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8 Tips to Reduce Shipping Costs for eCommerce

Pramod Bhat
  •  
  •  
November 10, 2020

Shipping is one of the most tedious but essential parts of eCommerce that every company has to deal with. No matter the size of the company and years of experience you have in the business, you want to do it right. Since most consumers prefer free shipping and low shipping costs, you want to offer them the best shipping services. Reducing shipping costs for eCommerce and delivering packages on time is a good strategy.

Based on the study conducted by Econsultancy, 74% of shoppers abandon their carts due to expensive shipping fees, taxes, and hidden fees. Other studies have found that late shipment is a factor for customers abandoning their cart while 40% of shoppers are willing to pay the shipping fee for next day delivery. 

So, how do you address this challenge? This article will discuss tips on how you can reduce shipping costs, pick the best shipping partners for eCommerce, and determine which shipping service is cheapest. 

Shipping Costs are Vital in eCommerce 

eCommerce shipping has become more competitive as big players in the industry, such as Amazon, offer fast and free shipping. Due to Amazon's easy shopping experience, other businesses are competing to provide the same or better experience at an affordable cost. If you're only starting, you may work fine with shipping services such as UPS or USPS. But as your business starts to grow, you need to find a fast and affordable shipping service. 

Managing your shipping costs is a tedious part of running an eCommerce business. However, it is crucial, and you must not ignore it. As a business owner, you understand that your customer's shipping experience can affect your relationship. They want to receive their packages in a fast and cost-effective way. If they don't, it will affect your sales and reputation. 

You can control most aspects of your business, but once you send the package to the shipping courier, it is out of your hands. If the package arrives damaged, broken, or late, the feedback will be given to you. The worst case is you won't get a second chance to make an impression, and you may lose sales from the negative review. So, if you want to create a good customer experience, you need to pick a reliable shipping company. 

Aside from choosing a reliable shipping partner, you have to choose which shipping service is the cheapest. Customers can lose interest in your products once they find out you are charging them for high shipping costs. Many abandon their carts and instead choose another store when they find out the shipping cost during checkout. To avoid these scenarios, we will help you reduce the shipping cost charged to your customer. 

Before we talk about the steps you can take to lessen shipping costs, let's discuss first the factors that affect them. 

Factors that affect Shipping Costs

The shipping cost is the price your customer pays for getting their product from the warehouse to the customer's address. However, customers often don't want to pay for the shipping cost. They like free shipping or affordable shipping costs. 

You might have encountered consumers that are willing to pay for a $100 product but not for a $25 shipping cost. To avoid this scenario, a good option is to offer them an affordable and reliable shipping service. Let's determine the factors that affect the shipping price. 

  • Package size and weight

The larger  the package, the more customers have to pay for the shipping fee. Transporting bigger packages requires a bigger space, so the dimensions of the box are usually measured before shipping. The same goes for the weight of the package. The heavier it is, the more you have to pay. 

Some shipping carriers charge based on dimensional weight pricing. From the name itself, a package's weight shall be based on the dimensions. Carriers prefer this method since some packages take up the space of the vehicle despite being lightweight. Hence, it is best to pick a box that will fit the item well rather than throwing it in the first box you can see. You'll not only save on the cost but on the packaging materials, too.

Pick the most appropriate package size for your product. It should be big enough to hold the item but snug enough to avoid movement or shaking during transport. You can use a shipping calculator to determine how the size and weight affect the shipping cost. 

  • Origin and destination country

Apart from the package's dimensions and weight, the distance between the origin and destination country affects the shipping cost. The general rule is, the farther the package travels, the higher is the shipping rate. It will cost you more to ship internationally than domestically. There are also customs charges and port fees that you need to pay for. Don't forget the difference between exchange rates when you ship internationally. 

It's also good to note that carriers use shipping zones. Instead of using miles to track the distance between one destination to another, they divide it into different zones. In the U.S., there are eight zones. Usually, the origin is Zone 1, and the customer's address is classified under zone 2 to 8. The classification will be based on the distance between the origin and destination. Expect that the higher the shipping zone, the more you'll pay for the shipping cost.  

  • Packaging

Did you know that 9% of the amount you spend on a product is its packaging cost? Many companies are unaware of the impact of packaging on shipping costs. Since packaging is a factor in your shipping cost, you need to select the right packaging materials and boxes. Often, businesses pack the item in an oversized box without thinking that the dimension can affect shipping costs. We'll discuss the steps on how you can reduce the price below.

  • Value of the item

The value of your item plays a key role in your shipping cost. The higher the value, the higher  the shipping cost. However, there are some restrictions when shipping high-value items. It depends on each shipping carrier. To ensure the safety of your packages, add insurance. Insurance is another cost your customers have to pay for, but it protects your package from damage, theft, or loss. 

  • Delivery Speed

The faster you want the package to arrive, the higher your shipping cost. With Amazon leading the game with its two-day shipping and overnight shipping, small and mid-sized businesses are forced to catch up with the giant retailer. Today, consumers consider two-days as the standard delivery time, while three to four days is considered acceptable. Due to this, businesses are spending money to offer fast delivery at a low rate.  

