How to reduce shipping costs?

Sarah Fedida
Fetchy Digital Manager. Always here to share with you the best infos
September 9, 2020
Revenue, Profit, customer service, SEO, Customer Experience, Design, UX, Shopping Cart, Social Media

How to Reduce Shipping Costs - The Definitive Guide for Small Businesses

  1. Ways to reduce shipping costs on eBay and Amazon
  2. How to reduce shipping costs for larger items
  3. 5 of the best tips to reduce shipping costs for small businesses
  4. Is there a method to ship both quick and cheap?

Shipping is the black sheep of every online seller. Your client is expecting next-day, free shipping, right to his door and at his prefered time. Basically, you’re in charge of finding the best shipping option that matches your client’s criteria, without eating into all your margins and wasting all your time.

Did you know that the shipping process represents most of the time you’re investing in every order? It’s crazy! What if you can convert this time to growing your business instead of wasting time looking for good shipping prices, negotiating with carriers, waiting at the post office, writing down the label etc…?

Knowing how to reduce shipping costs would be a great beginning for optimizing your shipping process and maximizing your margins. In this article, we will explain to you how you can reduce shipping costs for ecommerce sellers: from the marketplaces, like eBay and Amazon, but also generally speaking for online sellers.

How to reduce shipping costs on eBay

Within eBay, the only shipping services that have been integrated are UPS, USPS and FedEx for some countries. The main advantage of USPS is that they provide you with free priority shipping boxes that you can order on their website.

Using these services, in order to optimize the shipping cost, you need first of all to get shipping supplies: a scale and a measuring tape to evaluate your shipping costs as precisely as possible before adding your item to your store.

If you’re a beginner on eBay, we would recommend you to begin shipping small items. In fact, if you’re shipping large items and you do not have a perfect understanding of the shipping prices, you will likely lose all your profit in the shipment itself. By the way, if your item in under 16oz, USPS First Class Package service is definitely the best one…

For larger items, use flat rate priority mail using USPS boxes. It’s fast and the boxes are included in the shipping rates (only available in the USA, up to 70 pounds); the rates will depend on the size of the box (3 types of sizes available).

Stay connected to check the status of your shipments and adjust data if needed. Don’t forget, shipping quickly is one of the key components to stay a top-rated seller.

Notice that the First Class service does not include a signature. For expensive items (more than $100), you would be better to use a service that warrants a signature it will help you prevent and protect you with disputes between the carrier, your customer and yourself. Also in case of lost packages, it will help facilitate the process.

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How to reduce shipping costs on Amazon

Regarding Amazon, one of their best strategies to reduce shipping costs is to work with their fulfilment program - FBA (Fulfilment by Amazon). You can use the Amazon FBA calculator to calculate how much it would cost to have your shipping fulfilled by Amazon.

This solution is not always a cost-effective one, you can compare the rates using their calculator and how much it would cost to take care of shipping yourself.

Having said that, both on eBay or Amazon you are still very limited in terms of shipping solution. eBay offers you to work with USPS, which is great within the USA but it still has some limitations and the FBA option for Amazon is not the ideal one depending on the products you’re selling (for example for low-cost products the Amazon option might be too expensive, besides some products are not allowed in the fulfilment centers).  Within the USA, the USPS option is worth being considered since this is the cheapest option with an average good level of service.

How to reduce shipping costs on large items

Let’s now concentrate on large items, which entails totally different pricing and conditions. According to most of the shipping companies, large items are the packages exceeding the following dimensions:

  • Packages are over 70 kg
  • Packages measure more than 420 cm in length and girth combined
  • Packages measure more than 270 cm in length

Here, again you can use domestic post service shipping rates that are generally offering the best prices but insurance, signature, tracking and level of service can be very limited.

Assuming that large items are expensive items, you would rather consider both for you and for your client having the best level of service using top pro carriers.

Please note that the packing part is also very important for heavy products to reduce the risk during transportation by the third-party company.

In this way, the best option for you is to negotiate with top carriers like UPS, DHL, TNT the best rates for larger items. It’s not an easy task since they require minimum engagement so you may rather consider options like Fetchy to benefit from those top carriers services without signing any contract with those courier companies. Regarding the minimum engagement, it will really depend on your country, your relationship with your sales rep, the type of products you’re selling and so on.

At this point you may have an understanding that the two main options for small and medium businesses are, first, to use domestic post services taking into account their limitations both for you and for your client, or to work with top carriers but the negotiation process will be tough and you’ll still need to sign for a minimum amount of shipments per month. The minimum shipment is for businesses that want to get a fixed rates list negotiated. If you're ordering a shipment without any minimum you can, but the price will be not competitive at all.

Thus, you may appreciate our tips to succeed in reducing shipping costs if you’re a small or medium-sized business owner. Here are the five main tips:

Top Tip #1: Select up to 2 top carriers

Based on your country and your shipping destinations  - domestic or international mostly - you’ll have to look for the best player.

