you use only what is needed to protect your goods. Consider using lightweight packing materials such as bubble wrap or Styrofoam peanuts instead of heavier materials. Even one ounce saved translates to real cost-efficiency.
Many shipping companies offer free supplies in their offices, as well as pickup and delivery options that save you a trip to the shipping office. Though you will be at the mercy of the shipping carrier’s schedule, this is a great time-saving measure that allows you to focus on more important business.
If you are shipping between 150 and 20,000 pounds, you are shipping what is considered “less than truckload” loads, which requires the delivery company to consolidate your packages to fill their vehicles. Unfortunately, this also means you pay more for shipping less weight. Freight consolidation services, or e-commerce shipping companies, can help manage your shipments to consolidate deliveries and save you the added cost for LTL from the carriers. You can also save by delivering more goods in one trip, thus reducing wasted space.
Keep in mind that special handling requirements for goods will raise your cost of shipment. Though unavoidable in some cases, this is a factor to consider nonetheless.