For e-commerce businesses dealing in physical goods, shipping plays a crucial role in business profitability. Shipping costs can sometimes be on the high side, with shipping companies constantly revising and increasing their rates based on the ever-growing demand for e-commerce services and other factors.
Because of this, small businesses need to devise strategies on how to reduce freight costs to a minimum, to be able to remain relevant, boost profitability, and increase competitiveness with the likes of Amazon, which offer free shipping services to their customers. Various tips can be followed to lower shipping costs and boost profit margins. In the following paragraphs, we will be looking at these tips and how to use them to widen your margins.
Tips on how to reduce shipping costs
There are a lot of tips on how to reduce shipping costs, especially for small-scale businesses. Below are some very effective ones
Don’t stick to just one carrier
It’s a bad idea to settle for the first shipping carrier you come across. Leverage the availability of a wide array of shipping services and compare their shipping rates to get the best bargain. You can even attempt to strike a new bargain with your current carrier if you feel there’s a need to do so. Don’t just feel too comfortable with your current shipping rate. There’s always room for a better bargain.
Also, you need to be familiar with various information regarding the package such as the size and weight of the package, the origin, and destination. You can use this information to get a better bargain on shipping rates.
Use packages that your carrier gives you
Using your packaging would do a lot of good to your business branding. However, this can also attract extra shipping costs. Unless you can afford these additional costs, you should stick with the packaging provided by your shipping carrier. Doing so would significantly reduce shipping costs and help widen your margins.
Look out for Discounted Supplies
One way of getting discounted packaging materials like bubble wraps and poly mailers is purchasing them in bulk. This would significantly reduce transportation costs and improve business cost savings. Additionally, you can also look out for discounted or even free packaging supplies provided by some big shipping carriers like FedEx and UPS.
Use Online payment for Shipping
Paying for shipping services online can give you discount rates of up to 60% for some shipping carriers. This is a lot when you consider the number of shipments shipped monthly and would increase your profit margins.
Use Poly mailers instead of Boxes
Poly mailers take up less space in the transportation vessel and are also very cheap compared to boxes. This contributes to reduced shipping costs and should thus be considered in preference to boxes. Poly mailers can be used in packaging non-fragile goods such as pillows and sweaters, rather than using boxes that are much more expensive.
Use of Hybrid services
UAE shipping companies and other shipping carriers such as UPS and FedEx offer hybrid services that are generally cheaper compared to the normal shipping services. In addition to the less cost, the shipping carriers also pick up the packages and deliver them to the post office nearest to the destination. However, though this is a good method for reducing shipping costs, the delivery time is also slower.
Use prepaid shipping
This involves the purchase of shipping labels and placing them on packages when you are about to ship them, rather than paying at the point of shipping. This method of payment offers discount rates of up to 20% and reduces shipping costs to a very large extent. It is also ideal for same-weight packages that are shipped out frequently from the company.
Decrease the shipping distance
Shipping to destinations over long distances or higher shipping zones would incur high shipping rates and longer shipping times. Therefore, decreasing shipping distances by eliminating shipping to higher shipping zones would save you a lot of money and time, in addition to getting lower shipping rates and better shipping options.
Use of 3PL Fulfillment Centers closest to your Customers
One way of reducing shipping distances is by partnering with 3PL companies with several fulfillment centers located globally. This would significantly reduce shipping distances, as the packages would be shipped from fulfillment centers closest to the package destination. Reduced shipping distances translate to reduced shipping costs, reduce trucking costs, lead to faster deliveries, and higher profit margins.
Also, 3PL companies offer discounted shipping rates translating to reduced shipping costs and higher business profits.
Other tips include
- Understanding shipping costs
- Manage your shipping volume
- Dropshipping
- Use of several shipping carriers
- Use of shipping software, etc.
The bottom line is that shipping costs are unavoidable and play a huge role in the overall profitability of any business, including small-scale businesses. Therefore, the need to look out for strategies that would reduce shipping costs and boost profit margins.
