Offering your products online dramatically increases your business’s presence. This is incredibly important for small businesses looking to grow their audience. However, operating a business online has its own unique challenges. For smaller e-commerce companies, the primary challenge is managing logistics. The cost of shipping in particular can be a burden for small businesses. Fortunately, there are ways for startup online businesses to reduce the high costs of shipping.
Reasons For High Shipping Costs
Many of the reasons behind the high costs of shipping are rooted in the pandemic. Though the days of lockdowns are behind us, the supply chain is still feeling the effects of COVID-19. Spikes in cases of the virus have forced shipping ports across the globe to close. Anytime a significant shipping port is closed, the smaller ports around it become overwhelmed. This causes a chain reaction that slows delivery times and increases shipping costs for everyone.
Temporary port closures resulting from COVID-19 also caused a more unexpected issue. There was a massive shortage of shipping containers in the early part of 2022. Closed ports held thousands of empty shipping containers that couldn’t be used because of lockdowns. This meant that many ports had to operate with far fewer shipping containers than usual. Of course, this shortage led to deliveries being delayed and shipping prices rising.
3 Questions to Optimize Your Shipping
How Do You Charge for Shipping?
One of the clearest trends in online consumer behavior is a love for free shipping. One of the major reasons for Amazon’s continued success is the promise of free shipping on most deliveries. But for self-employed entrepreneurs and young eCommerce businesses might not be able to offer such a deal. Including free shipping with every purchase would be too expensive. Instead, many small e-commerce businesses increase the price of their product to offset the cost of shipping. Online consumer behavior has proven this to be an effective method.
Are You Packaging Properly?
You might not have any control over the weight of your products, but you can change the weight of their packaging. Soft products like clothing and rugs can be shipped in bags instead of boxes. This will keep the package light and reduce the amount of space it takes up on a delivery vehicle. Ask yourself if your products can be shipped in less rigid packaging.
Have You Considered a Fulfillment Partner?
Although it sounds counterproductive, it can actually be cheaper to pay someone to handle your logistics. That’s because third-party logistics companies leverage their huge volume of shipments to negotiate with carriers. This allows them to offer small businesses incredible shipping rates they wouldn’t be able to secure alone. Small e-commerce businesses that sell their products internationally will benefit the most from these rates. For instance, a startup American company might not be able to afford to deliver products to New Zealand. But a fulfillment partner can secure the best rates from NZ couriers on their behalf.
How to Reduce Shipping Costs
Cut Down on Package Weight
We’ve already covered the possibility of lightweight packaging, but there are other ways to reduce a package's weight. You could also consider ways to reduce the DIM weight of your packages. DIM weight, or dimensional weight, is an alternative way carriers determine shipping prices. It is generally used when a package is light but also very large. Packages that take up more space in a delivery truck are more inconvenient to deliver. As a result, they are also more expensive to ship. To reduce a package's DIM weight, ensure the product is in the smallest box possible.
Consolidate Boxes
When you pay for shipping, you’re actually paying for a space on a delivery vehicle. Shipping individual products in separate boxes may be safe, but it also takes up a lot of space. If your products are durable enough, consider consolidating multiple products into a single box when possible. Shipping multiple products in a single box also lowers the amount of trash produced from the shipping process.
Use Packages From Your Carrier
Branded packaging might be fantastic for marketing purposes, but it can be bad for logistics. Some carriers will charge companies with branded packaging a dimensional fee. Usually, this is because custom packaging can take up more space or be an awkward shape to ship. Fortunately, most carriers offer boxes that can circumvent this issue. Consider using the boxes your chosen carrier provides to avoid additional shipping fees.