8 Ways to Reduce Ecommerce Shipping Overhead
Shipping costs are one of the biggest expenses for any ecommerce business — from a small to warehouse-sized operation. However, it is possible to have low overhead costs on shipping so that you can maintain your profit margins and still meet customer expectations. Here are 8 ways to reduce your ecommerce shipping costs.
1. Negotiate Your Shipping Rates
Shipping carriers will negotiate their rates based on your annual shipping volume. Determining a method that offers the cheapest shipping for small business is vital. This is also true for mid and large sized businesses. The more you ship, the lower your rate. Once you have secured a lower rate with your carrier, you can easily add it to ShipWorks. We’re also proud to offer our users discounted rates through UPS.
2. Know Where You’re Shipping
If you primarily ship to one specific region, a regional carrier may be your best bet. Regional carriers often provide lower shipping costs than national shipping carriers because they cover a small geographic area.
For example, OnTrac is a ShipWorks partner that covers the West Coast and they offer fast deliveries within California, Arizona, Nevada, Oregon, Washington, Utah, Colorado, and Idaho.
Shippers fight a constant battle of finding the right carrier that will deliver packages to customers as efficiently and as cost effectively as possible. This becomes even more difficult as there are hundreds of viable carrier options. This increases the time it takes to identify the right carrier for every order, forcing many shippers to overlook the vast network of regional carriers available for the simplicity that comes with opting for a national carrier.
3. Use Third-Party Shipping Insurance
Carriers charge more for shipping insurance than third party companies. Carriers charge about $0.85 for every $100 of insurance, and third-party insurance companies charge about $0.55 cents for every $100. This can contribute to low overhead costs. These savings can add up, especially when you’re shipping valuable items.
You could save up to 90% on coverage from a third-party carrier compared to that of shipping carriers such as UPS, USPS, FedEx, or DHL. Most providers will charge a fee if your shipment has a declared value over $100. Note that the declared value coverage isn’t the same as insurance, despite the striking resemblance. The declared value increases the carrier’s maximum liability in the event of a loss or damage. As a result, you can’t always expect to recover your full losses.
4. Watch Out for Shipping Carrier Fees
Depending on the shipping carrier you use, you may be charged for things like Saturday delivery, fuel surcharges, delivery signatures, and residential delivery charges. Understand these shipping carrier’s rates in advance and learn how to cut shipping costs so that you don’t pay for a delivery feature that isn’t important to you and your customers.
5. Print Your Postage Online
This one is obvious to ShipWorks users, but if you’re new to shipping, you’ll quickly learn that there is a huge cost saving when you skip the Post Office counter and print your postage online. The USPS has authorized Endicia and Stamps.com to provide internet-based postage at reduced shipping costs. You’ll use your computer to buy postage from either of these companies and then the USPS will deliver the package for you.
6. Take Advantage of Discounts for Priority Mail Express and Priority Mail
If you prefer to ship with USPS Priority Mail Express or Priority Mail, make sure you purchase postage through Express 1. Express 1 is a USPS partner and they provide substantial postal discounts to companies which allows them to save on shipping. The great part of this is that you get the discount regardless of your shipping volume and without signing a contract. If you’re using ShipWorks, Express 1 is free and it’s easy to use
7. Optimize Your Packaging
Shipping carriers charge based on the package’s size, weight, and destination. It may seem obvious, but you can save money on shipping and ensure low overhead costs by using lighter and smaller packaging. It may require increasing your packaging options in the warehouse, but it can allow you and your team to better optimize the packaging for each item and avoid high shipping costs.
8. Use Free or Discounted Shipping Supplies
When it comes to saving money on shipping, making sure you have cheap mailing supplies if crucial. These expenses ad up quickly, so look for ways to get them at a discount, especially it you ship in high volumes. From cheap shipping boxes to packing supplies, these small savings can total to thousands of dollars at year’s end.You can order free boxes on the courier websites, or look up the physical store location to use their shipping supplies.
Even if your parcel is heavier or larger than the packaging supplies they offer, you can always keep the free supplies for later. The savings may seem small at first, but they’ll add up over time!
Alternatively, you can purchase discounted supplies when purchasing in bulk online.
If you use your own packaging, you may have a “dimensional fee” for packages that exceed the carrier’s size regulations. You can avoid these charges by using the carrier’s packaging.
* Reduced rates are limited to shipments within the continental U.S. These rates and discounts exclude shipment origins from Alaska, Hawaii, and Puerto Rico. Rates and any applicable discounts are subject to change at any time without notice.