Luckily, there are at least a five items which any merchant can do to decrease the expenses related to shipping products directly to clients: (a) negotiating with carriers, (b) speed shopping on select orders, (c) with”free” money, (d) paying attention to merchandise block worth, and even (e) selectively using fulfillment services.
Free or Low Cost Shipping Has Altered
The ecommerce business — like nearly every business — evolves. So too has free shipping or its near relation, low-cost delivery. Only a couple of decades ago, it was possible to earn a fantastic argument it did not necessarily make financial or business sense to offer free shipping, even with a minimum purchase. However, the market has changed, and many — if not most — online shoppers expect to be given a free shipping offer when they shop online. What was a marketing strategy in 2009 has turned into an ecommerce requirement in 2013.
Free shipping and low-cost shipping offers are demonstrated to increase the amount each shopper spends on a given trip to an internet store. The latest data comes from a September 2013 poll that UPS and trend-tracking company comScore conducted in Canada. The poll found that over three-out-of-four Canadian shoppers had additional things to an ecommerce shopping cart so as to achieve a minimum purchase threshold and earn free shipping.
Negotiate for Better Rates
Negotiating better shipping prices is the clearest way to save money on transport generally. The top carriers in the U.S. — UPS and FedEx — are prepared to reduce rates if they think they will receive more overall delivery volume.
What is more, UPS and FedEx can also allow you to take up to 3 months to cultivate your volume; you might have the ability to enjoy lower shipping prices instantly even as your shipments drops up. Be careful that your projections are accurate, but as you’ll have to hit the delivery volume you promise so as to maintain your lower prices long term.
If you will need to boost your transport volume to have a better negotiating position with UPS or FedEx, try to add inbound shipments too. Several online retailers cover for bulk products to send from a manufacturer or distributor to that merchant’s own warehouse. As opposed to reimbursing the manufacturer or distributor for the delivery costs, a merchant may use its own UPS or FedEx account number, significantly boosting the merchant’s volume.
Shop Around for Shipping
When a vendor offers free delivery or, possibly, 99-cent shipping, it might make sense to shop around for prices. Not every provider’s rate program will make sense for each shipment.
For instance, for physically small but heavy things, flat rate shipping in the U.S. Postal Service can create considerable cost savings over UPS and FedEx. However, for many mid-sized bundles — comparatively speaking — UPS and FedEx provide better rates than the USPS. So taking just a minute to compare prices before sending a bundle can make a difference to your company’s bottom line.
Use Free Money
In business, there’s absolutely no such thing as”free,” if one is speaking about shipping or cash. But there’s an accountant in a single retail chain that likes to refer to payment card benefits as”free money.”
Some business debit and credit cards provide reward programs wherein businesses receive”cash back” — often in the kind of Visa or MasterCard gift cards — on just about any purchase made.
From an accounting standpoint, these cash back benefits might be regarded as a discount on the initial product or service purchased or as”free money” that might be applied to other company purchases or expenses.
Merchants can”reduce” shipping costs by paying with cards that earn cash back and treating the reward for a discount to the delivery prices or by paying for the transport with reward cards earned with other small business purchases.
Know Cube Values
If your shop offers shoppers estimated shipping costs through an application programming interface, it’s possible that you’re losing money on transport even if the shopper pays for it.
Many ecommerce platforms which have built in integrations for UPS or FedEx use only three variables to estimate how much it will cost to ship an order: the source address, the destination address, and the weight of the package.
For most orders, these three data points are enough to give an accurate rate quote, but any box that’s both light and big will cost far more than anticipated.
UPS, FedEx, and the USPS all think about a shipment’s”dimensional weight” in addition to its real weight when charging your company for transport.
Basically, dimensional weight is a charging calculation. Carriers can lose plenty of money on big, lightweight, and low-density packages. Imagine, for instance, shipping a box of cushions. The boxes may be exceedingly mild, but still take up plenty of room on a UPS truck. ( See “Shipping: Dimensional Weight Errors Can Cost Big Bucks,” where we clarify the subject further.)
To compensate, the carriers — with some variation in formulations — compute the normal value of this space the big, lightweight box takes up and charge that amount as opposed to the actual weight of the product.
Merchants can provide shoppers with better estimates and save on shipping, if they know that product’s”block worth,” that in the delivery context is the length, height, and width of the packed product. If you know a product’s block worth prior to a shipper buys it, then you can correct your ecommerce platform to provide better price quotes and save money.
Use a Fulfillment Service
A last cost saver might be as straightforward as using one or more fulfillment services that warehouse, package, and ship orders on your behalf. Fulfillment services are able to benefit from economies of scale to get better prices on shipping, shipping supplies — such as tape and boxes — as well as warehouse space. What is more, some pride firms have several warehouses, so you can place inventory in more areas thus reducing shipping prices by closeness.
Fulfillment providers charge a processing fee — after all, they wish to create money too — but often online retailers will discover that with a fulfillment service may lower the total cost of shipping packages.
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