Every ecommerce business needs a cost-effective and efficient way to get goods to customers. Unfortunately, many shipping methods only tick one of those boxes.
That said, there are plenty of strategies you can use to pay less for shipping and grow your profit margins. Plus, these tactics can help you to deliver your products to your clientele in the shortest amount of time possible.
In this article, we’ll take a look at various things you can do to get shipping deals that make the most sense for your business and your customers.
10 Shipping Tips for Your Small Business
From reducing costs to creating a better customer experience, a solid shipping strategy will create plenty of opportunities that can help you to grow your business. We’ve rounded up the top 10 things for you to consider.
1. Understand Shipping Costs
Although shipping companies consider different elements when it comes to pricing their services, there are a few standard factors that will affect your shipping costs.
- Destination: How far is your package going? The distance between the package’s origin and its final destination will have a big influence on price.
- Weight and size: The bigger and heavier the package, the more it will cost to ship. Keep in mind that some carriers may add a surcharge for large packages, even if they’re light.
- Volume: If you’re shipping loads of parcels, you’ll likely be eligible for a discount on your courier service; more so if your goods are heading to nearby destinations.
- Speed: Everybody loves overnight shipping, but it can be pricey. There are plenty of expedited shipping options, but these will add to your costs.
The most important thing to do when trying to understand distribution costs is to go through a carrier’s shipping policy to understand exactly what affects the price of the service, and whether it will work for your business.
2. Determine Your Shipping Strategy
Now that you understand the different factors that will affect the costs of delivering your products to your clients, you can start forming your shipping strategy.
An important consideration are the destinations you’ll ship your goods to. While you do want to sell to the biggest market possible, it’s a good idea to set a maximum delivery distance when you first start selling. This will help you to test the market and keep costs down.
Then there’s the shipping company – or companies – you’d like to work with. This will affect how quickly you can deliver your products and the costs you’ll either have to cover yourself or pass on to your buyers.
3. Be Aware of Delivery Times
Delivery times have a huge effect on your customer’s experience, which can turn one-time buyers into loyal customers and help your business to grow continually.
For businesses that are selling non-perishable items, same- and next-day delivery may be nice to have, but they’re not essential. That means you can stick to land and sea-based shipping methods, which take a bit longer but will save you some money on deliveries.
You also have the option of offering faster distribution methods that customers can request when they make their order. Just be sure that your shipping policy outlines the standard and expedited timelines and fees.
What’s most important here is balance. Choose distribution options that will allow you to deliver your customer’s purchases in a reasonable time but won’t cut into your profit. Remember to give your buyers a clear outline of your policy so they know what to expect.
4. Use Shipping Software
As a small business owner, you’re likely wearing a lot of hats. From creating products or sourcing the items you want to sell to managing the books and marketing your wares, there’s plenty to do. It’s always a good idea to automate the processes you can.
Shipping software will help you to manage all of the aspects of your deliveries. These programs will allow you to pull the most up-to-date rates for specific package sizes and weights based on the shipping company you use. Some even give the option of customizing and printing shipping labels.
When searching for shipping software for your business, be sure to go for an option that allows you to track the details of all of your shipments. This will help you to pinpoint the destinations you ship to most and how much you’re spending on your deliveries. Both of which can help you to make business decisions that help you to streamline your operations and increase your profit margins.
5. Compare Carriers
No two small businesses are the same and neither are their shipping strategies.
While some might offer flat rates on certain standard-sized packages, others may provide better value for bigger boxes. What’s important is that you consider all of your options to get an understanding of what they offer – and what they don’t.
There are a few things to keep in mind when shopping around for providers. As mentioned above, speed is an important factor. So are the days that the shipping company delivers. Some carriers will deliver on weekends at no extra cost, while others will charge a premium.
You’ll also want to look at how they define their shipping zones. Consider how many of your clients fall within these zones and how that will affect your costs. Don’t forget to check their policies on package sizes and weights, either.
6. Prepare Your Packaging
We’ve already mentioned that carriers may charge different prices based on the dimensions of your packaging. Rightsizing your packaging will ensure that you don’t overpay for boxes, bags, or unnecessary fillers like packing peanuts or bubble wrap.
The type of packaging you choose will also have an effect on your shipping costs. Rather than an expensive rigid box with your business logo embossed on the outside, a corrugated box that’s carefully packed with a thoughtful note inside will protect your deliveries and save you a shipload of money.
Ordering your packaging in bulk is a great way to reduce your packaging costs. Many suppliers will offer you a discount when you buy packaging in bulk. Planning your packaging strategy and ordering your boxes and other supplies in large quantities is a great way to reduce your packaging costs.
7. Get Insurance
Accidents happen, so it’s important that you have comprehensive shipping insurance to protect your business and your customers. In the event that products either don’t make it to their final destination or arrive a little worse for wear, a shipping insurance policy can protect you from liability.
You can either cover your goods through the carrier you use for your deliveries or you can choose a third-party insurer. While the first option is more convenient, it’s often more expensive. Carriers often charge anything from $1 to $100 per item shipped. The rates for cover from third-party insurance companies will usually be about half of that.
