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How to reduce shipping costs for your small business

As a small business selling online, shipping can be a challenge. There are a lot of logistics to arrange, which is a headache in itself, but more importantly, shipping costs money. You have to think about packaging, storing your inventory and deal with delivery fees.

Ecommerce is more popular than ever and being able to sell online is great for your business. At the same time, particularly when you have a business with less capital stored up, shipping fees can be a pain. And the more it costs you to ship, the more you have to charge customers to compensate – which can cost you sales.

Fortunately, there are lots of ways to cut shipping costs without sacrificing the quality or ethos of your business.

What makes shipping expensive?

First things first, let’s clarify exactly what we mean by shipping fees. We’ve all seen the added cost of an item on Amazon, but shipping fees are more than one cost. It’s a general term that includes:

  • Boxes, packaging, tape, scissors, and anything else required to contain your items

  • Courier costs for collecting and delivering items

  • Labour costs of sending the item, meaning the cost of the workers’ time

  • Import and export fees if you’re shipping internationally

That seems like a lot, but it’s actually good to have it broken down like this. Now you see there are a lot of places you can start chipping away at your costs.

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Package your items better

It’s easier than you think to change the way you package goods. Maybe you’ll only shave off a few cents per package, but the more business you do, the more it adds up.

Weight = money

Pay attention to the weight of your packaging. Weight is a key determinant of how much your items will cost to ship. You may not be able to do much about the weight of your items, but there are ways to accommodate any item weight more efficiently.

You can bring down the weight of your packages by:

  • Using corrugated boxes to pack items: Corrugated boxes are a stronger and lighter material than standard cardboard, with rows of small air-filled grooves between the inner and outer layers of the box.

  • Using lightweight packing material: You should always be packing your items tight, but that doesn’t mean you need to use heavy material. Bubble wrap, air pillows, and lighter packing paper are all good options.

  • Designing a custom shipping package: Even if your item is awkwardly shaped, the easier it is to pack items together and the closer they conform to the shape of the box, the less material you’ll end up needing.

Size it right

When you’re looking for packaging, it’s very common to find something that’s bigger than what you’re actually sending. Using a large box for something small like a candle is unnecessary, and it also means you’ll spend more on packing materials so the item is secure and won’t break on its way to the customer.

By changing your materials from boxes to smaller things like padded envelopes, you can get rid of pointless fees. You should also be on the lookout for free packaging. Some carriers, like DHL, offer this, either by default or when you pay for specific classes of shipping.

Flat-rate shipping

Shipping policies and pricing change constantly, so even if you’re doing everything you can to make your packaging cheap, it can be tough to keep up. That’s why more businesses have turned to flat-rate shipping as a way to lower shipping costs.

Flat-rate shipping means that no matter the weight, size, or shape of the item, the cost to ship it stays constant. Sometimes it’s cheaper to opt for flat-rate shipping, but that’s not the only benefit.

The consistency of flat-rate shipping makes costs easier to calculate. Suddenly, you have a fixed cost instead of a variable cost, which takes the guesswork out of estimating your expenses. Your customers will also appreciate the clarity of flat-rate shipping.

Lower carrier costs

Another thing that tends to inflate shipping costs is the carrier you use to deliver items. Take your time and look into all your options until you find a carrier that fits your budget. If you have customers in other countries, also check their import and export rates.

There’s always competition between shipping carriers, so it may be feasible for you to negotiate a lower rate. You can also negotiate directly with suppliers, if you have them, to get items shipped directly to you so it’s easier to control costs.

Another way to lower carrier costs is to implement other delivery methods that remove carriers from the equation. Consider offering either local delivery or in-store pickup.

Local delivery lets you fulfil orders yourself, which means you aren’t paying carrier costs. You can define a maximum distance for local deliveries in your shipping policy so customers know exactly what their options are. Local delivery will usually be less expensive for your customers, since as your shipping costs go down, so will your prices.

In-store pickup is another way to remove carriers from the shipping process. In fact, if your customers opt for in-store pickup, you’ll have no shipping costs at all.

You won’t have to send your items anywhere, which means no boxes to pack or moving trucks to hire. In-store pickup also isn’t necessarily restricted by location, since it’s up to the customer whether they want to travel to you or not.

Either delivery option will benefit your business. Both methods mean:

  • More opportunities to connect with your customers and community

  • A better experience for your customers, since they won’t need to deal with shipping delays or variations in order costs

  • More sales – shoppers average 25% higher cart sizes and spend more when choosing either in-store pickup or local delivery

All these strategies can save you a lot of stress and money when you’re fulfilling customer orders. Lowering your shipping costs will lead to happier customers, and happier customers spend more.

Max Elias