10 ways to reduce small business shipping costs

Written by Guest Contributor

Big tech has changed the way businesses operate. Giants like Amazon and their fast, low-cost shipping have raised consumers’ expectations, so smaller stores need to offer similar things to compete. However, that’s not always easy with high small business shipping costs.

Transportation and logistics cost U.S. businesses $1.64 trillion in 2018, an 11.4% jump over 2017. While small businesses can’t avoid all of these expenses, they can lower them. Here are ten ways how.

1. Use a multi-carrier shipping strategy

One of the best ways to lower small business shipping costs is using a multi-carrier strategy. Different carriers offer varying rates, but which one is cheaper often isn’t consistent. Choosing the best carrier for each individual order can help get the best deal every time. Every time you receive an order, compare how much it’ll cost with each carrier. Remember to include packaging weight, distance, and shipping speed. While this sounds like a lot of work, many postage software solutions will automatically compare rates for you. That way, you can find the best deal in seconds.

2. Choose the right package size

Another step is to rethink what size and type of packaging you use for each shipment. Shipping costs go by the total package weight, so you can get lower rates if you use smaller, lighter packages. See if you can use bubble mailers, thick envelopes, or smaller boxes for some products.

Customers may appreciate smaller packages, too, since they reduce waste. Reducing waste by just one pound a day can stop 325 million pounds of garbage from entering landfills in the U.S. You can take that and promote your shipping as eco-friendly while saving money.

3. Rethink your materials

Similarly, the packaging materials themselves play a big role in small business shipping costs. One of the best options for many businesses is corrugated cardboard, which is both stronger and lighter than regular boxes. That way, you can ensure your shipments stay safe while reducing their weight.

This principle also applies to the insulating materials inside the package. Air pillows may be lighter than foam inserts while providing similar protection, for example. Look through your options to find the lightest possible solution for the safety you need.

4. Offer BOPIS options

Some solutions to reduce small business shipping costs are remarkably straightforward. If you skip the shipping process entirely through buy-online-pickup-in-store (BOPIS) options, you’ll save a lot on logistics. You can also earn more, as 75% of shoppers who’ve used BOPIS say they’re more likely to make another purchase.

Of course, BOPIS is only viable if you have a brick-and-mortar store, and it won’t apply to every order. However, not every order needs to use BOPIS for it to be an effective cost-reduction strategy. Cutting the costs of just a few orders a month will total substantial savings year-over-year.

5. Optimize your warehouse

One solution that’s easy to overlook is organizing your warehouse. Optimized warehouse layouts improve productivity and safety, cutting down the time your business spends on each order. In turn, that lets you handle more orders with the same amount of time and resources, saving money in the end.

A little organization can go a long way. See which products or parts you handle the most, and organize your warehouse to make those more accessible and closer to packaging departments. Keep an updated record of where everything is to help prevent over-selling and over-ordering, further reducing costs.

6. Consider flat-rate shipping

Many small businesses reduce their shipping costs by transferring them to the customer. One of the best ways to approach this is by offering flat-rate shipping. Carrier rates shift often, but if you offer a flat rate, you’ll know exactly how much each order will cost you.

Flat-rate shipping also makes things better on the customers’ side. While free shipping is ideal, if customers have to pay, they’ll appreciate the reliability and transparency of a consistent rate. That way, you can reduce your shipping costs while not pushing your consumer base away.

7. Use third-party shipping insurance

Another way to reduce shipping costs is through insurance. Returned items cost the retail industry $369 billion, but shipping insurance can help mitigate these costs. Covering losses from damaged products can save a considerable amount of money and help keep a loyal customer base.

You can go further to cut costs with insurance, too. While many carriers offer shipping insurance, you may be able to find lower rates from third-party insurers. You can also only provide insurance for high-value items or provide it at an extra cost to buyers, helping mitigate the costs.

8. Limit shipping zones

Shipping to far-away locations leads to high small business shipping costs, too. One way to avoid this is to stop delivering to the most expensive shipping zones. Start by looking at where most of your orders come from to determine what range you need to serve to maintain business.

You may not have many orders in the farthest-away zones. If not, consider not shipping to those areas. That may make you inaccessible to some customers, but if you weren’t getting many orders from those areas anyway, avoiding the high shipping expenses may be more cost-effective.

9. Check your selling platform’s features

Many small businesses sell on platforms like Shopify or Amazon, and these often have opportunities to reduce costs. Look into your marketplace’s features to see if it offers things like real-time carrier rates, outsourced shipping and shipping subscription packages.

E-commerce platforms often offer features like this to entice businesses to keep using their services. Some will be able to get you discounts from leading carriers, others may help analyze rate changes and others may design shipping labels for you. If you’re already paying for a platform, you should take full advantage of it.

10. Look into prepaid shipping

Finally, if you have a consistent order volume, consider prepaid shipping. Carriers like UPS and FedEx offer discounts if you buy a given number of shipping labels upfront. If these numbers match your normal order volume, you could save up to 20% on shipping costs.

Remember that this approach only works if your monthly orders are consistent. If you have high seasonal fluctuations, it’s probably not worth it to pre-pay for labels throughout the year. However, you may have a few months with consistent volumes where you could pre-pay.

Small business shipping costs don’t have to be high

Small business shipping costs can seem intimidating, but they don’t have to be. You have many options for decreasing these expenses, letting you meet your customers’ needs without diminishing profit margins.

Combining any of these ten steps could result in impressive savings over time. Review your business to see what could work best for you, adopt the most effective strategies and enjoy the savings.

About the Author:
Emily Newton is the Editor-in-Chief of Revolutionized, an online magazine showing how technology is innovating different industries.

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