So, how can you offer fast shipping to your customers without breaking their banks, or yours? 


Reduce Shipping Costs

8 Ways to Reduce Shipping Costs

If increasing the price isn't an option but you want to make the shipping experience better and affordable for you and your customer, then follow these tips to reduce shipping costs. 

Tip #1: Use the Right Packaging 

We mentioned earlier that packaging affects your shipping costs. Some businesses make the mistake of throwing the item in a box without considering if it is appropriate for the product's size. Since shipping carriers compute the fee based on dimensional weight pricing,  you can expect that you'll have to pay more for an oversized box. 

To effectively cut shipping costs, you need to pick the right box that will fit your product. Instead of throwing your items in one oversized box, why not choose an appropriate container  for it? You'll not only reduce waste but reduce shipping costs, especially when dimensional weight pricing is applied. To make it easier on your part, you can stock different-sized containers made from different materials. 

With the packaging materials, you can try to trim down the weight using lightweight materials. You can use materials that offer both protection and packaging, such as a padded envelope. Since cardboards are heavy, you can plan on ways to  reduce the weight but still provide protection for your packages. 

If you're selling non-fragile items, switch your boxes to a polybag or mailer envelope. The size is a lot smaller than a box, and it will occupy  less space. You'll also spend less on the packing supplies. Try using poly mailers  for other products.

Tip #2: Use free packaging and supplies

A useful and cost-effective tip for packaging is to use free packaging from the shipping carrier. Almost all carriers offer free packaging, so grab this opportunity and use their boxes. You can not only save money on packaging, but you also have to avoid paying additional dimensional fees.

Tip #3: Negotiate Shipping Rates with Multiple Shipping Companies

Everything is negotiable. You may not be Amazon, but it doesn't mean you aren't a valuable customer for shipping companies. Considering that rates are continuously increasing each year, negotiating the shipping rate is a good option. Contact your existing account manager and set up a meeting to discuss your needs. 

Don't be afraid to talk to a person whose job is to listen to your needs. Having an account manager is a clear indication of your bargaining power. Before you set up a meeting, you must understand the shipping carrier's requirements, business model, and parameters. Understanding these, along with your shipping data, can help you negotiate. 

Tip #4: Choose a reputable shipping company

When it comes to choosing a shipping carrier, you need to pick someone already known in the industry. You will be entrusting your packages to them, and you want them to be delivered safely to your customer's doorsteps. Carriers will help you with the documents and rules for each country. Since there are items that can't be shipped from one state to another, one of the questions asked is, “Can you ship alcohol via US postal service?” The answer is no. 

USPS does not allow for the shipping of alcohol, domestically or internationally. Even boxes that used to carry alcohol are not allowed. If the box you plan to use for shipping has an alcohol brand’s label, you have to cover it or USPS won’t ship the package. 

There are several shipping services in Canada, but none can beat Stallion Express. Stallion Express gives you a fast and affordable delivery service. You can save up to 70% when you choose Stallion Express. 

Tip #5: Understand Your Shipping Destination

One way to reduce shipping costs is to have a clear knowledge of the location you will be shipping to. Having a clear understanding of the destination can help you negotiate shipping rates with your shipping carrier. It also helps if you frequently ship to this destination. Your shipping carrier will mostly charge you lower shipping rates. 

Tip #6: Decrease Shipping Distance

Another way for you to reduce shipping costs is to reduce the shipping distance. Since we mentioned earlier the concept of shipping zones, you understand that the farther the distance, the higher the shipping zone, and the more expensive it gets. If you can eliminate shipping to higher zones such as zone 7 and 8, you can reduce the cost. Another way is to partner with companies with many fulfillment centers that can reduce the distance between the point of origin and destination.

Tip #7: Purchase Insurance from Third-Party 

We understand how important it is to protect our packages, especially high-value items. Shipping insurance shall be the answer to this dilemma. However, insurance from carriers is often more costly than third-party insurance. The carrier insurance costs $0.85 for every declared value of $100, while third-party insurance costs $0.55 for every declared value of $100. High-value items will be charged more if you pick carrier insurance. Hence, you can save a lot with third-party insurance. 

Tip #8: Don't Use Too Many Shipping Carriers

It might be useful to try multiple carriers when you were starting your business, so you can determine which carrier is best for you. But once you have established yourself, you need to choose the carrier that suits you best. This will help you create a good working relationship. It will also increase your bargaining power because you are shipping your packages through only one carrier.  

Conclusion

Reducing the shipping fee can be a challenge. You want to offer a fast and affordable shipping experience to your customers, but you also don't want to take the burden of shouldering the costs. It's a good thing that here at Stallion Express, we offer the cheapest shipping rate and fastest delivery service! Do you want to know more? Contact our team today!

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Pramod Bhat
Written by Pramod Bhat

Pramod is the CEO of Stallion Express - the leading eCommerce shipping provider in Canada. His vision, leadership, and innovative strategies have catapulted Stallion into one of the industry's most trusted brands. He is on a mission to help online sellers in Canada scale and succeed. He is also the reigning office ping pong champion.

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