No one likes a price jump, and shipping prices are no different. With the increasing popularity of the ecommerce industry, shipping prices are only projected to increase over time. While shipping prices are projected to become higher, that doesn’t mean there aren’t a few strategies for keeping shipping rates low. With a bit of mindfulness and awareness of shipping logistics, merchants and consumers alike can reduce how much they spend on shipping.
In this article, we’ll explore why shipping is so expensive, how to reduce shipping costs, as well as how ShipCalm can help.
Why Is Shipping So Expensive?
Shipping costs have increased, but what has caused those rates to increase so dramatically? At the beginning of the coronavirus pandemic, online shipping and ecommerce soared. With the demand to stay indoors, many individuals adjusted the way they view purchasing their essentials. The sudden demand for ecommerce infrastructure wasn’t met with a reliable system of labor to accommodate it, so costs have increased across the board.
It’s also standard for shipping carriers to raise their shipping rates annually. From fuel and labor to packaging and shipping materials, many merchants in the ecommerce space have struggled to stay competitive as they adjust to soaring shipping prices. Especially for small businesses beginning to expand and grow their profits, taking control over reducing shipping costs can improve a business’s bottom line.
How to Reduce Shipping Costs
With soaring shipping rates and increased carrier costs, it can be hard to stay competitive within the ecommerce space, especially with large shipping titans like Amazon in the way. Having smooth shipping systems in place ensures ecommerce businesses are successful, consumers tend to appreciate streamlined logistics and lower shipping costs when choosing a place to order from twice. Let’s review a few proven tactics for keeping shipping costs affordable and reducing shipping-related losses whenever possible.
1. Reduce Distances
Generally speaking, the farther the distance a package needs to travel, the more expensive the shipping will become. A simple way many people will determine how to reduce shipping costs is by strategically reducing the distance of their goods. By reviewing shipping zones, the geographical areas that carriers ship between, online businesses can adjust the point of origin by looking at the different distribution centers within the US. Zones range from Zone 1 (close to the origin point) and Zone 8 (the farthest point). Try to avoid higher shipping zones to take advantage of lower shipping rates by teaming up with shipping partners with numerous distribution and fulfillment areas.
2. Change Packaging
Outside of delivery distance, the weight of a package can also influence a higher shipping cost. By paying attention to the packaging used when preparing goods for shipment, merchants can save a considerable amount of money on shipping costs. It’s possible that if a businesses’ shipping costs are exceptionally high the shipping supplies being used are to blame. Here are some tips for changing packaging to prevent shipping costs from being too high:
- Change box materials – When possible, use a lighter corrugated box for packaging. Less weight is more savings!
- Change Infill material – It’s possible the package is being weighed down from within. Use lighter infill materials or air pouches when applicable.
- Use bubble mailers/envelopes – One of the lightest packaging materials is bubble mailers and envelopes. Ditch the boxes and use these whenever possible.
3. Reduce Package Size
Along with the same idea of changing up packaging, it’s also worthwhile to identify if reducing the package sizes is a possibility. While a box might not be physically heavy, the size and dimensions of the parcel play a huge factor in calculating shipping costs. If products are smaller in size, boxes should be sized appropriately. Use less infill whenever possible and utilize smaller shipping containers to reduce shipping rates. This is another way using bubble mailers and envelopes instead of boxes can be a smart choice, as they tend to be more compact while still protective of products.
4. Negotiate Shipping Rates
Another popular method ecommerce businesses will utilize to reduce shipping costs is by negotiating shipping rates with shipping carriers by promising a larger volume of packages shipped. By increasing the volume of goods sold, shipping carriers are more likely to accept a lower shipping rate. Shopping around for a carrier that is willing to negotiate shipping costs can drastically impact shipping costs, especially for smaller online businesses.
Another idea is to consider adjusting your own shipping rates to accommodate the price of shipping. This price fluctuation can be a reflection of the average shipping costs, and help reduce profit losses through sudden increases in sales. Another option is offering free or discounted shipping for customers that purchase a certain amount at one time (encouraging fewer small repeat orders).
5. Prepaid Labels
For businesses that are shipping the same type of product repetitively, it might be lucrative to purchase labels in advance to save on shipping costs. Shippers will need to know the weight and dimensions of the packages for this to be a feasible option, but purchasing labels in bulk can save merchants a large portion of their profits.
6. Use Third Party Insurance
There are many scenarios within ecommerce where merchants are advised to spend money to make money. Third-party shipping insurance is a great example of a worthwhile investment for online businesses that want to minimize the financial consequences of human errors and uncontrollable events that might occur after a package has been handed off to shipping carriers. Shipping insurance coverage conditions will vary based on each unique insurance company but typically covers a large variety of shipping-related incidents outside of the seller’s control. This includes delivery events such as product damage, delivery delays, or shipping carrier errors.
7. Consolidate Orders
Another simple way to save money on shipping costs is by paying close attention to repeat orders. Consolidating orders is a quick way to save money on packaging materials and shipping costs at the same time. Reliable inventory management is a critical step in saving money on shipping supplies and delivery costs, so ensure that your shipping logistics are ironed out before settling on high shipping costs. There are many online tools and software that entrepreneurs often utilize to track inventory and potential consolidation opportunities or utilize a third-party logistics service to take over that element of shipping management. No one likes wasted packaging materials, so business owners can anticipate a proven improvement in shipping fees.
8. Use Hybrid Delivery Services
The increased popularity of ecommerce services came with an evolution of the way we ship goods. Many of the pesky shipping fees online businesses will run into occur during the last mile of the shipping process. Hybrid delivery services, such as UPS SurePost and FedEx Ground Economy, are ways to save money on these fees by streamlining the distribution routes to reduce shipping costs. These services offer residential shipping for low-weight shipments, delivered within 2-7 business days. Shipments need to be less than 70 pounds and no longer than 130 inches long. These services are potentially cost-effective for those who frequently use a traditional home delivery service.
9. Use Regional Carriers
For online sellers that ship a lot in the same area, they could find many benefits in using regional carriers. Many new businesses will prefer a carrier due to proximity to themselves, but once orders begin to increase for the same national hotspots, regional carriers might be more profitable. Shipping rates will vary largely by the carrier and area of the country, so doing a little extra research on the cheapest option is highly suggested.
10. Use a 3PL Provider
Another smart way to reduce shipping costs is to partner with a 3PL to help with a comprehensive logistics program to identify improvements within your current shipping infrastructure. Third-party logistic services, like ShipCalm, are designed to save money on shipping fees and streamline shipping processes to maximize profits. Plus, as the merchant, business owners can take a step back from time-consuming shipping responsibilities and focus instead on other company matters. Find out more information on how a 3PL can benefit your company.
ShipCalm Can Help Your Business Reduce Shipping Costs Today!
Growing a business involves many moving parts and it might seem simple to neglect little details such as shipping logistics when focusing on profits. When maximizing sales and expanding, saving money on shipping costs can drastically influence potential growth. Asking yourself why shipping is so expensive is a natural conclusion for any ecommerce company starting to increase its order fulfillment capabilities. Luckily, a third-party logistics provider like ShipCalm can save you money on shipping costs and save you time simultaneously.
ShipCalm knows how to save money on shipping logistics, analyzing the best distribution centers and packaging processes to optimize savings. Boasting competitive pricing and easy-to-use services, ShipCalm can make shipping products a breeze. New and growing businesses can rely on ShipCalm to improve and elevate the way your company ships orders. Focus on making your customers come back while ShipCalm takes care of the delivery. Contact a ShipCalm representative today to learn more!