How To Reduce Your Shipping Costs

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How To Reduce Your Shipping Costs

As an online seller, you will no doubt be doing all you can to cut back on unnecessary business costs and increase your bottom line. But how much thought have you put into reducing your shipping costs?

Here’s the thing - charging your customers too much for their delivery can risk loss of business, while failing to charge enough can cut into your profits.

How to reduce shipping costs

Now while there’s no denying that this is becoming a problem more and more retailers are faced with, there are options for overcoming this and saving money on your shipping fees (and overall business expenses).

How?

Simply by securing the cheapest delivery costs on the market.

Obvious as it may seem, many of the tips on how to do so are often overlooked, despite the fact they can save you money and even improve your business process.

With that in mind, I have included seven tips below on how you can easily reduce the cost of shipping for your business.

 

Short on time?

1. Negotiate your shipping rates

2. Compare courier services and shop around for prices

3. Use multiple delivery services

4. Use a shipping aggregator for cost-savings

5. Claim shipping refunds

6. Use a fulfilment service

7. Look beyond price


1. Negotiate your shipping rates

Negotiate shipping rates

If you weren’t already aware, one of the easiest ways to make savings on your delivery costs is by outright asking for them. In fact, in most cases the rates advertised by shipping providers, including the likes of FedEx, Yodel and UPS, aren’t set in stone and can actually be negotiated by sellers.

There are of course a few things to bear in mind, regardless of whether you’re negotiating with your existing provider or looking for a new shipping service.

Firstly, you will likely get a better response by picking up the phone and speaking directly with a representative or someone else with authority, as opposed to negotiating via email.

Secondly, some providers will be even more responsive with negotiations if you agree to lock yourself into a yearly or multi-year contract.

It’s also worth familiarising yourself with your current shipping expenses, reviewing if and where any extra fees are coming from and negotiating these with your carrier.

Finally, always start by doing your research and getting some quotes from a number of other providers, as this will give you more credibility.

2. Compare courier services and shop around for prices

Compare courier services

This may seem like another obvious point, but many online sellers don’t actually think to compare courier prices, despite there being plenty of courier comparison sites out there – ParcelHero, Parcel2Go and ParcelMonkey to name a few.

While you can of course look on the individual courier sites – DHL, Royal Mail, DPD, Collect+, Yodel etc – and use their own shipping calculators to get an idea of prices, shipping comparison sites can compare all of these services in one place, saving you time.

3. Use multiple delivery services

Use Multiple Delivery Services

If you sell products of different weights and sizes, you could actually reduce your shipping costs and save yourself money, simply by using more than one courier service.

While there are of course benefits to using the same provider for all of your parcels, the most obvious being a potential reduction in postage costs due to bulk shipping, it won’t always be the cheapest option.

Here’s the thing.

Different providers will be more cost-effective for certain parcel types, i.e. those with specific weights and dimensions. As such, they may be able to offer better rates for these types of products, compared to other services.

In other words, if you sell a range of different products, it could be an effective way to drive down delivery costs.

Let’s assume you sell homeware for instance. For your larger furniture orders, it may work out cheaper to use a courier service such as DPD, whereas for smaller and lighter items it may be more cost-effective to use Royal Mail or Hermes.

For a comparison of courier prices and to see which service is cheaper based on your business needs, have a read of this article.

4. Benefit from reduced rates by using a shipping aggregator

Use a shipping aggregator

Shipping aggregators such as Parcel Station, Temando and Parcel2Go tend to be overlooked, despite the fact they can offer huge savings.

But what is a shipping aggregator and how exactly can they reduce your costs?

Shipping aggregators work by understanding your shipping needs and selecting the right carrier at the best price for your parcels.

But that’s not all.

As they use the leading couriers on a regular basis, they can actually obtain reduced rates and pass these rates onto their customers, saving you further costs.

Similarly, you can consider the use of a bespoke parcel and carrier management solution such as Parcelhub or GFS. With these services, you are not only able to leverage their buying power and gain competitive rates on carriers, but you can also benefit from their logistics support and customer service.

5. Claim Shipping Refunds

Claim shipping refunds

Another way to save money on your delivery costs is by claiming a refund from your shipping provider.

Now let me start by saying that this isn’t an ideal situation, nor is it a tactic you should be relying on to cut back on costs, but in the event that your shipping provider fails to meet their guarantee, you could be entitled to a refund.

This is because many will offer money-back guarantees if they deliver the item later than promised (or later than they’ve been paid for).

FedEx and UPS, for example, both offer this guarantee and Parcelforce offer a full refund for failing to meet their express9, express10 and expressAM guarantees, as well as 50% for their next working day service and 25% for their 48-hour service.  

Again, this is by no means an ideal scenario, largely because late deliveries jeopardise customer satisfaction – and in turn your reputation – but it’s certainly something to be aware of if you find yourself in this situation.

If you’re thinking that the process of claiming a refund is more hassle than it’s worth, there are various services out there, including 71Ibs, RefundTiger and Refund Retriever, who will handle the entire process – screening packages and filing refunds on your behalf – all for a percentage of the refund.

6. Use a Fulfilment Service

Use a fulfilment service

Another way to save money is by using a fulfilment service that stores, packages and ships your orders on your behalf, eliminating the hassle incurred with delivery. In fact, many fulfilment services will even handle customer enquiries related to the fulfilment.

Now while these services do come at a cost and won’t always be the cheapest option for certain product types, it can save you a huge amount of time – and time is money.

But which fulfilment service should you use?

Perhaps the most well-known provider is Fulfilment by Amazon (FBA), who contrary to the name, will also store and fulfil goods that have been sold outside of the Amazon marketplace.

FBA isn’t the only option though – consider researching services such as DK Fulfilment, James and James eCommerce Fulfilment and myWarehouse.

7. Look beyond price

Look beyond courier prices

The cheapest courier service won’t always be the best option for your business and it won’t always provide you with the biggest savings.

Think about it this way.

If a provider has bad reviews and consistently high late delivery rates, they could end up costing you more in terms of handling returns and disappointed customers.

For this reason, it’s crucial that you’re researching your potential providers.

Take a look at this courier comparison checklist to get an idea of the factors you need to be taking into consideration.

So, there we have it – seven tips for reducing your delivery costs and becoming more profitable.

What works for you? Let us know by leaving a comment below.

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Topics: Shipping & Fulfilment, eCommerce Best Practices, eCommerce

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