By: Atikah Hanafi
Shipping cost is among the main cause of headache among small business owners, especially when they are trying to compete with the giants like that of Amazon which continues to raise the bar by offering free and fast shipping. It is no surprise as shipping can eat up as much as 25% of your overall business costs according to Peter Gasca of Gascaco.
In order to stay on track, you need to find ways to cut down the shipping costs without hurting your business. Here are 7 ways you can try to reduce your shipping cost.
Negotiate like a pro
It is no rocket science that the more you ship, the lower your shipping rate – an advantage which, unfortunately, not all small or medium-sized business are able to enjoy. However, you can still get away with better rates with negotiation. Try to ask for cheaper rates based on annual shipping volumes instead of per shipment.
You can also work with multiple carriers first to see who can offer you the best shipping rates. The process of switching a shipment partner can be a hassle and costly for you – a fact that is also known by carrier companies. Once a carrier get a wind that you’re leaning to their rival’s offer, they would definitely offer you better rates and greater incentives to lure you as their clients. Hence, use this situation to your side by asking whether they can give a better offer than their rivals.
If your business only focuses on one specific region, it is more cost effective to opt for regional shipping that cover your shipping route. Plus some major shippers might not offer last mile delivery service and therefore, resort to mail carriers to do the job. Nevertheless, if you can find a carrier that can offer a hybrid service (i.e. both freight forwarding service and end-mile delivery), you’re in for a jackpot!
Use third party insurance
When it comes to insurance, opt for third-party insurance provider as their rate is usually cheaper than the ones charged by carriers. Otherwise, find the carrier that offer the best insurance rate using an online comparison tool, if you rather avoid the hassle of working with multiple companies to manage your shipment.
Look out for discount and extra charges
Some carriers may able to offer you a reasonable rate on the surface, but after adding all the extra charges, they turn out to be a lot more expensive than other shipment and fulfillment companies. Look out for additional charges that might be imposed by your carrier such as fuel charge, freight rate, accessory charges, etc.
On the other hand, there are also carriers that offer discounts under certain conditions and volume (i.e. loyalty discount, bulk orders, etc.). Dig around whether they offer partnership and member discount. It won’t hurt to give them a phone call to find out more.
Reconsider your packaging
There are many ways you can do with packaging to ease up the sting from shipping cost. Instead of using boxes which are usually heavier and larger, opt for poly mailer, bubble mailer, padded envelope to wrap your products. The size and weight of a package will directly affect the shipping cost. Cut the size, cut the prize.
Another options you can try to further trim the cost is using the free packaging provided by your carrier. You can also avoid unnecessary dimensional fee if you are using the carrier’s packaging.
We heard again and again how useful it is if we were to compare prices before making a purchase. The same goes to shipping. Another way to cut down your shipping cost is to compare the shipping rates offered by your potential carriers. If manual comparison might take a lot of work and time, you can just use online comparison tools to determine the best shipping rate that suits your need.
When making comparison, you must ensure to use fixed variables for evaluation. Compare the rates based on packages in similar weight and dimension but also take note on any possible hidden charges imposed by different carriers.
Use online shipping solutions
Using online shipping solutions can definitely saves you a lot of time and money if you were to do the fulfillment by yourself. Some cloud-based shipping services allow you the freedom to procure, receive, repack and resend parcel in an efficient yet painless way. You can also skip your visit to the post office counter and print your air-way bill online which will not only save your money but also time.
An article by Bigcommerce.com found that 75% of consumers won’t pay more than $10 for shipping. Hence, managing your shipping cost is vital for your business. As you trim the shipping cost, you’ll definitely be able to offer better shipping rate to your customer without losing much of your profit.