If you run a store online, you know that shipping services are a crucial part of your business. There’s no doubt that you’ll need to pay attention to other e-commerce expenses as well, but without a reliable way to deliver orders to your customers, it’s virtually impossible to build a successful e-commerce business.
All of that probably isn’t news to you, but what might come as a bit of a surprise is that you can actually optimize your shipping costs. Many online merchants fail to even consider that as a possibility since shipping services are third-party companies that aren’t under the direct control of the store owner. But the truth is you can reduce shipping costs with a few simple hacks.
Here, we’ll take a detailed look at how to save on shipping costs with 5 easy strategies so you can keep your e-commerce profit margins healthy! Ready? Let’s get to it.
Why should you learn how to lower shipping costs?
The obvious answer to the question above is that – if you learn how to reduce shipping costs for your e-commerce business – you’ll increase your profit margins. But there are plenty of ways that you can increase profit for your business. Why should you focus on looking for strategies to reduce shipping costs specifically?
For one thing, some experts estimate that shipping costs can take up roughly 15-20% of your online business’s budget. That’s a pretty big chunk of your cash flow to be putting into one element of your business each month! It should go without saying that the lower that number is, the better your bank account will look, and the bigger your smile will be.
Another great reason for you to learn how to lower shipping costs is that, as a result, you may be able to lower the prices your customers pay for your products. Naturally that can lead to increasing your store’s volume of visitors, increasing your online sales, and ultimately improving your bottom line.
The final reason why it’s a good idea for you to learn how to save on shipping costs is that it can go a long way to help reduce your shopping cart abandonment rates. There are just two statistics you need know to drive this point home:
- Shopping cart abandonment is extremely common; close to 90% of all online shopping orders were abandoned in March 2020.
- More than 60% of all shopping cart abandonments are the result of shipping costs being too expensive.
For any of you who aren’t math-magicians, the bottom line is if you reduce shipping costs, you can increase conversion rates. So, that leaves us with one big question that you’re probably itching to have answered by now:
How can you lower shipping costs?
Just scroll down to find out.
Top 5 hacks to reduce shipping costs
As useful as they are, these aren’t the only ways to save on your shipping expenses. But, after some serious research, we’ve boiled the list down to the top 5 tricks to help you reduce shipping costs.
Start with the steps on this list and see how your profit margins look as a result. You can always expand your strategy from here – be creative!
Side note: Once you’ve put these top 5 hacks into action, there’s no doubt that you’ll be curious to see what the effects are. The best way to get an accurate idea of how your methods of reducing shipping costs are doing is to track and analyze your online business’s expenses and profits.
Online businesses have lots of expenses though, and they often interact in ways that can make it difficult to track. If you’re a Shopify store owner, you’re in luck.
BeProfit – Profit Tracker is the best Shopify app for tracking expenses and profit margins with ultimate accuracy. The app makes sense of your store’s complex data and turns it all into easy-to-understand charts and graphs. Plus, you can export reports that you can customize – giving you a clearer picture of how your business is performing so you can make data-driven decisions.
Try the BeProfit – Profit Tracker app today, here.
1. Use the right packaging materials
What are the ‘right’ packaging materials? Well, that really depends on two things: what your business sells and what your priorities are.
First, when it comes to what your business sells, you may need to use padding materials if you sell fragile products – and that’s not always so cheap. So if you don’t sell fragile products, don’t waste money on padding. The statistics also suggest that more than one-third of online shoppers are okay with receiving packages without bubble wrap or extra paper inside, so this shouldn’t cause harm to your bottom line.
Second, when it comes to what your priorities are, what we really mean is how important is branding to you? Are you willing to pay a handsome price for branded packaging materials? What about brochures and other informational materials you send along with the products? If there’s any option for you to cut back on these sorts of ‘extra’ expenses without cutting into your bottom line, do it. Again, making these changes won’t have such a big impact on your profits, since roughly half of all online shoppers say that branded packaging doesn’t add or detract from their shipping experience.
Beyond that, here are another few notes on how to lower shipping costs by adjusting your packaging materials…
Find free packaging materials. Yes, they exist. If you use USPS, UPS, or DHL this is an option. Other shipping companies may offer discounts on packaging materials if you’ve been doing business with them for a while.
Go green with your business. Besides the environmental benefits, you can save a lot of money on shipping for your e-commerce business by reducing the amount of packaging materials you use per order. You’ll end up spending less on the sheer amount of materials you have to buy every month, and the weight of each order will also go down.
Plus, there’s the added bonus of attracting more customers. One survey found that almost half of all respondents were likely to be influenced to make a purchase based on the business’s commitment to environmental awareness.
Finally, while you’ll want to use less materials per order, you should also consider purchasing packaging materials in bulk. When you dig down into the data this can ultimately help lower your final cost of fulfillment.