Every carrier has a good reputation either on prices, level of service, strategy for international shipping (last mile) and general conditions.

For example, choose FedEx if you need to ship next-day air, need a very cheap solution (SmartPost).

In order to try to get the best conditions, do not split yourself into too many companies, it requires a lot of time and effort, so stick to 1 or 2 maximum.

Top Tip #2: Get acquainted with your representative

Every carrier has representatives around the country. The role of these reps is to negotiate rates and give you the support you need in order to facilitate the shipping process.

Their main goal is to make you ship as much as possible. The more you ship, the more they make money!

So the more you build a strong relationship with your rep the better conditions you will receive in terms of pricing and minimum engagement. Besides, sometimes you can get free products from your sales rep like duck-tape, boxes… worth it!

It is very important to build a relationship with the companies that you are working with. At Fetchy, for example, their customer support is simply incredible. You have a team dedicated to your account at every step.

Also, try to leverage flat rate shipping, which can be a huge source of saving for you. Shipping companies set those rates based on the zones or distances that the package travels. You have to understand the flat rates you’ve got before deciding to use them or not.

Top Tip #3: Consolidate your account

Since shipping rates are always based on the volume you’re shipping, it benefits you to ship as many packages with the same account as you can.

If you have the opportunity to ask vendors to ship your products using your account, do it!

Top Tip #4: Save on shipping materials and be precise on the dimensions of your package

Boxes, packing tapes, packing peanuts etc. For all of these supplies, you have several options to consider (such as the USPS’ free boxes) and consider packing yourself since carriers like FedEx charge a lot of money for this kind of service.

Top Tip #5: Work with a third-party shipping tool

Considering all the options and limitations described in this article, in the last few years we’ve seen many third-party tools emerge to help small businesses manage their shipping needs.

Take Fetchy, for example, a solution that has totally changed the approach toward shipping.

This tool is an interesting combination of the two crucial tools: price comparison and automation… and is that it is totally free!

Other tools like ParcelMonkey, Parcel2go are offering great price comparison websites with a large offer in more than 80 countries all over the world. You can use this tools to get a quick (but not precise) price. Be careful to check if prices are including all taxes and duties.

If you are already working with few platforms and few carriers you can test tools like Shipstation that are offering an all-in-one tool to connect all your stores and accounts in one place.

These third-party companies have understood that having a successful shipping strategy, both qualitative and of low-cost for a small business owner, is almost impossible without expert assistance.

So who are these companies and what are they offering?

You effectively have two kinds of companies: the price comparison ones and the automation solutions.

Price comparison tools are websites offering you to compare prices between many shipping companies and to see the best rates. These tools, such as ParcelMonkey, are generally not focused on business owners but rather for private consumers.

Price comparison tools are great to help you get a first direction on the shipping prices to expect.

At Fetchy, they will find for you the best shipping prices, working only with top carriers. Select the best option and print the label that will be automatically edited for you. You can also directly schedule the pickup time and address from the system and track the package in real-time.

Very important to note, Fetchy is free and does not require any minimum amount per month, as per the regular shipping companies, and no monthly subscription fees, like most of the third-party tools.

Please note that by using this tool, you cannot integrate your existing accounts to compare the shipping prices. Besides, be sure to double check if the prices are taking into account all the taxes and the product insurance.

Also, those services are not integrated with your store. It means that if you are keen on their prices, you’ll still need to manually record all the order details in their system.

On the other hand, you have the automation tools. Using those tools you can very easily integrate your store(s) and all your accounts in one place in order to automate the processes from the moment you’ve received a new order until your client receives the package. Tools like those can save you precious time but are limiting in the number of options to get attractive shipping prices since you’re working with your existing carriers accounts.

You can integrate your store to Fetchy in a matter of seconds, whether it be from Shopify, Etsy, eBay, Amazon, Wix or many more.

Thus, all your orders, items and shipments will be gathered on your dashboard.

In other words, every order takes no more than two minutes to be ready for shipping and you can enjoy up to 70% off your regular shipping prices.

Summing it up

To conclude, shipping for small business owners is complicated since you have to choose between saving time or saving money and also between quality shipping services both for you and for your customer, whilst the whole time trying to make a healthy profit.

Being a small business does not provide you with the power to negotiate interesting shipping prices.

So the best options for you are or either to try by yourself to save here and there some peanuts using the tips described in this article, or try to work with a third-party tool in order to optimize your shipping process.

Besides, we truly believe that as small business owners you should focus only on making our business grow and not on logistical tasks that require a very deep understanding in order to optimize it, so prefer to give it to the experts like a third-party tool.

Don’t forget, money saved on your shipping is money in your pocket!

About the author:

Fetchy is an all-in-one free solution offering small and medium-sized businesses a perfect, easy-to-use tool to facilitate the shipping process along with very attractive prices using top carriers from all over the world.

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