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How to Reduce eCommerce Shipping Costs

How to Reduce eCommerce Shipping Costs

eCommerce shipping costs are on the rise, and if you’re like any other online business owner, you’re going to be looking for ways to off...
Julia Hecht
April 15, 2020
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eCommerce shipping costs are on the rise, and if you’re like any other online business owner, you’re going to be looking for ways to offer your customers the best deal without cutting into your own profits. With shipping costs gradually getting higher and higher, you’ll need to get innovative if you don’t want to take on those extra costs yourself. Unfortunately, there isn’t one solid way to reduce eCommerce shipping costs, but there are many small techniques you can utilize together for a larger overall impact. 

If you’re interested in reducing your eCommerce shipping costs, first you will need to look at the packaging materials you use. Get whatever you can in bulk, or recycle other boxes and materials you might already have. Pack items efficiently, and work through multiple distribution centers to expand your reach and cut down on time and costs. 

The Impact of Rising Shipping CostsThe Impact of Rising Shipping Costs

eCommerce is a rapidly growing industry, but the rise in demand coupled with a shortage of truck drivers is driving up the cost of shipping. In addition to that, if a small-scale business tries to keep up with sites like Amazon, it could end up spending huge amounts of money on expedited shipping. As shipping costs continue to go up, retailers need to make the decision to either pass those extra costs on to customers and risk losing them, or take on the extra costs themselves. 

Common shipping services, like those offered by FedEx and UPS, typically have fluctuating rates, but the trend over the past few years has been climbing. Shipping rates are going up an average of 5% year over year, with some services spiking even higher. In addition to that, sellers that sell through eBay or Etsy will notice higher list prices for their items, and all sellers may notice higher surcharges for deliveries. 

Many eCommerce store owners will need to make some changes to the way they ship packages if they want to stay profitable. 

Buy Shipping Supplies in Bulk

A good way to get started with saving money is by buying all your shipping supplies—like boxes, filler, tissue paper, and tape—in bulk. Even if you don’t make many monthly sales, you could save a lot of money if you buy your packages in bulk and store them in your own home or warehouse. You can often get a much better deal for buying in bulk, with discounts for buying larger batches. If you’re in this for the long game, you may want to invest in bulk supplies.

Buying boxes in bulk instead of whenever you need them could have an additional benefit as well. With the extra savings, you could have your boxes customized to fit your brand, and you would have a much greater level of consistency. Consistency is an important factor if you ship large orders frequently since is much easier to palletize boxes if they are all the same shape and size. If you aren’t palletizing the boxes yourself, then having boxes that are easy to palletize could save you some labor costs. 

Reuse Packing MaterialsReuse Packing Materials

An alternative to buying materials in bulk is to reuse packing materials that you already have. If you’re like anyone else, you shop online too, and you’re bound to have extra boxes and newspapers laying around. You could even have friends and family help supply you with newspapers and boxes so that you can keep up with your sales. Depending on the volume of sales that you receive you may still need to buy some materials, but every little bit helps when you look at the big picture. 

Using recycled materials comes with an additional benefit as well. By advertising how you reuse boxes, you can present your company as being more environmentally friendly. That can be a real selling point for some customers, and it positions your brand in a positive light. Most customers will be willing to look past the fact that your packages might not be the prettiest if that is the consequence of looking out for the environment. After all, it’s what’s on the inside that counts!

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Consolidate Individual Items into the Same Box

This one may seem obvious, but it is still worth bringing up. If you have a customer that orders multiple different items from your store, then you obviously wouldn’t pack each item into different boxes to ship. Not only does that increase the likelihood of a package getting lost, but it is also clumsy and expensive. The postal service, or whatever shipping service you utilize, would have to process multiple different packages instead of just one large one.

Packing all the items into one big box can save you money on processing fees, and even though the box would be larger and heavier, it would be much easier for the shippers to handle and keep track of it. Additionally, a larger, sturdier box is going to be better protected than a small box, so you can ship with greater confidence that your products would be safe.

Along that same principle, if you have multiple orders come in from customers in the same area, you can consolidate their packages in one pallet or truckload to ship at the same time. That way, you can cut down on the number of trucks traveling that distance, significantly reducing the number of total miles traveled and the overall shipping cost. Your customers might have to wait slightly longer for their orders, but you could save a ton of money by shipping in batches like this.

Use the Right Sized PackageUse the Right Sized Package

If you’re packing a box to ship out to one of your customers, you will probably fill up any extra space with some sort of filler to prevent the items from shifting around. Although that can have added benefits, like protecting the products from damage, it is also expensive. 

If you have extra space in a box, chances are that means you could have used a smaller box to begin with. It costs more to ship a larger box, even if it weighs the same as a smaller one. Additionally, the added paper and filler will add more weight to your package. Although paper isn’t tremendously heavy, those little costs can add up over time. 

If you pack a box and notice that it has a lot of extra space, try to find a smaller box to see if you can fit the order in that. Obviously, don’t smash packaging or squish products together to save a little money, but if the empty space is considerable, you should consider finding a smaller box.

If you order special, branded boxes from a supplier, then try to get multiple sizes so you have options for a variety of different kinds of orders. 

Use Poly Mailers Instead of Boxes

If you’re shipping products that are lightweight and not very fragile, then you might want to consider alternative packaging options instead of boxes. Poly Mailers are thin, durable, self-sealing plastic envelopes that can be used to ship some items, such as clothing. These packages are much more lightweight and often smaller than boxes would be, so they can save you a ton of money in the long run if you switch to these instead of bulky cardboard. 

Poly mailers can end up benefiting your business in many other ways, too. They are even weather-proof, so they can keep your products dry in any amount of rain. The material is also tear-resistant, cheap to buy, and it takes up almost no space in storage. Cardboard can’t boast the same capabilities, now can it? 