2. Offer multiple shipping methods
If you’re wondering how using multiple shipping methods can end up reducing your shipping costs, you’re not alone. We were a little taken aback by the idea when we were writing this!
The idea is this: every shipping company has its own surcharge rules. Some will tack on an extra fee for deliveries to certain areas, others will charge for additional handling on larger packages, the list goes on.
So if you use several different shipping methods that have different surcharge rules, you can cleverly avoid those extra fees by making sure that certain orders are handled by the specific carriers.
For example, let’s say you use two shipping methods: FedEx and UPS.
Let’s now imagine that FedEx has a surcharge for deliveries to rural areas, and UPS has a surcharge for packages over 50 inches in length.
In this example, you would want to arrange your business operations in such a way that all deliveries to rural areas would only be handled by UPS and all deliveries of packages 50 inches or more would only be handled by FedEx. If you could manage to create such a system, you would effectively dodge the surcharges for both of your shipping methods and establish a great way to reduce shipping costs for your business.
This is just a small example and in reality it might be more complicated than that. But the idea is still the same. Having multiple shipping methods can help you avoid shipping surcharges and reduce shipping costs on the whole.
3. Create item bundles
You might notice that some of your products are frequently bought together. Customers who buy winter hats may also be in the market for winter gloves. People who purchase bathing suits could also be interested in funky-patterned flip-flop sandals.
Or maybe certain products are often bought in bulk. Customers who like a certain protein powder may buy 5 units in one go. People who buy dog treats don’t want their furry friends to go hungry, so they might buy a few packs all at once. There are plenty of creative ways to pair items together.
Whether you see those sorts of trends in your orders or not, you can take advantage of this idea and start creating bundled orders. Why?
The incentive for your customers could be to save a few bucks on buying several items in a single order as opposed to buying them all separately.
For you, the incentive is to help you reduce shipping costs. By bundling items together, you can lessen the amount of packaging materials you use (as mentioned above) and also avoid paying both shipping and handling costs for multiple orders.
The added bonus that comes with bundled orders is that you have a creative and attractive new way to upsell. You can set a pop-up alert on your website so that when a customer selects any item that is included in one of your bundles, they’ll be presented with that offer. This can be a particularly effective strategy around the holiday season!
4. Have customers pay for shipping
Of course, we wouldn’t recommend phrasing it that way to your customers. We wouldn’t expect a lot of people to jump for joy at the idea of paying for shipping themselves, at least not at first. But if you frame it differently they might!
Think about it like this: if a customer is interested in purchasing a $30 product and then sees that the shipping will cost another $6, they could be quickly turned off from the idea of finalizing the purchase. That’s a 20% surcharge for shipping, no wonder!84% of online shoppers say they’ve added more items to their order just so that they could qualify for free shipping. Talk about an #ecommerce dream come true! Click To Tweet
On the other hand, if you frame it as “any order over $35 gets free shipping”, then suddenly the customer’s ears might perk up at the idea of saving money. In the end they might actually spend more money to reach that $35 threshold, but in their mind they’ll be getting more for their money. That’s the power of using the right pricing strategy.
Does that sound like a bunch of make-believe? You don’t need to take our word for it – data shows that 84% of online shoppers say they’ve added more items to their order just so that they could qualify for free shipping. The phenomenon is real folks, the only question is whether or not you’ll use it to help reduce your shipping costs!
5. Shop around for better rates
If you’ve learned one thing from being in the e-commerce industry, it’s that there’s almost a guarantee that no matter what you sell, there’s someone out there selling it at a lower price.
While that can sometimes be frustrating for you as a merchant, it’s a different story when you’re the one looking for the best price. Thankfully, shipping providers are also very competitive. So much so that they’ll often go out of their own way to take the business away from their competitors.
It’s your job as a responsible business owner to keep the profit motive in mind and find the best shipping rates to help beef-up your profit margins. Compare and contrast shipping couriers to determine which is best for your business’s needs. Some of them charge for setting up, others have subscription fees, and many will make you pay to cancel with them. Do your best to understand all of those fine-print details upfront before making a decision.
If you’ve already chosen a courier and other shipping companies aren’t actively reaching out to you to steal you away from their competitors, reach out to them first and ask what rates they’d be willing to agree to.
Start saving, now!
Finding ways to reduce shipping costs doesn’t need to drive you crazy. And yes, the pun was intended.
In all seriousness – at the start of this article, we promised you the top 5 ways to reduce shipping costs for your online business. Haven’t we ‘delivered’ on that promise?
Okay, enough with the jokes. Now that you’ve read through those top 5 hacks, you have a solid foundation on which you can build the best shipping strategy for your e-commerce store. Don’t feel pressured to implement all of these tips at once, it’s not a race. Take your time to get each one right and before you know it, you’ll be well on your way to optimizing your store’s shipping costs!