How to reduce shipping costs for small businesses - The top 10 tips for online shops!
Shipping costs can be one of the biggest expenses for online shops and can significantly impact profit margins. However, there are numerous ways to lower your shipping costs without compromising on customer service.
Our logistics experts have compiled the key tips on how you can effectively reduce your e-commerce shipping costs!
- Find the Most Affordable Shipping Service Provider
- Utilise Parcel Flat Rates
- Offer Free Shipping
- Use Parcel Shops and Pickup Stations
- Embrace Sustainable Packaging Materials
- Optimize Packaging Efficiency
- Use Self-Shipping Services
- Streamline Internal Shipping Processes
- Reduce Return Rates
- Outsource Your Logistics
Conclusion
1. Find the Most Affordable Shipping Service Provider
Likely the most obvious but still one of the most effective tips:
Thoroughly research various shipping service providers and gather as many quotes as possible. Remember that, depending on your order volume, you can often negotiate a better price. Also, inquire with your current shipping provider for a more cost-effective rate. Don't leave these options unused!
Additionally, if your online shop is highly active in a specific area, consider looking for a regional shipping service in that location. Regional carriers can offer lower shipping prices as they don't need to travel long distances.
2. Utilise Parcel Flat Rates:
Shipping services offer flat rates for parcels. With these tariffs, you pay a fixed price per parcel, regardless of size or weight. Depending on the products you ship and their quantities, this option might serve as a cost-effective alternative to standard shipping rates.
Flat rates also make it easier to calculate and predict your ongoing shipping costs.
3. Offer Free Shipping
Many online shops provide free shipping for orders above a certain value. This strategy often works well, motivating customers to purchase more and stock up to qualify for free shipping. Just ensure that your profit margin remains intact.
- Note: When offering free shipping, avoid expensive shipping options like express or international shipping. If possible, offer standard shipping for these cases to prevent impacting your margins significantly.
4. Use Parcel Shops and Pickup Stations
Pickup stations are a cost-effective way to send multiple shipments to a central location near your customers. From there, they can collect their packages.
This approach reduces individual delivery routes to customers' homes, saving costs. Additionally, these parcel shops often offer favourable terms.
5. Embrace Sustainable Packaging Materials
The more packages your e-commerce shop sends, the more packaging material you use. Consider looking for recycled materials for padding, which is often cheaper than new materials or plastics.
Numerous providers offer environmentally-friendly filling materials made from inexpensive recycled paper instead of new material. At Quivo, we exclusively use sustainable materials for padding in our fulfilment centres, and it works!
6. Optimize Packaging Efficiency
Shipping revolves around size and weight. The lighter the packages and the more grams you save, the cheaper your shipping will be. Avoid unnecessary packaging material and assess what can be omitted without jeopardizing the product's safety.
Lighter materials or smaller packages might also be suitable options to reduce weight and space.
7. Use Self-Shipping Services
Various self-shipping offerings are provided by package couriers, logistics companies, and fulfillment providers. These programs or web apps allow you to create, print, and attach shipping labels to packages yourself for direct shipment. This can be a cost-effective alternative to traditional shipping services, as you're taking some of the work off their hands.
For example, our free "Send it Yourself" in the Quivo Connector. With this service, you can organize your orders, choose from various shipping providers and options, print labels, and send your packages at our favourable shipping rates. We currently offer this service in Austria, Germany and France.
This can significantly save costs!
8. Streamline Internal Shipping Processes
Examine each step of your shipping process:
- From order placement,
- to storage,
- inventory management,
- packaging,
- staff allocation,
- invoicing,
- to actual shipping.
Ask yourself:
- What could run better?
- Is there a bottleneck?
- What incurs the most costs or effort?
- Is anything still manual that could be automated?
- Where do errors regularly occur?
A seamless ordering process becomes increasingly crucial as the number of daily shipments grows. And, as the saying goes, time is money:
Optimize your processes, make minor adjustments, and automate manual steps to ship as efficiently and cost-effectively as possible!
- Additionally, listen to your customers' feedback and take it seriously. They clearly tell you what works well and what doesn't. All of these aspects are an ongoing challenge in the e-commerce landscape!
9. Reduce Return Rates
High return rates lead to increased costs due to the effort involved. If your online shop also covers the return of purchased products, additional expenses can arise. This is essential for customer satisfaction, and as logistics experts, we also advise offering free returns if possible.
Firstly, analyze which products are returned most frequently to evaluate their sales potential. Secondly, clearly communicate return conditions on your website to avoid misunderstandings, negative reviews, and extra costs.
- Additionally, you can minimize return rates by including precise photos and detailed descriptions of your products.
10. Outsource Your Logistics
Parcels are piling up, the warehouse is full, and your staff is struggling...
Perhaps it's time to outsource your logistics to a fulfilment provider like Quivo. Even if your parcel situation doesn't seem dire, it might still be worthwhile to have a professional logistics provider handle your operations. They take care of inventory, packaging, and the entire shipping process—from order reception to your customers' doorstep.
This largely eliminates the bottleneck of in-house parcel shipping, allowing you to focus on selling and growing your online shop.
Conclusion:
Overall, there are many ways for online shop owners to reduce shipping costs without compromising customer satisfaction.
- Choose the right shipping rates,
- optimize your packaging,
- utilize parcel shops,
- offer free shipping, and
- automate your processes.
- Utilizing self-shipping solutions or logistics services from fulfilment providers can significantly reduce your effort and costs, maximizing your profits!
Do you have more questions? Feel free to contact us without any obligation.
Sources
Page: Onlineshop Versand: Tips & tricks for a satisfied clientele
URL: www.shopify.com/de/blog
Page: Prohibition Partners - The European and US CBD Repor
URL: www.mollie.com
Page: Optimise shipping costs
URL: www.siwa.at
Page: Prevent shopping cart abandonment
URL: www.tecchannel.de
Pictures:
Logsta / Quivo © 2023
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