Obviously, this option isn’t ideal if your products can be damaged in shipping. Poly mailers offer no physical protection whatsoever, and any rough handling would be transferred directly to the products inside. The durable walls of a shipping box might be a requirement for making sure your products get delivered in one piece. However, if you know your products would be okay without the added protection, then it’s worth giving poly mailers a shot. 

If you aren’t sure if poly mailers are right for your products, you can still save a bit of money by going with bubble mailers instead. Take the time to consider all your options before you commit to a long-term packaging strategy. 

Combine Product and Shipping Costs

Now, you might not think that combining the cost of shipping into the price of the item would save you any money, but it can. If you can add an estimated shipping cost into the total cost of the product, you can offer “free shipping,” which seems like a better deal to them. 

Not only does it seem enticing to your customers, but it also locks your prices at a consistent level that takes shipping into account. If you overestimate the costs and offer everyone a flat price, then everyone will unknowingly be paying the top price for shipping regardless of what the actual cost would be. That means that you actually make more money than before, and future increases in shipping costs wouldn’t cut into your sales profits. 

Think of this strategy like a safety net for your business. You can protect your profits and avoid overcharging your customers if shipping costs rise more. You may also reduce the number of abandoned shopping carts as a bonus!

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Automate to Streamline the Process

Humans aren’t perfect, so anything you can leave to the computers, you probably should. Automation is a huge asset to running a business, especially if your eCommerce store has grown large enough to require hiring more employees to help you fill all the orders. Automating processes can reduce errors and free up your time to do other tasks, and time is money!

When you have to manually pack orders and fill in shipping labels, mistakes are bound to be made. If a package is improperly labeled, it could end up being delivered at the wrong location, or even returned directly to you. Your customer would have to wait for you to sort the issue out, while you often have to pay the shipping costs to have the order shipped around in circles. 

Integrate software into your website that automatically populates shipping labels for you based on the information that the customer provides, to reduce the likelihood of errors on your part. Although software like that can be a bit costly, it can end up saving you a lot of money in the long run.

In addition to automating shipping labels, you can also automate things such as sending information to the employees that pack orders, and keeping track of inventory so you never run out of stock. Automation is a great tool for streamlining business operations, and you can only grow so much without taking advantage of that technology.

Open Additional Distribution LocationsOpen Additional Distribution Locations

If you run a small business online, it’s possible that your entire inventory is simply in your garage. That might work for a little while, but eventually, your sales will exceed what you’re able to keep in your home. 

If you operate a medium- to large-sized eCommerce store, then you likely keep your products in a warehouse already. Orders are shipped out from that warehouse to your customers, no matter where they are. This is a much better situation than operating from your garage for many reasons, but it isn’t going to solve all your problems. 

If you only have one location for distributing your goods, then it could take you more than a week to ship to other parts of the U.S. That’s a far cry from the 1- or 2- day delivery that consumers have gotten used to nowadays. If you can manage it, you should try to have more than one distribution center to offer expedited shipping to a larger percentage of your customers. Not only does that improve customer satisfaction, but it is also a lot cheaper to ship packages a shorter distance. 

Now, it might not be practical for you to buy another warehouse and pay to have it staffed and stocked. It just might not be within your available budget. However, there is another option that you can take advantage of that is well suited for eCommerce stores of any size: outsourcing fulfillment to a 3PL. 

Outsource Order Fulfillment to a 3PL

Outsourcing any part of your business can feel like a blind trust exercise, but you can’t hold on to every aspect of your business forever. In order to grow efficiently, you’re going to need some help. Plus, once you can let go and pass on fulfillment responsibilities to a third-party, you’ll find that it comes with a huge list of additional benefits. 

Although it can be a tough decision to make, outsourcing to a good Third-Party Logistics (3PL) fulfillment center can allow you to:

  • Reduce shipping costs
  • Take advantage of a range of flexible shipping options
  • Ship products expedited, or overnight
  • Distribute products from several different fulfillment centers around the U.S.
  • Keep track of inventory to maintain the right stock levels
  • Efficiently manage returns and product resale
  • Easily handle the rush of holiday orders
  • Free up your time to work on other aspects of your business

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When you work with a third-party fulfillment partner, you can allow your business to grow beyond your wildest dreams. Fulfillment operations would scale effortlessly with your business, so you wouldn’t need to worry about outgrowing the facilities. 

Even though there are going to be some costs associated with working with another company, a good fulfillment partner can actually end up saving you money overall. Reverse logistics shipping is a notoriously expensive problem for eCommerce businesses, and that problem can essentially be erased from your to-do list. Additionally, you wouldn’t need to supply the boxes or supplies, since the fulfillment company will have that handled too. 

Fulfillment Services with R+L Global Logistics

R+L Global Logistics is a world-class 3PL warehouse operations center that specializes in saving you money. If you want to know how to reduce eCommerce shipping costs, just take a look at how we consolidate orders in the perfect size boxes, and ship truckloads of freight at once to get you the best deal. 

Our Pick and Pack strategies offer the most efficient solutions for any eCommerce store, minimizing cost and errors while saving you time. Additionally, our Warehouse Management Systems (WMS) can fully integrate with your online store to fill orders as soon as they come in, and to automatically notify you if your stock runs low. 

If security is a concern of yours, then you can rest easy knowing that all our fulfillment centers are monitored 24/7, so your valuable products are safe with us! We take your business seriously, and we will do what it takes to protect it.

If you want to reduce eCommerce shipping costs but don’t know how to get started, just talk to us! We’re here to help. Give us a call at (866) 989-3082 for more information, and to request a free quote when you’re ready.

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