Effective shipping cost management will significantly improve your bottom line in the competitive retail world. As demand for e-commerce increases, so does the expectation on customers’ behalf for rapid, safe, and affordable delivery. Only the increased cost of shipping cuts into the profit margin and makes the firm less competitive. Luckily, retailers can institute several methods to reduce shipping costs while maintaining quality service standards.
Experts at VTM offer these five effective ways to achieve this:
Negotiate with Multiple Carriers
The carriers charge according to the package size, weight, and speed of delivery. One of the best ways to minimize the cost of shipping is by negotiating with several carriers, not just one. A retailer can negotiate better rates by sitting and talking with carriers, such as FedEx, UPS, DHL, or regional couriers, particularly if they have a consistent volume of shipments.
Use Flat Rate Shipping
Another effective way of reducing the cost of retail shipping is a method known as flat-rate shipping. Major carriers offer flat-rate boxes where a specific price has to be paid regardless of the weight and destination of the package.
This would benefit the retailer sending heavy items over long distances and provide predictability and cost control.
Outsource to Third Party Logistics Providers – 3PLs
Outsourcing to a 3PL company is another excellent option for retailers in pursuit of cutting shipping costs. Because of their economies of scale, 3PL companies can offer warehouse space, order fulfillment options, and shipping services at considerably lesser charges than if they were to be provided by a retailer. They enjoy crossover knowledge with major carriers and can negotiate deeper rates than an organization’s. You could save time and money with a third-party logistics shipping operation. You won’t need to worry about maintaining your warehouse, rehiring the fulfillment staff, or direct negotiations with carriers. This will allow you to focus on your business’s growth while orders are processed and shipped efficiently.
Optimize Packaging
Packaging your products means a lot when it involves shipping costs. Carriers base their rates on a package’s dimensional weight, meaning the larger and ‘bulkier’ some packages are, the more expensive they are, even when they aren’t heavy.
You must use the least and lightest packaging without sacrificing your product’s safety. You may want to consider investing in customized packaging that squarely fits your products or using eco-friendly packaging materials, which are lightweight yet durable.
Implement a Shipping Zone Strategy
Shipping zones are calculated based on how far your shipping origin is from its destination. If a package has to travel further, it is costlier to ship. You may further lower overall costs by following a multi-warehouse strategy in different geographical regions. That way, you can ship orders out from the closest warehouse to where the customer is, thus minimizing the distance and cost. Retailers can also use the carriers’ shipping zone maps to plan the warehouse locations. Besides reducing shipping costs, this strategy cuts delivery times and raises customer satisfaction and repeat business.
Low shipping cost enhances your margins, giving customers better deals and improving sales and customer loyalty. Integrate these strategies within your shipping operations and stay ahead in this fast-moving retail world.
