Table of contents
- Introduction
- What are the most important factors in determing shipping costs
- 10 ways to save on shipping costs in 2024
- Conclusion
Introduction
If your small business or business is looking for ways to save money in 2024 and beyond, then cutting shipping costs might be one of the easiest ways to do so. Here are some solid questions to ask to help you navigate your shipping costs reduction journey. Is there a way to get cheaper shipping? What is the cheapest shipping method for any small business or business? Who has the cheapest shipping rates? What are ways to reduce shipping without compromising your customer service or customer experience.
What are the most important factors in determing shipping costs?
Before diving into the 10 ways to save on shipping costs in 2024, it is important to understand some shipping basics and go from there. What are the most important things that affect your shipping costs in the first place? Here are the key things listed below.
Size
The size of your shipment really matters when it comes to costs for obvious reasons. The bigger the packaging the higher the costs will be to ship your item.
Packaging
This one goes hand in hand with size, but packaging is also super important in determining how much it will cost to ship an item.
Location
The father the shipping point from where your business is will play a major part in how much you will spend on shipping.
Value
How valuable your shipment is will also play an important part in your shipment especially if shipping cross border or internationally.
Fees
Import/export fees will also have an impact on your shipping costs. These are costs associated with clearing shipments going across the border or internationally.
Once you have a true understanding of how the above 5 factors affect shipping then you will be able to make adjustments to reduce shipping costs and boost your small business profits.
10 ways to save on shipping costs in 2024!
1) Pack with corrugated boxes
You might not have any control over the size of your product but you do have control over how you package your product. Always try to pack your items in corrugated boxes. Corrugated boxes make it easier for courier companies to handle and transport your items. They are also easy to stack and allow couriers to utilize the space in their trucks better. In fact, some courier companies will tack on a non-corrugated fee to your shipment if you ship it in anything but a corrugated box.
2) Use packing materials
Not only is it important to pack your item or items using corrugated boxes but you should use packing materials inside the box as well to help minimize in transit damages. This one is often overlooked when thinking about costs with most small businesses. Having a damaged product show up to your customer has consequences and will affect your shipping costs.
What are some of the consequences of poor packaging?
Having to send another product- this affects your bottom line and could have been avoided if you used bubble wrap or foam inserts when you shipped the first product to your customer. Couriers will most definitely wash their hands of responsibility with a package that was not wrapped or secured properly inside.
Increased labor- not only do you have to send a new product to your customer but you will have increased labor to handle the customer service, tracing and claims aspect of a damaged shipment.
Dissatisfied customer- a customer with a damaged product at their door will be a dissatisfied customer. Not only do they have to wait to get another one but the annoyance alone might make them go somewhere else.
3) Analyze Value vs Cost
For obvious reasons, many small businesses will opt to go with the cheapest courier but this might not be a good idea. Know what you are getting when selecting a courier or carrier for your shipping needs. Here are some key questions to ask before choosing a shipping company that is right for you:
What is their on-time ratio? How often are they on-time verus not on time? You will want to stick with a company that is at least over 90 percent- 100 percent would be golden.
Why is on-time ratio a key factor in reducing your shipping costs? It matters because if your small business has a courier that can get it right the first time or get your shipment there on-time all the time, it will ultimately reduce some of the other things discussed earlier such as increased labor and additional shipping to resend your product. A late product will sometimes mean having to expedite another one to your customer. Rush shipping costs more money.
Do they understand your industry? Not every courier will understand the nature of your industry or why shipping deadlines are important. For example, shipping to a trade show without the right partner can mean the difference between having something to display at the show or standing there empty handed. A trade show usually runs for a specific amount of days and time. Some are even one day. If you have a show on February 5th and your shipment shows up on February 6th, what's the point? Your small business might have to seek out a shipping partner that specializes in the nature of your industry. It might costs a little bit more initially but in the end, their success will save your business in the end.
