Your shipping expenses significantly influence your business’s profits. The demand in the e-commerce industry continues to increase, and carriers need to change their prices based on factors such as the warehousing space they have at disposal and distance.
Providing free shipping can attract more buyers. However, you will have more expenses. On the other hand, if your customers are the ones to pay the shipping costs, it could be the deciding factor in choosing whether to buy your product or not. Moreover, larger companies such as Amazon use free shipping nearly everywhere to avoid encouraging smaller business owners to compete by offering free shipping on their products.
Therefore, learning how to minimize shipping expenses plays a vital role in maintaining and raising your business and profits. For that reason, we created this article to provide you with valuable information and advice on how to achieve that. Learn more below.
What Are Shipping Expenses?
Shipping expenses include the costs of transportations by a carrier like Unival Logistics to get the goods from the shipping carrier to the consumer. That also includes fuel charges, surcharges, and other elements linked to the distance the items must travel to their target.
What Determines the Shipping Expenses?
Before shipping your products, you might want to understand the factors that influence how much you will spend on transporting items to your customers, as it will help you reduce your expenses.
These include package dimensions, weight, destination, value, and shipment type. Below you can learn more about them, which might help you minimize your expenses next time you ship.
- Package dimensions: All the major carriers use a pricing technique called DIM (dimensional) weight to calculate the shipping rates for packages. It considers the package size to decide its shipping cost.
- Package weight: The weight of your package also affects the cost of the shipping. If it is heavier than the DIM weight, the carrier will use it to assess your shipping expenses. Naturally, the more weight the package has, the more expensive the shipping will be.
- Shipping destination: The shipping destination is another factor that determines how much carriers will charge shipping an item. They determine the price by calculating the package’s pickup position and the receiver’s location. In the USA, there are nine zones. The higher the zone, the more expensive the shipping is.
- Package value: The value of your product also plays a role in determining how much you will be charged for shipping. If you ship high-value items, you will have to ensure your packages. That increases the costs of the shipping. However, it protects you in cases of damage, loss, or theft in transport.
Other elements that affect the shipping expenses include delivery times and unexpected setbacks.
Ways to Minimize Shipping Expenses
Below are some of the ways to reduce your shipping expenses. Consider trying them out, as they will likely save your money in the long run.
Use Packaging Provided by Your Carrier
Using packaging provided by your carrier can reduce your shipping costs. Most major carriers charge a dimensional fee if you use your boxes. Your unique packaging may help with branding. However, if you cannot afford additional charges, consider using the one your carrier provides.
Choose the Right-Sized Packaging
As package dimensions affect the shipping expenses, you might want to opt for smaller boxes when possible. Also, you can pack multiple items in a single box. Doing this will also reduce the material used in packing, making it less heavy and more ecological.
If the items you need to ship are not fragile, you can pack them in poly mailers instead of boxes. They are less expensive as they take up less space, thus reducing packaging costs.
Negotiate with Different Carriers
Many businesses tend to stay with the first carrier they find when there might be a more sustainable way to ship their goods. Nearly all carriers change their pricing based on volume, meaning the higher the volume, the lower the charges.
However, in many cases, small businesses do not know they can negotiate the prices with the carriers. With that said, it would be a smart move to contact several carriers, understand the size, weight, and volume of your packages, along with their origin and destination, and use this knowledge to obtain a better deal.
Opt for Regional Carriers
Choosing regional carriers is another way to reduce the expenses associated with shipping. They offer the same services as major ones, but at reduced prices. However, their delivery network is limited to a significantly smaller geographic area. Nonetheless, it can be an economical alternative if your consignments are within their zones.
Know Your Shipping Fees
Knowing all your shipping fees will enable you to bill your customers accurately, thus avoiding losing money and customers. There are over 75 charges that could apply to your consignments, such as signature fees, fuel surcharges, and Saturday delivery charges, to name a few. Moreover, if the shipping costs are on your recipients, include them on your final bill to avoid absorbing them.
Opt for Prepaid Shipping
Prepaid shipping can offer a discount of up to 20%. That means you can buy more shipping labels and place them on packages when they need to be shipped out, instead of paying for each before shipping it. Prepaid shipping is an excellent choice if you know the same-weight items will be shipped out repeatedly.
Reducing Shipping Costs Is Vital for Business
Regardless of the size of your business, reducing shipping expenses plays a pivotal role in sustaining it. Offering free shipping might attract more customers, but it will mean more expenses for you. Conversely, if you pass the costs on to your customers, they will likely weigh them before deciding whether or not to buy your products.
Either way, lower shipping expenses will significantly benefit your business, and applying cost-effective ways from this article will help you reduce them. Get the most out of your work without letting shipping costs decrease your profits.