How to Reduce Shipping Costs

How to Reduce Shipping Costs for Small Businesses

High shipping costs are a huge burden on small businesses. Getting your products to your customers quickly and affordably is a must, but finding the right carrier for the right price to reduce shipping costs can often come as a challenge. In this blog, we’ll help you understand how shipping prices are calculated by carriers, and outline various ways you can apply this knowledge to lower your shipping costs and exceed customer expectations significantly.  

How are Shipping Costs Calculated?

If you’re curious about what it will cost to ship your products to your customers, first you need to understand what factors are used to calculate shipping rates. Carriers will determine the cost to ship a product based on the weight and dimensions (length, width, and height) of your package. They also consider the speed of delivery and the distance the shipment needs to travel to reach its destination.  

Minimizing Package Size and Weight Helps You Save Money

Now that we know how carriers factor packaging size and weight into calculating shipping rates, let’s explore how we might use this knowledge to lower shipping costs:

• Reduce the Shipment Weight

  While this might sound easier said than done, there are many ways you can attempt to lower the weight of your shipments. The simplest way would be to reduce the weight of your actual product. For example, if your product has a metal casing, you could switch to a lightweight plastic. If that’s not feasible, you can use lighter packaging materials, or using bubble mailers instead of corrugated boxes, when applicable.

• Choose the Right Packaging and Packing Materials

  This is another area where you can potentially cut down your shipping costs significantly. For starters, you want to avoid using oversized packages for your orders and products, but more on that shortly. Find the most sustainable and cost-effective materials to contain the contents of your shipment. Whether you use recyclable paper, air pillows, bubble wrap, or packing peanuts to cushion your items and pad your packages, you can opt for the most economical options if they don’t sacrifice the effectiveness of the protection.

• Consolidate your Shipments

  Rather than sending out multiple small packages separately, it’s generally more cost-effective to consolidate orders into one larger shipment. While it's true that consolidating everything into one big box increases the actual weight, what it does is lower the dimensional weight of your shipment. This means that since one package takes up less space than three on the carrier's truck, the dimensional weight is lower than the actual weight, and this is factored into lowering your shipping costs.

• Lower the Dim Weight

  As mentioned, lowering the dimensional weight of your shipment can minimize your shipping costs. So, how can we lower the dimensional weight? Minimizing the amount of space left over within your box once you’ve placed the product inside it is key. By using packages that are closer in size to your actual products, you’ve successfully lowered your dimensional weight because the package now takes up less space. Plus, when you use packages that have less space available after you’ve placed your product inside, you don’t have to use as many packaging materials.

Negotiating Bulk Shipping Discounts with Carriers to Reduce Shipping Costs

It’s no industry secret that the more you ship, the more you save! The higher the volume your business ships, the greater negotiating power your business has with the carriers. What do you think makes a carrier more profitable, a shipper who ships a package once a day at a $5 margin, or a shipper who ships 50 packages a day at a $1 margin? Carriers want volume, so the more you can deliver, the more discounts you can be eligible to receive. Now, what if your business doesn’t have the volume to negotiate a significant discount with the carriers directly? Again, this is where shipping software comes in to give small businesses that competitive edge.

When you use shipping software such as ClickShip, the rates you receive aren’t based on your own shipping volume, but on the combined volume of the platform’s user base. These volume discounts are passed on to each individual shipper utilizing the shipping software to book shipments and help reduce shipping costs.

Create a Clear Shipping and Return Policy

Crafting a clear shipping policy is key to cutting shipping costs. By setting minimum order thresholds for free shipping, streamlining packaging guidelines, and communicating delivery timelines, businesses can encourage consolidated orders, optimize packaging efficiency, and reduce the need for expedited shipping. This not only enhances customer satisfaction but also helps minimize unnecessary expenses and returns, making shipping more cost-effective overall and improving customer satisfaction.

Comparing Carrier Rates and Lowering Shipping Costs

It can be both difficult and time-consuming to get quotes for shipments manually, so rather than going to each carrier directly for a rate, small businesses can utilize shipping software to streamline the process and drop shipping charges. That way, you only have to enter the details of your shipment once, and the software will work as an aggregator to retrieve shipping rate quotes from a variety of carriers simultaneously. Businesses can save time and money by comparing shipping quotes and choosing the most suitable shipping rate and carrier.

Check out the following video for more insights on how ClickShip helps you compare various carrier shipping rates to lower your shipping costs.