4) Exclusiveness can pay off
It is often beneficial or cost effective to create a true partnership with your shipping provider. This will allow your business to negotiate better rates based on exclusiveness. Also, get to know who your shipping rep is at the courier company you are using. Ask your rep, is there a way to get cheaper shipping rates with their firm? Oftentimes, you can negotiate a better baseline discount with them. They don't want you to go anywhere else and will work with you to create an exclusive relationship. One in which you save more on your shipping. Sometimes hopping around from one company to the next can harm the bottom line for your business.
5) Choose the right shipping method/service
The method in which you choose to send your shipment matters a lot. Rush shipments will cost your firm a lot. Here are some common shipping methods or services to consider:
Ground or Standard
This service goes as the name suggests by ground and takes the longest via courier or carrier service. It is often the cheapest method. Shipments are delivered usually by end of day after the package gets to the consignee.
Express or Expedited
This is an upgraded service level and shipments are delivered next day by end of day. Costs are obviously more than Ground or Standard service.
Express Saver(3pm)
Shipments are delivered overnight and guaranteed by 3pm. by the courier company
Express Early am(9am)
Shipments are delivered as early as 9am. This is a premium service and should only be used if necessary and you must also ensure that your consignee is open at that time to receive your shipment. Otherwise, you will end up spending more to upgrade and not get the intended result. You might even be charged a re-delivery fee by the courier or carrier, which adds more to your shipping costs.
Related video: How to schedule a shipment using Purolator?
To avoid paying more for shipping than is necessary, it is recommended that you plan properly the entire production of your product. If you plan on using ground service to save costs, then ensure that it is shipped in enough time. It is also recommended that you add a day or two if you can to the shipping time to account for any in transit hiccups- because they will happen.
7) Prepaid option
If the customer requires or asks for an express or expedited service, build it into your costs to the customer, that way it becomes part of your selling price to your customer. Or let the customer decide how they want the product shipped and charge them for it.
8)Use Free supplies
Use the packing supplies such as boxes, envelopes, mailers and sleeves that are provided for free from most courier companies. This way you can save on having to supply or buy these items yourself. Most courier companies love when you order supplies from them, they see it as a good sign that you are commiting to using their services.
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9) Pick-up option
Offer a pick-up option for your product allowing customers to come to you and pick up their items. This is a great option if your customers are local to your business and can easily come in and pick up their product or products.
10) Gain more knowledge
Having a shipping department that is knowledgeable will go a long way in helping you reduce your shipping costs. Your shipper or employees should be versed on the following:
Dimensional weight vs Actual weight
Dimensional weight is the weight that the courier or carrier company will use to charge you for your shipment. It is usually a weight that is cubed using the length x width x height of your package. Your actual weight often will be different from your dimensional weight. It is important to know the differences between dimensional weight and actual weight when calculating your shipping costs to your customer. This is another key area where using the right packaging will come in handy.If you don't then, you might end up charging too little, which means that your small business will pay for the difference.
Related video: how to calculate dimensional weight?
Profit Margins
Does your shipping department understand how shipping fits into the overall profit margin of your business? Do they see shipping as an isolated cost when calculating your profit margin or are they also trying to find ways to reduce shipping to boost your overall profits?
Production delays
Having a good knowledge of how delays affect the costs of shipping is really important. Production delays can lead to rush shipping, which means more costs. Include your team on why having a product ready in time to go out to the customer is supercritical. Not only because it is good customer service but also because it affects your shipping strategy as well.
Conclusion
Understanding how to reduce shipping costs for your business begins with understanding the basic principles of what affects costs in the first place. Such things as size, packaging, and location. With these in mind, you can go from there in figuring out how your company can create shipping strategies that will help to lower shipping costs. Making some tweaks in your process can go a long way in creating major reductions in your shipping costs. Planning ahead and capitalizing on a longer shipping service such as ground or standard can help to not only decrease your shipping costs but also increase your profit margins. But, it takes having everyone on board willing to gain knowledge about the factors that affect shipping costs in the first place.
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