- Negotiate rates with carriers. “If you talk to your carrier and they are not willing to negotiate, we encourage businesses to switch companies because that is the ultimate leverage.”
- Let customer keep their returns. Some of the biggest store chains are considering just handing customers their money back and letting them hang onto the products they do not want, according to CNN.
- Slim down package weight. You may not be able to reduce the weight of your products, but you can slim down your packing components.
With ecommerce sales for 2021 increasing 14 percent over 2020, there is no question that shipping acumen has never been more important for retailers’ overall success. Especially with inflation and supply chain challenges continuing to disrupt the industry, small businesses are going to want to save some money wherever they can.
“Apart from the rising fuel prices, shipping carriers are raising their rates every year. What we have seen with this trend is that they are even having mid-year rate increases,” Josh Dunham, Co-Founder and CEO of Reveel, said. “The percentage of their increase is just an average of the transportation charge, so it does not include any rule changes or other added charges, and they can raise other rates as well, but they will not announce all of that. UPS had a rate increase of 10 percent, and FedEx increased by 12 percent.”
Retailers already know how difficult shipping carriers can be when it comes to their rate increases, and with inflation now factored into the pricing, we have created a list of some quick and easy steps to help lower your shipping costs:
Negotiate Rates with Carriers
In December 2021, FedEx achieved its highest operating income in the company’s history, and UPS achieved its most profitable quarter ever in Q4 2021. Both did so primarily by increasing retailers’ parcel shipping costs — something they will continue to do. Not negotiating means accepting significant cost increases.
“There are a lot of different ways you can negotiate with carriers,” Dunham said. “Start with knowing your shipment profile, especially now with carriers being at capacity and having more shipments than they know what to do with, so one of the biggest leverage points is knowing where your shipments are going and the weights. If you talk to your carrier and they are not willing to negotiate, we encourage businesses to switch companies because that is the ultimate leverage.”
Source From Different Manufacturers
Especially when sourcing from suppliers within the United States, it can greatly reduce what you pay for shipping. Keith Daniels, a partner at Carl Marks Advisors, thinks it is important to look at ways to diversify your supply where you can and not just rely on one country or manufacturer. Retailers may not only find cheaper shipping, but also lower-priced goods.
Let Customers Keep Their Returns
In recent weeks, some of the biggest store chains, including Target, Walmart, Gap, and American Eagle Outfitters are considering just handing customers their money back and letting them hang onto the products they do not want, according to CNN. Since shoppers are so used to being offered free returns, they have come to expect it from every retailer they purchase, including the smaller stores. Letting consumers keep their returns will not only ease the cost of paying to have the item shipped back to your store or warehouse, but it will also ease the burden of having to restock the item.
Alternatively, if your business cannot afford this type of option, you can offer customers free returns if they bring the unwanted item into your store. Shoppers will still get their free return, and you do not have to front the cost of them shipping it back.
Offer Local Delivery or Pickup
Shoppers are so keen on receiving free shipping, that they are less likely to care about local delivery or pickup options if it means they do not have to pay to have their items shipped to their house. Especially when shopping from small businesses, consumers understand you may not have the same budget for discounted shipping as retail conglomerates such as Amazon or Walmart, so this is a great option for both you and the customer to save some extra cash.
According to Shopify’s consumer trends data, nearly a third of buyers say they have bought something online and had it delivered locally during the pandemic. Offering local delivery services also help indie retailers to:
- Connect with your local community by making it easier for locals to shop with your brand
- Improve customer experience by saying goodbye to shipping delays and variable costs
- Increase sales through 25 percent higher cart sizes and average order value
Slim Down Package Weight
You may not be able to reduce the weight of your products, but you can slim down your packing components. Small reductions in packaging materials can add up to substantial ecommerce shipping cost savings over time. As a bonus, you can also save on the cost of packaging and infill. According to Red Stag Fulfillment, you can do this by:
- Using a bag rather than a box wherever you can.
- Corrugated cardboard boxes come in a variety of thicknesses, so use the lightest box that will still protect your products during shipping.
- Match the box to the item. This will not only save you on the weight of the package, but also on the amount of infill you need.
- Reduce the weight of you infill and use air-filled pillows whenever possible.
These tips can be especially helpful when preparing for the holiday rush. In order to be able to handle the influx in online orders around that time, carriers may unexpectedly increase their shipping rates, so follow some or all of these steps to prevent your business from overspending on shipping costs.