5 Ways to Reducing Shipping Costs in the New Year

Did your ecommerce shop send baskets of goodies out this holiday season? Then you know very well how much shipping costs can affect your profit and what delays or poor service can do to your reputation.

The ever-increasing popularity of ecommerce means you as a merchant have the greatest opportunity of raking in revenues and attracting loyal, lifetime customers.

Let’s say you have an online store that sells electronic gadgets. A potential customer lands on your website, finds a cell phone and quickly adds it to his cart. He clicks to your checkout page and you almost have the sale!

But before the purchase your customer suddenly realizes the shipping cost is half as much as the phone and in that instant has changed his mind. Later he will buy the same product from one of your competitors.

Many people don’t mind paying more for their favorite item or the hot new thing, but they’ll think twice about buying it from you if you have outlandish shipping costs or other irrelevant charges.

Higher shipping costs not only harm your margins, but they may push away potential customers who have a big appetite for online shopping. A bad experience or a high price could send them to your competitors.

So, what can you do to prevent this from happening? You need to review your company’s shipping strategies and find new ways to reduce the expenses. Here are 5 things to consider:

Negotiate with your current carrier

Before you undertake a negotiation battle with your carrier, review and do your research. Get familiar with your previous shipping bills to figure out the main drivers behind outrageous or extra fees, then find loopholes in your contract and shut them down, permanently.

Regardless of who is doing your shipping, always get prices from competitors as part of your review. Whether you want to switch or not, knowing what other carriers are charging is a element in negotiating with authority.

The flat-rate strategy

Many shipping agencies have the option to ink a flat-rate shipping contract. Typically the merchant is charged a standardized fee, regardless of the delivery location and other factors that normally influence shipping costs.

Pay attention though, because some companies will label the flat rates by zones, localities or distance to be covered. Many also increase costs as the weight of your goods increases.

Conditional shipping deals rarely are beneficial for the end customer or the ecommerce merchant. If your website sales are high, the flat-rate strategy could be the way to go.

Save money on packaging

Most top shipping service providers offer packaging equipment such as wrapping rolls, printers and scales to prominent online retailers and customers, free of cost. Some may even provide you with computers and software at subsidized rates. Such deals can help you cut down on your packaging cost and make shipping cheaper for the customer.

Consolidate your account

Shipping fees are highly dependent on the volume delivered, and it’s beneficial for you to transport the maximum number of goods with your delivery account. This can also include shipping incoming raw material or finished goods to your warehouse. Ask your vendors to ship products on your carrier account whenever possible for the biggest savings.

Claim your refunds

Another way to add some extra dollars to your profit jar is with on-time shipping assurance provided by many reputable shipping companies. While most carriers are incredibly precise with their timing, there is always a modicum of human error that may cause delays.

Delays on guaranteed deliveries entitle you to a refund on that delivery, but many such refunds go unclaimed. That means businesses like yours are missing out on money they’re owed. Always claim your refund!

These are some simple yet effective ways to reduce your shipping costs. They’re the perfect start to help you brainstorm ways to improve your customer service and reduce both what you pay and how much you charge your customers.

Jake Rheude is Director of Business Development for Red Stag Fulfillment

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