Again, it’s important to shop around and compare providers when it comes to shipping insurance. Many insurers will pay out for damaged or broken packages, lost or stolen parcels, and excessive delivery delays, but this isn’t necessarily guaranteed.
8. Negotiate Your Rates
There are few things better than a great bargain. This is especially true when you can cut a deal that reduces your business costs, increases your profit margins, and allows you to grow your business.
Fortunately, when you’re shipping loads of goods, you have leverage to negotiate charges with your carrier. There are two methods you can use to do this: benchmarking and cost modeling.
Benchmarking is all about gathering information about other companies’ distribution habits and costs. Look at the charges incurred by companies that ship similar products or work in the same industry as yours. Then use that information to create a benchmark and negotiate your rates based on this.
Cross modeling is a bit more complicated. It requires you to analyze the specifics of your shipments and understand where your providers make the most profit. You may be able to reduce costs by negotiating better prices for elements where shipping companies have the highest margins.
9. Offer Free Shipping
Most of the tips on this list have revolved around helping you to make decisions about shipping that help your business by reducing costs. Free delivery is all about your customers. But it has big benefits for your business, too.
Many customers will favor brands that offer free shipping over competitors that charge for delivery. Plus, if there’s a threshold on the value of a purchase in order for it to be eligible for free shipping, they’re also likely to buy more goods.
No-fee delivery will reduce the chances of shoppers abandoning their carts. However, you’ll need to ensure that you include the shipping costs in the price of your products. To do this, you’ll have to collect information about all of your shipments and the associated costs.
Then, you can work out what it costs to ship an average order or specific products. This amount can then be factored into your product’s base price and you can offer free shipping.
10. Account for Returns
Consumers have almost endless options when shopping online. And they expect ecommerce retailers to provide them with equally as many opportunities to return items if they decide they don’t want them.
The value of returns made in the US each year is nearly 10% of all retail sales. Making provision for your customers to return goods if they change their mind about their purchases is essential.
To enhance your customer experience and encourage buyers to return to your brand, your returns process needs to be as frictionless as possible. Include a return label with your shipments and ensure that your payment service provider has a reimbursement facility.
How to Reduce Shipping Costs for a Small Business
Shipping is expensive. Fortunately, though, there are a few strategies you can employ to reduce shipping costs for your small business.
- Optimize your packaging: Rightsizing your parcels will ensure that you save money on packaging materials and shipping costs. One great way to do this is by using envelopes or poly bags rather than boxes.
- Reduce shipping distances: Delivery distance is a major factor that will affect your distribution costs. When you’re just starting out as a small business, it’s best to focus on delivery areas that are closest to main distribution hubs to reduce expenses.
- Look for deals: Many of the ecommerce platforms that small businesses use to sell their goods offer reduced shipping rates as a result of bulk deliveries. Investigate these opportunities and take advantage of them.
- Use third-party insurance: While most carriers will happily insure your goods while they’re being shipped, their rates are usually high. Opt for a third-party insurer to lower your shipping insurance premiums and reduce your costs.
- Keep an eye on rates: Shipping companies change their rates all the time based on services offered, distance, and the weight and dimension of the packages delivered. Being aware of this can help you to find the best rates for the services you need.
How to Calculate Your Shipping Costs
Every carrier will calculate shipping costs for your small business in a different way. This means that there isn’t a general equation you can use to work out what you’ll pay to have your goods delivered.
The good news is that there are just a few major factors that will affect your shipping costs. Once you understand the factors that affect the price of distribution (you can refer to the first of our 10 tips above), it becomes easier to calculate your shipping costs.
For a more concrete idea of what delivery will set you back, you can use a shipping cost estimator. Most of the major shipping companies have one of these calculators on their website that you can use to get a quote before you ship.
The Best Way for Your Small Business to Accept Payments
Before you’re able to box your products up and send them off to their new home, you need to sell them. That means ensuring that your clients can easily make purchases online.
At Pay.com, we understand the importance of a seamless shopping experience for attracting first-time buyers and retaining existing customers. We’ve designed our payment infrastructure that allows you to accept multiple payment methods via a customized checkout page on your website.
What’s more, you can keep track of your buyers’ details so that they don’t have to provide basic information over and over again. Plus, if a customer decides they want to return an item, you can easily issue a full or partial refund via the Pay Dashboard in just a few clicks.
The Bottom Line: Pay Less for Shipping and Grow Your Profit Margins
It may take a little while to wrap your head around shipping. But once you have an understanding of the different elements that affect shipping costs, you can create a shipping strategy that will help you to pay less for deliveries and grow your profit margins.
Your ultimate goal is to balance cost savings and customer experience. Rightsizing your parcels by using the correct packaging material is one way to do this. Offering delivery only in major centers that are quick and easy to reach when you first start shipping goods is another.
Although post-sale service is important, you want to ensure that the pre-sale experience is great too. Using Pay.com’s full payment infrastructure will allow you to easily add all of your customers’ favorite payment methods via your Pay Dashboard. Plus, if they want to return any goods, you’ll be able to issue a full or partial refund without any hassle.