Buying Supplies in Bulk to Reduce Shipping Costs for eCommerce Businesses

Another effective way to save on shipping costs and minimize shipping charges is by purchasing your packaging and packing materials in bulk. By buying in larger quantities, you may qualify for significant discounts from suppliers, making your materials more affordable. This not only decreases your upfront expenses but also contributes to reducing your overall shipping costs in the long run. Additionally, stocking up on packaging supplies can ensure you’re always prepared to handle increased order volumes efficiently, further enhancing your cost savings over time.

Use Drop-Off Locations

Using carrier drop-off locations instead of scheduling pick-ups can save on additional pickup fees that some shipping companies charge. Many carriers have conveniently located drop-off points, including local stores or post offices, where you can leave your packages at no extra cost. This is particularly beneficial for small businesses that don’t ship large volumes daily but still want to reduce unnecessary expenses associated with scheduled pickups.

Switch to Economical Shipping Methods to Cut Down Shipping Fees

For non-urgent shipments, choosing slower but more economical shipping methods can lead to significant cost savings. While customers might prefer fast delivery, offering the option for economy shipping or extending delivery windows for lower shipping fees can appeal to cost-conscious customers. Many carriers provide discounted rates for standard or ground shipping, which can be a great way to lower expenses on deliveries that don’t require speed.

Monitor and Review Shipping Costs Regularly

Regularly reviewing your shipping expenses is crucial to identify areas where you can reduce shipping costs. 
Analyzing your shipping data, such as carrier rates, delivery times, and customer preferences, allows you to recognize trends and inefficiencies. For instance, if a particular carrier’s rates have increased, you might want to switch to a more cost-effective option. Ongoing review shipping costs helps ensure that you’re not overspending and that your shipping strategy evolves alongside market changes and customer expectations.

How to Get the Best Shipping Rates and Save on Shipping with ClickShip

Shipping is complex, the process of manually inputting shipping information, weighing all the options, and negotiating better rates with each carrier directly can be tedious and often overwhelming. But ClickShip helps you streamline the entire process and provides a comprehensive suite of tools that work to save you even more time and money on shipping.

• Free to Use Shipping Software

  ClickShip is an online platform that businesses can use to access exclusive discounted shipping rates from a variety of trusted carriers. There are no upfront fees or volume commitments. The basic account comes equipped with loads of core features, including access to the best shipping rates. You can quote, book, track shipments, and more. It’s free to use; you only pay for what you ship. Reach out to our experts now and ensure your products are delivered on time, every time.

• Enjoy Volume Discounts and Compare Quotes Instantly from Various Carriers

  We leverage the combined shipping volume of our customer base to pre-negotiate the lowest rates with leading carriers and pass those savings on to our customers. And there’s no running around contacting different carriers looking for a quote. ClickShip is integrated with numerous leading carriers and couriers, so you can compare rates in seconds and choose the best rate and service for your business.

• Seamless eCommerce Integration for Streamlined Order Fulfillment

  If you have an eCommerce store or online business, then ClickShip can help you save even more time and money on shipping. ClickShip integrates with the leading online storefronts and marketplaces like Shopify, Amazon, WooCommerce, Etsy, WIX and more. When you integrate your store or marketplace with ClickShip, the platform will automatically sync with your online orders, so you can easily compare rates, book shipments, and fulfill orders seamlessly without having to manually enter any of the shipping details.

FAQ

How can I compare shipping rates from different carriers?

Traditionally, comparing shipping rates meant visiting individual carrier websites and entering package details repeatedly. But there's a better way! Many platforms allow you to compare quotes side-by-side from major carriers on a single platform. Simply enter your package details and destination, and get instant quotes to choose the most cost-effective option for each shipment.

Does packaging size affect shipping costs?

You bet! Shipping costs are often based on a combination of weight and dimensional weight (calculated by multiplying length, width, and height). Using a smaller box or optimizing your packaging to minimize space can significantly reduce your dimensional weight and, in turn, your shipping costs.

Can I negotiate shipping rates with carriers?

Negotiating shipping rates with carriers is usually an option for high-volume businesses. However, there are ways to get better rates even with lower volumes. Some shipping platforms such as ClickShip have negotiated discounted rates with major carriers that are automatically applied to your shipments.

How can I use technology to automate my shipping process?

Technology can automate many repetitive tasks in the shipping process, saving you time and reducing errors.

Why ClickShip? The Solution to Overcoming Shipping Cost Challenges

Shipping costs no longer need to be a burden for your small business. By implementing these strategies and leveraging the power of ClickShip, you can transform your shipping process into a smooth, cost-effective operation that keeps your customers happy and your bottom line healthy. ClickShip has loads of automation features that turn tedious shipping tasks a breeze. Ready to take control of your shipping costs and streamline your fulfillment process?

Sign up for a free ClickShip account today and experience the difference!