For many businesses, and especially small and medium-sized businesses (SMBs), shipping is not cheap.
No matter the products being shipped, it doesn’t take long for shipping costs to skyrocket, and for a high-volume shipping business, those costs can quickly become overwhelming. No company wants to overspend on an already tight budget, as it could increase the risk of losing the business or underperforming.
Below, we’ll explore some ways retailers can save on shipping costs so they can remain profitable in 2022 and beyond.
6 Ways Small Retailers Can Save on Shipping Costs
Consider the economic instability due to the COVID-19 pandemic and increased competition with large retailers like Amazon or eBay. Small business retailers are constantly looking to cut costs where they can.
In addition to these concerns, carriers raise their shipping rates annually, and 2022 will be no exception, considering the ongoing supply chain snafus. These factors present new challenges to SMBs that already worry about their financial situation, especially during a global pandemic.
How can we level the metaphorical shipping playing field for small businesses? Here are five ways retailers can keep shipping costs down this year.
1. Compare and Negotiate Multiple Carrier Shipping Rates
Because there are various shipping companies, like FedEx, UPS, and the Postal Service, each has unique shipping rates.
Additionally, each carrier may have different discounts for businesses, such as volume-based discounts, which companies can earn if they ship a certain number of packages. It’s always worth speaking to a carrier agent to learn more about ways to save.
Take the time to understand the carrier options available and see which are best suited for the company budget. It’s also possible to negotiate shipping rates with carriers, but it’s critical to use data to support your claims. Use past shipment information when negotiating rates, and be sure to foster a good relationship with carrier agents.
2. Use Lightweight Shipping Materials
Boxes and other packaging materials can add to a company’s total shipping costs and make it more challenging to turn an acceptable profit.
For this reason, consider using the most lightweight shipping materials to reduce the cost of each product being shipped. It may even be possible to find free boxes for shipments, making it all the more cost-effective.
For example, here are some companies worth looking into:
- Amazon Shipping Supplies
- Uline
- Lowe’s
- Walmart
- Staples
- The Boxery
Do some research and find out which companies offer cheap shipping boxes and mailers.
3. Decrease the Shipping Distance
It’s common for big brands to offer long-distance shipping for their valued customers. However, it’s understandable that the farther a company sends a package, the more expensive it will be.
Shipping zones play a role in shipping rates, and understanding that may cause retailers to decrease their shipping distance. Retailers can look into international fulfillment centers to keep shipping costs low while also delivering to international customers.
Additionally, it was mentioned earlier that current supply chain disruptions are negatively impacting shipping companies. Some have transitioned to air shipments to overcome associated shipping challenges.
Small businesses can reduce shipping costs by decreasing the number or size of the zones they typically ship to. Consider eliminating shipping to higher zones to keep costs down.
4. Consider Adopting a BOPIS Model
More and more brick-and-mortar retailers are adopting a buy online, pickup in-store (BOPIS) model to help meet ever-changing customer demands. Additionally, many small businesses are making a digital transformation and offering customers more product delivery options.
To reduce shipping costs, consider adopting a BOPIS business model. Local customers can order their products online and come to the store to retrieve them, essentially eliminating the need for the company to ship anything out.
Companies can also consider partnering with apps like DoorDash or Postmates, which deliver products directly to customers.
Keep in mind that not all customers will be able to visit a store in person, but to reiterate, it could reduce the number of packages being shipped over time.
5. Use Third-Party Shipping Insurance
Finally, some third-party package insurers can guarantee that products get shipped seamlessly for businesses that ship products of high value.
While using a carrier’s built-in insurance or add-on coverage may seem more straightforward, third-party insurers tend to offer broader coverage at a reduced rate.
Working with one of these insurers can often help reduce shipping costs, and in some cases, it could be half the cost of shipping with a traditional carrier.
6. Include Shipping Costs in the Upfront Price
For businesses looking to keep shipping costs down, it may be wise to consider incorporating shipping costs into the price for products. This may or may not go over well with customers. Retailers should consider offering free shipping by passing shipping costs onto the customer entirely.
This could be a dealbreaker for customers — so businesses should consider this factor when trying to reduce shipping costs. Small business retailers can market free shipping to customers, while still accounting for shipping by raising the price of whatever product they’re selling. The offer of “free shipping” is easily marketable, and known to influence consumer behavior.
The tips above are only a few ways small retailers can save on shipping costs. Companies should consider using some of the information above to avoid overspending on shipping products.
Save on Shipping and Remain Profitable
Small business retailers are facing unprecedented challenges — the ongoing COVID-19 pandemic, supply chain disruptions, and increased competition are all factors that contribute to small business struggles during this time. However, using some of the tips above, retailers that operate on a smaller scale can keep shipping costs down.
