Are you tired of losing money to the skyrocketing cost of logistics and now you’re looking to reduce your shipping costs? Well then, you’ve come to the right place.
In today’s world, customers are incredibly price-sensitive. The #1 reason for checkout abandonment is high delivery costs, so reducing your logistics expenses must be a priority.
But fear not, our e-commerce experts have compiled their top strategies to help you seriously reduce your shipping costs.
Drawing from their experience working with countless e-commerce stores, they share the most common ways businesses lose money on shipping and logistics, and offer their expert advice on how to avoid these pitfalls.
Don’t let logistics costs hurt your bottom line any longer – read on for the inside scoop!
6 Expert Tips to Reduce Shipping Costs:
- Research all possible shipping methods for the cheapest rates
- Leverage partners or 3rd-party solutions for negotiated rates
- Offer flexible delivery methods in your checkout
- Invest in warehouse management
- Set up a good returns process
- Use shipping rules to assign the cheapest shipping method
“E-commerce stores tend to spend too much money on their shipping because they haven’t researched all the shipping options out there. Often, retailers ship with a carrier or delivery method that is more expensive than something that would be better for their products or customers simply because they weren’t aware of what’s possible.” – Ben Haslam
As an e-commerce business, presuming you already ship with the cheapest service, or choosing the first carrier you negotiate rates with, can quickly lead to profits going down the drain.
Rates vary greatly between each carrier for different destinations, weights, sizes and more, so doing diligent research is essential.
This is especially true when shipping internationally, as relying on one carrier to ship to all your destinations will cost more than finding the best rate for each location.
To get the most cost-effective shipping strategy, here are some practical tips:
- Research all possible shipping services
- Evaluate which options match your particular needs
- Identify the right combination of carriers, services and costs for your particular packages (eg size, weight, destination, and speed of delivery)
- Create a multi-courier strategy combining the best and cheapest options
- Monitor rates in your local and international markets
- Maximise savings while offering great service to customers
With carriers becoming increasingly overloaded and the number of e-commerce businesses competing to negotiate shipping rates growing, it’s becoming more difficult to obtain cheaper shipping rates from carriers.
“More and more often, e-commerce businesses are unable to even get in touch with carriers to start negotiating in the first place, leaving them stuck with the higher-cost shipping rates available to all.” – Eros Cavallari
If you’re struggling to negotiate rates, or you just don’t know where to start when it comes to negotiations, consider the following tips:
- Know your volume: Carriers are more likely to negotiate rates if you have high shipping volume. Make sure you have accurate data to share.
- Be ready to negotiate: Negotiations take time but can save your business money. Be prepared and don’t accept the first offer.
- Highlight business strengths: Emphasise growth or a strong online presence to encourage carriers to offer better rates.
- Consider long-term contracts: Some carriers offer lower rates for long-term contracts. Weigh the pros and cons before committing.
- Understand pricing: Different carriers have different pricing structures, so understand them to negotiate better rates.
- Negotiate services: Consider negotiating services like tracking or insurance, which can be included in the base rate or offered at an additional cost.
- Don’t be afraid to walk away: If negotiations aren’t going well, don’t be afraid to look for other carriers that can offer better rates.
If you’re struggling to contact the carriers directly, or you wish to expand your carrier network without entering into a contract, look for a partner or solution that can help you access lower, negotiated rates without needing to go to the carrier directly.
Solutions like Sendcloud are able to build connections with the carriers and they use that partnership leverage to attain the best rates possible.
Customers are becoming increasingly demanding, and according to this year’s E-commerce Delivery Compass, customers expect a range of options to choose from.
“Failing to offer a variety of delivery methods in your checkout is a sure-fire way to consistently lose potential customers, and therefore miss out on profit. Investing in multiple delivery options may seem daunting, but losing customers in your checkout will ultimately cost you more in the long run, especially with the increasing cost of customer acquisition.” – Henriette Vogt
Here’s some insights into what shipping methods consumers expect to see in the checkout:
- Next-day delivery is the 2nd most popular shipping method for consumers after Standard Home Delivery. Although more expensive, people who want their package as soon as possible are willing to pay for it.
- Collection from a pick-up point is increasingly popular with 21% of consumers stating they prefer to collect their package at a local store, and a further 16% preferring service point delivery. (Plus, this method has the added bonus of being cheaper for you).
