When running a business it’s important to stay on top of your outgoings in order to be the most profitable that you can be. Part of staying on top is to identify where costs can potentially be reduced, allowing you to increase your profit margin. These costs could be saved by reducing labour costs, reducing the cost of raw materials, reducing expenses or in the case of this article, reducing shipping costs.
As an eCommerce business that ships products to your customers, the chances are the costs of your shipping will be one of the biggest expenses you face. Ecommerce shipping is a big overhead and any savings that can be made can make a big difference to your balance sheet. For this reason, below we look into four ways to reduce shipping costs for your small business.
Reduce the weight of packages
If you are in the shipping industry then you will know weight equals money. The greater the weight of the product you are shipping, the more money it will cost you to send. This means that you want to pay extra attention to the weight of what you are sending if you want to try and reduce shipping costs. If you haven’t already researched it, try and send your products in lightweight packaging materials. You could look to have your own custom shipping packages made to fit around your product perfectly or use corrugated boxes. Even the smallest amount of reduced weight can make a big difference to costs in the long run, especially if you ship a lot.
Choose the right-sized packaging
This is an error that too many companies make! Sending your products in the wrong size packaging will not only cost you more but it may not be environmentally friendly. Perform a review on your packaging and confirm that it’s the best packaging for what you are sending. It could be that with a little research, there is a more suitable option. Plus, technology changes over the years, allowing more efficient ways to produce packaging. If you haven’t performed a review in a couple of years, you could be missing a trick.
One exciting development to consider is the advancement in packaging technology. For instance, a 100 cubic feet shipping crate could be ideal for your specific needs. These crates can accommodate large, heavy items while ensuring they’re well-protected during transit. By selecting the right-sized packaging, you reduce your shipping costs and contribute to a more sustainable and environmentally friendly approach.
Pass the cost onto your customers
When was the last time you reviewed the pricing that you charge your customers for shipping? If it was set a few years ago, you may be undercharging as the price of shipping has most likely increased from then. Do some research on what your competitors are charging and if it’s more, match it or increase but keep it less than theirs and offer it as a benefit when shopping with you. Even a small increase in shipping can make a big dent in your profit and loss sheet.
Passing the cost of shipping onto your customers can be a strategic move, but it comes with several risks that must be managed effectively. Customers may be unhappy about increased shipping costs. Hence, communicating the changes transparently is crucial. Explain that shipping rates have risen and that you’re adjusting accordingly. Moreover, highlight any additional benefits they’ll receive, like faster delivery times or improved packaging.
Research your competitors’ pricing and aim to stay competitive. Offer unique shipping perks, such as free shipping on orders over a certain amount, to offset higher rates. Higher shipping costs could deter potential buyers if your products are in a competitive market. Test different pricing models and assess customer reactions to find the right balance.
Ensure that your order fulfilment and shipping processes are efficient. Inaccurate or delayed shipments can lead to increased customer complaints and returns. Implement tracking systems and partner with reliable carriers. Introduce loyalty programs or subscriptions that offer reduced or fixed-rate shipping for repeat customers. This can help offset increased shipping costs and encourage customer retention.
Review the company you are using
It’s easy to get stuck in a bubble and continue using the same supplier that you started with. But over time, it may be that their prices are not as good as when you first signed up for them as your shipping company. Every now and then make sure you perform a review and make sure their shipping prices are in line with their competitors. If not, you can ask them to reduce their prices or consider moving to another supplier.
