Increasing profit becomes more challenging with each passing year as more competition enters even the most niche of online markets. Meanwhile, as your e-commerce company grows it can be difficult to decide where to cut costs. One commonly overlooked area is shipping costs. Here are six effective ways to cut shipping costs for your e-commerce store.
1. Choose optimal packaging
Most e-commerce business owners purchase and pack with the most affordable option. This often means utilizing oversized boxes and extra packing material.
How many times have you received an online order in a much larger package than the product itself? Isn’t it annoying to dig through all of the plastic packaging material inside just to get to the bottom of the package to find the product you ordered?
As an online retailer, you should closely match the product dimensions to the package size. Measure the length, width, and height of the product, packing supplies, and the package. Then work with your selected carrier to find optimal rates. Remember, small products shipped in a much larger packages require more space and therefore cost more because they take up more space in the delivery vehicle.
Overtime extra shipping fees due to improper packaging could easily eat into your profits. Block out time to research different packing options. Get boxes that are the right size for your most common orders, and only use the right amount of packing material to ensure that orders arrive safely.
2. Select the right carrier and service
Carrier shipping rates depend on the location, delivery service, product attributes, and shipping options selected. Each carrier offers a different shipping service based on these criteria. Every carrier offers express shipping – an overnight shipping service and by far the most expensive option. Express delivery is scheduled to arrive early before the business day starts or in the early afternoon.
Standard delivery takes 3-5 working days and depends on the destination. It is a cheaper option, and in the majority of cases, people do not mind waiting this amount of time. So, unless you are in the food industry with products that are time-sensitive and perishable, avoid expedited shipping. Expedited shipping is usually overpriced and unnecessary, unless customers deem it necessary and are willing to pay for it.
3. Display accurate estimated delivery dates
Display accurate delivery dates for your customers at checkout so they know when to expect their order. Displaying accurate delivery dates prevents packages from being re-routed, sent back to the retailer, or left at the doorstep where it can be stolen or lost. Also, delivery dates are the second most important piece of information customers pay attention to at checkout, after shipping cost.
4. Account for landed costs
Landed cost is a term tied to international shipping. It is a sum of all costs it takes to ship goods across borders. These costs include shipping rates, value-added taxes, insurance fees, and customs duties. Sometimes landed costs can also include export licenses. However, these fees are not always obligatory, and mostly depends on the country of export and import.
Optimizing landed costs can help you cut shipping costs significantly. First, landed costs show you what costs to account for when shipping internationally. Second, the landed cost directly influences profit margin. Always remember to add all the costs and an extra profit margin to the equation. Miscalculating how much it will cost to ship a product abroad can cost you a lot of money.
5. Offer curbside and in-store pickup
Another great way to save money on shipping is to offer in-store or curbside pickup. Generally, it is a cheaper option than home delivery. Additionally, it provides customers with convenience and flexibility since they can choose when and where to pickup their order. The same goes for curbside pickup, since customers do not have to leave the comfort of their car.
6. Offer flexible shipping options
Flat rate and table rates are the most widely used shipping options. It is crucial to know when to ship with one or the other as it can decrease your shipping costs. It’s generally best practice to ship lightweight packages using table rates and offer flat rates for heavy packages.
While table rate shipping is more cost-effective, given it allows you to set different shipping rates based on the location of your customers, as well as the size and weight of packages, flat rate shipping is considered more user-friendly.
E-commerce shipping is more complex than it seems and requires careful thought and strategic considerations. It is not about simply putting a product into a box and shipping it. Retailers must account for all costs involved in shipping, choose the right packaging, and align the product and package attributes with carriers to obtain the best shipping rates possible. If you want to cut shipping costs, pay close attention to the details.
Lucia Liskova, is a Content Editor at Calcurates by Amasty – shipping SaaS for e-commerce on Magento, WooCommerce, and Shopify.
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