Running an ecommerce business is complex. Navigating all of the moving pieces can leave one’s head spinning, and it doesn’t end when the product leaves the warehouse. Minimizing costs remains a universal component of any business strategy. One of the most fruitful opportunities for savings lies in commercial shipping. Thanks to some largely universal aspects of logistics, a little knowledge can go a long way toward improving the bottom line.
1. Use an Electronic Shipping Solution
With expectant customers and employee time, both representing valuable resources in today’s fast-paced world, any aspect of the process that can be handled more quickly and efficiently offers a chance to save. In particular, making the trip to a physical retail location to process your shipments instead of leveraging more efficient and intuitive solutions can waste both your time and your money. Online shipping services have improved the process to the point that some carriers offer premium savings to customers who use them.
The United States Postal Service, for example, offers deep discounts for those who use an approved online postage service, such as Endicia. The USPS provides up to 16 percent off of Priority Mail® and up to 60 percent off of Express Mail costs through using one of these approved vendors. In addition, they offer free pick-up service, tracking and shipping supplies. This combination of convenience and savings presents one of the most feasible methods of saving on shipping costs, and not simply through discounts.
2. Use Packaging Provided by Your Carrier
Each carrier holds its own policies on shipping requirements in order to accommodate its logistical systems. For this reason, carriers design their stock packaging around these rules in order to maximize compliance. In this way, these materials offer a boon to both you and your carrier.
Between discounts on packaging, guaranteed compliance with carrier standards, and the convenience and savings of both, using materials provided by your carrier offers a chance to reduce costs and improve relations with your carrier. That relationship will come in handy, as we will see later.
3. Control Customer Returns
As demonstrated, a few purposeful decisions can lead to big savings for businesses. Despite the logical conclusion that providing a return address and placing the responsibility on customers to pay for consequent charges helps alleviate shipping costs, human error in the process (e.g., delayed returns, customer support phone calls and lost packing slips) can actually increase overall costs to a company. This could be in the form of additional logistical or employee resource dollars, and in the potential loss of future sales, because 85 percent of customers who experience a negative or inconvenient returns process will not repeat their business.
By taking control of customer returns, despite the cost incurred, businesses can actually reduce costs in the long run. If they provide printable shipping labels that can help identify returns at the warehouse or store, utilize their corporate shipping account in order to take advantage of bulk shipping rates and facilitate the process as much as possible, they can expect improvements in employee and logistical efficiency.
4. Negotiate Rates Based on Growth
Unlike consumers who are generally locked in to shipping rates due to their low volume, businesses have the benefit of negotiable prices. But rates aren’t the only contingent on current shipping volumes. Savvy companies have actually leveraged growth projections to reduce costs in the present. Doing so can actually result in next year’s rates right now.
This practice is not uncommon for carriers. If logistics companies have the opportunity to profit from increased shipping volumes, facilitating that growth actually represents a prudent business decision. Consider taking your projections and tapping into your relationship with your carrier to see if a discounts are possible. The adjustment may spur growth and profit your carrier in the process.
5. Audit Shipping Invoices
While establishing a sound relationship with your carrier is important, maintaining integrity remains paramount. Shipping invoices are complex documents that can leave a lot of room for misinterpretation, and exercising your right to audit your billings can uncover some surprising results.
It’s important to make sure you understand the impact of surcharges, which may or may not be included as part of the cost when a label is printed. Understanding this impact and adjusting shipping behavior when possible can reduce or eliminate these extra fees.
6. Expand Warehousing
Your business may begin small, shipping to local addresses at reasonable rates, but success has its costs. As brand reach extends beyond your area code, longer-distance shipping can impact your bottom line. For that reason, expanding warehousing to strategically prudent areas can help minimize cost. Doing so represents a significant up-front investment, but with large volumes of outbound product, the savings will add up quickly, meaning lower overhead, and more satisfied customers.
Despite the diverse nature of businesses, universal aspects of shipping exist across industries that can help reduce cost. Using online shipping capabilities and carrier packaging can result in significant savings. Controlling your returns process can help reduce overhead costs and improve efficiency. Finally, establishing a positive business relationship with your carrier can result in reduced rates, greater accountability and money-saving advice. As your business scales, these seemingly small changes can make a big difference in securing future revenue, customers and peace of mind.