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How To Minimize Your eCommerce Shipping Expenses

Filling out shipping label

As a business owner, you probably like to have a certain level of control over the product that you sell. And as an online business owner, there is one area of merchandising that you usually have little to no control over, and that is shipping. Once you pack your items and send them off to customers’ hands, there is almost no way of knowing what happens in between.

Not only is shipping stressful, but it can get costly. It can either eat up your profit margin or chase out customers. If you are a small or a big eCommerce company, there are a few things to think about when trying to reduce the cost of shipping. In this article, we will try to help you by giving you the shipping options you can incorporate into your business strategy.

Shipping Strategy

A good shipping strategy is instrumental for the long-run well-being of your eCommerce business. A shipping strategy is essentially a way to meet halfway with your customers, to make their experience comfortable while saving those profit margins. You need to have precise knowledge about the shipping costs of each item. Whatever you are selling, you need to know its worth, size, weight, and the rates of your selected carrier.

Some logistics companies, such as Unival Logistics, work with high-value items, and their clients require an optimal shipping strategy, both when it comes to prices and the shipment’s safety. Companies that sell low-value items can also have an optimized system, and they can save a lot of money by working with fair shipping carriers.

Shipping Rates and Methods

Shipping Packages
Close-up image of mail worker checking information on parcels

The key to your shipping strategy is establishing the method and shipping rates. As an online business, you need to develop trust with your customers, and you do that by being transparent. Deciding on your shipping rates means that you need to determine how much the customer will pay for shipping and what part of the cost you will cover.

A regular shipping rate is when your customer pays all the shipping costs, and how much will an online shopper pay depends on the size of the shipment and the distance it needs to travel. This is not a popular method, as high rates drive off consumers from the shopping cart.

The most popular shipping option is flat rate shipping, which usually sets up the price according to the size of the box, and not the distance or the weight. Most of the major carriers in the US use this shipping strategy.

Free Shipping Option

Customers love a ‘’free shipping’’ option. In fact, there is a higher chance a consumer will decide to order one or more items if the shipping is free. But, as you are an online merchant, you know that shipping is never free, and you need to exceed customer expectations without endangering your business.

There are a few ways you can offer free shipping, the first one being covering the costs yourself. Maybe some major companies can afford to pay it from their own pocket, but it is not the case for most small and medium businesses.

You could increase the price of your item for as much money as it takes to ship it. That way, you met the customer’s expectations but protected your margins. This might seem like you are leading your customers on, so a better way to deal with this is to meet them halfway and be transparent about it. The way to do this is by increasing the prices, but slightly, and covering the rest yourself.

Free shipping can boost your sales, but you don’t want to increase the prices nor pay it all yourself? You could give discounts to certain customers or offer free shipping only on a minimum amount of items.

Item Weight

A great and systematic way to create a shipping strategy is to have detailed information about your products. If you are not shipping at a flat rate, your shipment’s size and weight is significant. When a customer orders a bundle with several items in it, you will immediately know how much it will cost.

Knowing the product size and weight will help you determine what kind of packaging it needs in advance. You don’t want to add too much extra weight with packaging, especially if the item is already heavy.

Packaging

Woman unboxing products
Beauty Blogging. Happy Attractive Lady Unboxing Parcel With New Cosmetics At Camera, Cheerful Social Influencer Woman Using Smartphone On Tripod In Kitchen For Recording Video Content For Her Vlog

When talking about the right kind of packaging for your business, there are three things to consider. First, the packaging has to make financial sense. Some shipping carriers offer free shipping boxes and other types of packing materials. If you need to provide the boxes and the wrapping, you need to consider the margins to avoid losing too much money.

When choosing the packaging, another thing to think about is that it has to be safe for your product. You don’t want it delivered wrinkly or even damaged, depending on what you are selling. Choosing a suitable material will help you with that. For example, poly mailers are great because they are a lightweight and affordable packaging material for items that do not need structure.

And the third thing to take into consideration when strategizing your business’s packaging options is marketing. Now, this is optional and it is not exactly a way to minimize the expenses, but it could have a positive impact in the long run.

In the last few years, and ever since the pandemic started, ordering items online isn’t just for the sake of buying stuff; it is also for the unboxing experience. Packaging with stickers, confetti, and other minor details are slowly becoming a part of customers’ expectation. Pay attention to what company you work with on this aspect. A company that offers luxury packaging solutions will know how to make your product stand out in the era of social media and many brands with unique packaging. Once you establish the branded packaging, there is a bigger chance that somebody will post about it online, and that is free marketing.

Local Shipping

Increasing the local community’s interest in your product can simultaneously minimize the shipping expense. One part of your shipping strategy needs to address the online shoppers who are in your close proximity.

You could offer local shipping on your website and customize your delivery area using a radius method or listing zip codes. If you set up free shipping for the locals, you will not feel it as much as international shipping. Either way, offering local shipping is a great way to minimize eCommerce shipping costs.

If you are a small business and want to connect further with your buyers – reduce the costs of shipping by delivering them the bundle yourself. Of course, larger companies will not be able to do this.

Additional Costs: Insurance and Tracking

Surprised when opening box
Small business parcel for shipping, Happy man opening online shopping package box with parcel while sitting on sofa at home.

Insurance and tracking have a crucial role in the shipping industry. They are essential for businesses that sell high-value items, or the companies that have thousands of orders every day. It is a way to increase your customer service productivity and your overall workflow.

If your business does not take that many orders, if you sell lower-value items, and if you are losing more money than you gain, tracking service and additional insurance are not an option for you.

Many shipping carriers have complementary insurance that covers up to a few hundred dollars worth of items if you can prove their countability. This will work just fine for a small company that doesn’t sell high-value products.

How to Choose a Carrier

Smiling Male Shipping Carrier
Smiling delivery man in red postal uniform standing near trunk of his car with a box and a clipboard in his hands. He is ready to do his job. Friendly worker, high quality delivery service. Outdoors.

Choosing a suitable carrier can take some time. Talk to a few different shipping providers, ask them about their rates, compare and negotiate the prices, get familiar with their packaging options, and find a reliable carrier.


More on this topic:

What Should I Look for in a Shipping Scale?

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