- Almost a third of consumers’ favourite shipping option is nominated day delivery. Customers want to choose when the delivery will come to ensure they are in to receive it. (And another added bonus is this method will decrease the number of undelivered packages).
- CO2 neutral delivery is growing in popularity, with almost 1 in 5 stating it’s their most preferred shipping option. It even scored higher than evening, mailbox, and locker delivery.
To offer more flexibility, consider implementing a multi-carrier strategy to get the cheapest rates for the services you need.
An all-in-one shipping solution can help you seamlessly manage your logistics from one platform, connecting your shop system to various shipping methods and integrating them seamlessly into your checkout.
“More often than not, we see e-commerce businesses losing a lot of money from poor warehouse management. And it’s a sneaky one, as many businesses don’t realise how much it’s actually costing them until we start implementing the changes and they see the total savings.” – Eros Cavallari
Common ways that poor warehouse management will eat into your profits include:
- Items being stored in the wrong location so the incorrect products are shipped (increasing returns)
- Workers needing more time to navigate the warehouse
- Orders taking longer to process
- Overstocking or stockouts occurring more frequently
- And items being lost or damaged
Start by assessing how things are running in your warehouse, and consider introducing any of the following:
- Set clear locations for individual SKUs
- Make sure picking staff are competently trained to navigate the warehouse quickly and effectively
- Think about which products are your best sellers and make sure the most popular items are easy to locate and close to the packing stations
- If you don’t have one already, consider setting up a picking and packing software to make it easier and more efficient for your staff
- Ensure your warehouse is kept tidy with minimal obstacles for your staff
- Make sure every operation has a clear process to keep things running smoothly
“There are many different strategies you can use for warehouse organisation, so try to research a few and implement what will work best for your particular business needs.”
Investing in a returns management solution is critical to help increase efficiency in handling your returns. And increased efficiency will always inherently save you money.
“We all know returns are a pain in the butt, and that they cost a lot. But accepting that returns are inevitable can be an empowering strategy and it can really help you save on costs as well.” – Henriette Vogt
Start by investigating your current returns management process and see where you might be wasting time and money.
Common problems with handling returns that will increase your costs include:
- Not tracking incoming returns so a return will randomly arrive at the warehouse
- Staff not knowing up-front what’s being returned, why, or what they need to do to process it
- Not using pre-negotiated rates or specific return shipping methods for your return shipments, making the shipping costs more expensive
- Taking too long to process a return item and preparing it for resale
- Making customers contact your support team to manually create a return, costing the team time (and ergo money)
Make sure to consider what you can improve with your returns policy as well. In the long run, an accessible and customer-friendly returns policy will help to increase your customer retention and reduce the amount you need to spend on capturing new customers.
If you’re looking for more tips to save money on your returns, make sure to check out our dedicated blog post: How To Reduce Return Costs.
Automation can be a game-changer when it comes to processing orders, and one particular tool that has consistently proven to reduce shipping costs is Shipping Rules.
Shipping Rules automatically apply IF THIS – THEN THAT actions to each order, covering a vast range of pre-set conditions. Here are some examples of how they can save you money:
- Assign the correct delivery method based on customer checkout choices
- Assign different methods based on product SKU
- Assign a shipping method for heavier shipments based on weight
- Apply the correct shipping method for international shipments based on destination
- Automatically apply insurance to higher-value packages
- And so much more…
“Sendcloud’s clients have seen remarkable savings, with one of our largest customers saving €60,000 in outgoing expenses in just one year. The client was able to save money by setting up a shipping rule that checked each order’s delivery address and assigned the cheapest carrier based on location. This was all done automatically, so staff simply had to print the label and send the package on its way.” – Miguel Delgad
Try making your own shipping rules to see just how easy it is.
We hope that the e-commerce strategies shared by our experts have been valuable to you and will help reduce shipping costs. A good place to start is to take a closer look at your own processes and identify the common pitfalls that are costing you money.
If you’re pressed for time or need more information on implementing these strategies, don’t hesitate to contact us. Our team of experts is committed to helping you find cost-effective solutions and improving your logistics management. Contact us today by filling in the form below to take advantage of our expertise and maximise your savings potential.