Every year it’s the same: major shipping providers USPS, FedEx, and UPS all raise their shipping rates while online shoppers grow more accustomed to free shipping. It falls on online retailers to either eat the extra costs of free shipping or lose customers by raising prices. If only there were another option… or maybe 7 other options?
If you want to continue offering free shipping without jacking up prices, below we present 7 tips for finding the money elsewhere. Apply the advice below to cut shipping costs and offer shoppers the free shipping they love — all without losing your shirt!
1. Reduce Package Size and Weight
The easiest way to reduce shipping costs is to… reduce the cost of shipping. By that, we mean to lower the actual cost of deliveries by reducing the package size and weight, or by using cheaper packaging materials.
If you find your packages have a lot of empty space, you can use smaller packages to save on dimensional costs. Similarly, poly mailers are lighter than boxes, so they can lessen your weight fees as long as the product is not fragile. Plus, poly mailers can be customized for better brand associations.
You can also buy your packaging materials in bulk to further reduce costs. Or better yet, get shipping boxes for free if you use USPS.
2. Ruthlessly Audit Your Inventory
Aside from reducing storage costs for hard-to-move items, auditing your inventory can reveal which products cost too much to ship. Depending on factors like size, weight, and where they’re shipping to, a product may not be making as much profit as you think after shipping.
If you don’t know what to look out for, you can read our beginner’s guide to inventory audits. If you’d rather automate and not worry about it, using inventory management software like ecomdash can pinpoint this information on its own. For example, ecomdash automatically calculates the Cost of Goods Sold, which factors in both the cost of acquisition and delivery, revealing a product’s true profit margin.
3. Find Shipping Discounts
What you don’t know can hurt you, especially if you’re missing out on a discount you’re eligible for. Major shipping carriers often provide special discounts for small businesses and regular clients, so you might be able to cut shipping costs just by applying. Specifically, you can check out the USPS business discounts and the UPS small business shipping rates.
4. Work with a New Storage Facility
In addition to size and weight, the third major factor in shipping costs is distance. To cut shipping costs, you can always reduce the distance of the delivery. Amazon sellers can take advantage of FBA, but there are other options for selling outside of Amazon, too.
While online retailers don’t always have the budget to open a new storage facility on the other side of the world, using a third-party logistics (3PL) company is still viable. Just watch out for the red flags when choosing a 3PL partner.
5. Use Third-Party Insurance
Here’s a tip that’s both useful and simple: third-party insurance providers are almost always cheaper than the major shipping carriers. The difference may just seem like nickels and dimes on the surface, but when you ship enough goods, those nickels and dimes can become hundreds of dollars. Insure your goods elsewhere to get the same security at a fraction of the cost.
6. Consider Regional Carriers
The major shipping providers are great for reach — you can sell to your hometown and Timbuktu with the same carrier. But that reach comes with an extra cost, and if you don’t necessarily sell much in Timbuktu, it’s hard to justify the cost.
Consider using regional carriers instead. They may not work for all retailers — it depends on how much you ship and to where — but it’s worth looking into if your customers tend to come from the same areas. If you’re looking for options in the U.S., check out Spee-Dee Delivery Services in the Midwest or LaserShip for the East Coast.
7. Buy Prepaid Shipping if Applicable
Prepaid shipping almost always saves you money. The idea is you buy all your shipping labels in bulk for a price break and then use them up one by one to satisfy orders.
While this seems like a great solution, there’s a big caveat — it’s only really viable if you ship a lot of orders with the same weight and dimensions. This strategy works best with ecommerce brands that have a strong flagship product, in which case the package details are the same every time. If your sales are unpredictable, this tip won’t save as much as you hope.
Finding Pennies Where You Can
Above we listed the best ways to reduce shipping costs, but we haven’t yet mentioned that you can always find the money elsewhere, too. Running a tight ship across all aspects of your business, from marketing to warehouse management, can help mitigate the rising costs of shipment.
Looking for more fulfillment tips? Check out our all-encompassing guide on shipping products to customers.
Editor’s Note: This blog post was originally published November 2017 and was updated in February 2021 to reflect more accurate and relevant information.