Reducing Shipping Costs

If your business is reliant upon sending products to customers via mail or a freight service, then your profit will be directly affected by how big or small your shipping costs are.

After scouring the internet we have put together what we consider to be a comprehensive guide to reducing your business shipping costs.

1.Get your shipping strategy optimised

irstly, is the shipping strategy that you are currently using the best one for your business model? Keep in mind that online giants like Amazon have revolutionised consumer expectations about shipping. So much so that online sales have been shown to increase when free and one day shipping are offered.
If it is possible to offer free shipping to your online customers we suggest that you bite the bullet and do so. If your profit margins prevent this or you simply can’t afford the cost of shipping here are some alternative strategies:

Offer Conditional Free Shipping

A way to offer free shipping without compromising your profit margin too much is to make free shipping conditional upon certain criteria, Examples of this would include:

  • Offering free shipping for domestic orders and paid shipping for interstate or international orders – you may be able to wear the interstate costs.
  • Offer free shipping for orders above a set value.
  • Offer free shipping with a minimum amount of items bought.

Whichever option you choose be sure to make the terms of the offer displayed prominently throughout your site. A good way of doing this would be to place a banner on your homepage proclaiming your free shipping offer e.g Free Shipping On All Orders Over $100.

Flat Rate Shipping

Offer and promote flat rate shipping on all orders. This strategy can encourage customers to spend more and can potentially add to the average order size for your business. Customers will also feel less inclined to quibble over paying the cost of shipping.

Offer Free Shipping For Returning Customers

A great way to encourage your existing customer base to buy again is to include a free shipping code with their first invoice. If you have a subscriber list you can send a free shipping offer out to them – a sure way to give your sales figures a shot in the arm.

Charge Full Postage Cost

It’s fair to say that this is the least popular option on the list. Customers may accept paying for international shipping or in some cases tolerate full postage charges from small online stores, but otherwise full postage is a sales killer. If you must charge full postage, consider ways to encourage customers to make a purchase in spite of the added cost – a discount coupon may be one way to do this.

Adjust Product Pricing to Lower Declared Shipping Costs

It is only human nature for customers to want to buy when they feel like the deal is a good one. When shipping costs more than or as much as the price of the product being sold, making the sale is a tough ask.
Many online store holders use a clever strategy of increasing their product price to absorb some of the shipping costs. They then lower the declared shipping cost to compensate.
A practical example of this is a product having a price of $10 with associated shipping costs of $8. The shipping costs make the purchase look unattractive, However, if you raise the product price to $15 and state that the shipping cost is $3 – the shipping cost is less likely to be an issue.
While the total customer spend remains the same the buyer has the perception that the shipping cost represents a good deal and is more likely to purchase the product.
While the strategy may not work in all cases, it is certainly worth investigating.

2. Compare relevant shipping rate calculators

Knowing what shipping rates you are likely to incur will allow you to effectively plan for shipping costs ahead of time and avoid extra fees at the post office. It makes good sense to bookmark these shipping rate calculators to ensure that you are getting the best shipping deal.

3. Batch process as much as possible

Batch processing is a great efficiency strategy, particularly when it comes to paying postage and freight costs.
It just makes sense to maximise the efficiency of your trip to the post office by sending as many orders as possible.
The more batch processing you can integrate into your system, the more time and money you can save. Purchase stationery in bulk to save on constant time consuming trips to make small top up purchases. Make the packaging process as efficient as possible by creating an assembly line. Order a stamp of your return address to save writing it on every envelope or package. Make and print shipping labels that clearly show your logo.

4. Reduce packaging expenses

Here are some clever ways to cut down on the costs of shipping materials.

Negotiate discounts for bulk purchases

Make it a policy to buy bulk supplies of shipping materials. Ask for discounts from suppliers or retailers given the size of your order.

Purchase packaging from discount suppliers

Packqueenand the packaging place are two places that you can source a range of discount packaging supplies from. Find the discount packaging supplier that best suits your business. Don’t forget Ebay can be a great place to buy packaging material. Simply use the Ebay search bar to look for your product, using the Buy Now filter and then sort the results from low to high.

Recycle and Reuse

Make use of all that packaging that comes to you free in the mail. There’s nothing wrong with the bubble wrap or the boxes you receive packages in – recycle them and save money. Not only will you save on packaging, you’ll reduce your waste.

Try different types of mailers

Not everything needs a box, Strategic use of tough versatile Polymailerscan help reduce shipping costs dramatically.

5.Get tips from your competitors

There’s no harm in asking for advice.
A simple email offering to swap ideas on shipping strategies may deliver surprising results

6.Search for shipping rate discounts

If you frequently use a shipping company other than Australia Post, it may pay to call them and inquire if they are offering any discounts like loyalty discounts that your business can take advantage of.

7.Use warehouses for international shipping

It is possible to reduce international shipping costs by using a third party logistics company. Often referred to as warehouses, they can potentially save you up to 40% on shipping costs. The only obstacle to using them is that they prefer to work with larger businesses.
If your business isn’t large, it may be worth investigating Shipwire which has positioned itself as a warehousing company for growing businesses. They operate warehouses in Europe, Asia, Canada and the USA. It costs nothing to set up an account. You only start paying for service when you begin to use their services to store and ship products. The pricing will vary in relation to the amount of product that you store and ship. To see if Shipwire is a good fit for your business, take a look at the Shipwire calculator.