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Five Ways to Boost Your Ecommerce Profit by Reducing Shipping Costs
As an online consumer, we expect a lot from e-retailers. We’d like a fast and convenient user experience, low transparent pricing, and don’t even think about charging (let alone up-charging!) us for shipping, because in our minds, that’s just not the way the online world works anymore.
This may be an extreme example, but the reality is that more and more consumers consider free shipping as the status quo. So how can companies combat this? For starters, if you are going to have to pay for shipping, you might as well figure out a way to pay less for it, so here are five things you can do to reduce your shipping costs.
Constantly Review Your Costs
Shipping for Ecommerce can involve a number of different costs, from insurance to surcharges for fuel, package size, and rural deliveries. Having a comprehensive cost measurement system will allow you to set prices in a way that can absorb some of these costs. Make sure you have a full understanding of your total costs and do not ignore these additional ad hoc charges. For example, should you offer free shipping on orders over $25, or on orders over $50? Understanding all of your costs will help you better forecast where you need to be.
Utilize Hybrid Shipping Services
Hybrid shipping services can reduce shipping costs by utilizing the USPS for last mile delivery. In this scenario, shipping companies can pick-up medium to large volumes of parcels and tender them into the USPS network to be delivered to their final destination. Since the USPS already has the infrastructure for delivery, this option can greatly reduce shipping costs for parcel shippers. Many shipping companies have developed special relationships with the USPS allowing them to negotiate reduced prices without sacrificing speed of delivery and customer satisfaction, and as a result, this can be a winning strategy for many ecommerce businesses.
Control the Size of Your Packaging
Many shipping services use a dimensional weight vs. actual weight process to determine cost, and understanding the difference can help companies save a bundle.
Dimensional weight is calculated by multiplying a packages length by width by height then dividing by a specified DIM Divisor; for example, the USPS domestic Dim Divisor is currently 194. The reason for Dimensional Weight pricing is that the volume of a shipping truck is finite, so larger boxes take up more space, and as a result, the size of the package can be equally important as the weight when it comes to cost.
Ultimately, shippers can save costs by utilizing the smallest possible packaging for each product. There are several software solutions out there that will measure and weigh each SKU and automatically select the smallest packaging that the item can safely ship in.
Choose the Best Packaging for You
Not all packaging is created equal. If you can identify the packaging that you really need, you may be able to reduce unnecessary costs. Think about the products you are using and the level of protection your packaging provides. Are you paying for protective packaging that isn’t needed for certain products? On the other hand, upgrading to more protective packaging for some items may reduce the number of returns, and as a result, the cost of having to pay for return shipping. Once you determine the packaging that you truly need, don’t be afraid to shop around. Many suppliers offer discounts for bulk orders, and every bit of cost savings can make a difference on your bottom line.
Modern shipping technology can save the average ecommerce shipper quite a bit of time and money. From printing shipping labels, to tracking shipments and deliveries, an initial investment in technology can not only reduce costs, but also allow for improved efficiencies and better customer service. Many shipping companies will provide you with their technologies that can be easily integrated with any software you are currently using. For example, OSM Worldwide gives all customers access to OSMART, a proprietary, cloud-based technology that helps companies increase efficiencies by managing their shipping costs, verifying addresses for accuracy, printing shipping labels on demand, and tracking packages every step of the way.
And finally, possibly the most obvious yet overlooked way to reduce your shipping cost is simply to shop around. UPS and FedEx are not the only carriers out there, and in fact many smaller package shipping companies, like OSM Worldwide, can often offer lower costs and better service. Your business is unique, and it is important to find the shipping solution that works best for you. Contact OSM Worldwide today for a free quote to see if our shipping solutions will work for your business.