Are shipping costs the silent profit-eater lurking in your balance sheets?

As an SMB owner, ‘how to reduce shipping costs’ is likely something you’ve already Googled. It’s a constant to strike the balance between keeping costs low while ensuring customers remain happy. 

High shipping costs? For ecommerce retailers, the average cost to fulfill an order is 70% of the average order value… That’s no small feat.

But you’re not alone in this dilemma and there’s some good news: how to get low cost shipping is not as daunting as it seems, there are effective ways to bring those numbers down!

Whether you’re wrestling with packaging options, negotiating with carriers, or exploring solutions like Linnworks, we’ve got your back. Read on to learn how to keep shipping costs low.

Why is controlling shipping costs important?

Controlling shipping costs isn’t just about saving pennies, it’s a crucial strategy for protecting your bottom line while also enhancing customer satisfaction. 

Competition is fierce in ecommerce, so offering competitive shipping rates, promotions and quick delivery can significantly influence a customer’s decision to buy from you or your competitor. For example, 88% of consumers are willing to pay extra for same-day delivery, so efficiency may just be as important as cost – more on that in a moment. 

But it’s not just about being competitive, you also need to be sustainable. Unchecked shipping costs can quickly erode your profits, making it a battle for survival in the online marketplace.

Customers are also becoming increasingly savvy, they’re not just looking for the best deal, they’re also considering the efficiency and reliability of delivery. A transparent and cost-effective shipping policy can mean the difference between a one-time buyer and a loyal customer. A recent Shopify report showed that 74% of consumers want to see shipping costs upfront when making purchasing decisions. 

By strategically managing your shipping costs, you’re ensuring a more profitable operation and building a foundation for long-term customer relationships. 

Remember, every penny saved on shipping is a penny that can be reinvested into your business, fueling growth, innovation and customer satisfaction. 

How to reduce shipping costs in seven steps 

We’ve put together seven strategic steps designed to help you navigate your way through the complexities of ecommerce shipping, ensuring you’re not just learning how to reduce shipping costs, but also how to enhance service quality at the same time. 

Step 1: Conduct an audit of your shipping

The first step towards shipping cost reduction is a thorough audit of your current shipping practices. 

Understanding your shipping volume and frequency should be more than a routine check, it needs to be a deep dive into your logistics ecosystem. This should encompass everything from the types of products you ship, their sizes and weights, to the destinations they’re headed.

Armed with this data, you’re in a stronger position to negotiate better rates with carriers (more on this in the next step). Knowledge of your shipping patterns allows you to identify inefficiencies and opportunities for bulk discounts or more favorable terms based on your consistent shipping volume. 

Remember, carriers are more willing to offer competitive rates to businesses that demonstrate a steady stream of business and a commitment to a long-term partnership. This initial audit is not just a step but a leap toward optimizing your shipping strategy for both cost efficiency and reliability.

Step 2: Negotiate with shipping carriers

After auditing your shipping, the next move is negotiating with shipping carriers. 

It’s more art than science, blending persuasive communication with solid data. Start by leveraging your shipping volume and demonstrating long-term commitment. Carriers value reliability and volume because it means consistent business for them. Highlighting your steady shipping volume can unlock discounts and better rates.

Don’t overlook the role of third-party logistics providers (3PLs). These experts can often secure discounted rates not accessible to individual businesses, thanks to their bulk shipping volumes and industry relationships. Partnering with a 3PL could mean substantial savings, even if your own volume isn’t massive.

Also, use carrier competition to your advantage. Carriers are in a constant battle to win and retain business – let them know you’re considering multiple options. This not only opens the door for better rates but might also lead to improved service levels as carriers vie for your business.

Negotiating is a continuous process. As your business grows and shipping needs evolve, revisit your agreements. Always stay informed about market rates and services to ensure your shipping strategy remains as efficient and cost-effective as possible.

Step 3: Optimize packaging

The secret to efficient shipping often lies in the packaging. 

Reducing the size and weight of your packages can significantly cut shipping costs. You need to find the sweet spot where your product is protected but not overpacked. Evaluate your current packaging solutions and ask: can the size be reduced without compromising product safety? Is there excess material that doesn’t add value?

Invest in packaging that’s designed for efficiency. 

Innovations in packaging materials mean you can maintain or even enhance protection while reducing bulk. This not only addresses how to keep shipping costs low but also appeals to eco-conscious consumers. Research shows that 82% of consumers are willing to pay more for sustainable packaging. 

Speaking of which, eco-friendly packaging isn’t just good for the planet, it can be good for your wallet, too. Sustainable materials often come with cost benefits, especially as consumers increasingly prefer businesses with green practices.

However, optimizing your packaging requires a balance – you need to ensure products arrive in perfect condition while minimizing weight and volume. 

This step not only helps reduce shipping costs but also contributes to a positive unboxing experience for your customers, reinforcing your brand’s commitment to quality and sustainability.

Step 4: Automate your shipping

Automating your shipping process is like setting your ecommerce operations to ‘efficient mode.’

By integrating a sophisticated shipping platform into your ecommerce system, you’re not just streamlining order processing, you’re also significantly reducing the margin for error. 

This is because automation ensures that every order is processed with precision, eliminating costly mistakes that can incur from manual handling.

The beauty of automation lies in its ability to consolidate and simplify multiple steps into one seamless workflow. From printing shipping labels to updating tracking information, automation tools handle the heavy lifting, freeing up your team to focus on other areas of business growth. 

Automated shipping platforms like Linnworks often come with the added benefit of providing real-time shipping rates and options. This means you can always choose the most cost-effective and timely shipping method for each order. 

The result? Happier customers and reduced operational costs.

Automating your shipping isn’t merely an operational upgrade, it’s a strategic investment in your business’s scalability and customer satisfaction. With tools like Linnworks, integrating automation into your shipping process becomes effortless, allowing you to unlock efficiency and savings with just a few clicks.

Step 5: Use tech to connect

Leveraging technology to streamline your shipping operations is essential for staying competitive. 

The right tech can bridge the gap between you and multiple shipping carriers, opening up a world of opportunities for better rates and improved efficiency.

One of the most powerful tools in your arsenal can be a platform like Linnworks, which acts as a technological conduit to various shipping options. Linnworks enables you to effortlessly connect with a plethora of carriers, ensuring you always have access to the best possible shipping rates and services tailored to your specific needs. This connectivity is invaluable in optimizing your shipping strategy for both cost and speed.

However, using technology to enhance your shipping process goes beyond just carrier selection. It can also provide insightful analytics, helping you understand shipping patterns, identify cost-saving opportunities and make data-driven decisions that drive down costs without compromising service quality.

This tech integration facilitates better tracking and communication with your customers, which means you’re also enhancing their shopping experience. They’ll appreciate the transparency and reliability of knowing exactly when their orders will arrive, further cementing their loyalty to your brand.

Adopting a tech-centric approach to shipping, especially with a platform like Linnworks, is about more than just reducing costs, you’re transforming your shipping operations into a dynamic, responsive system that scales with your business and exceeds customer expectations.

Step 6: Explore alternative shipping methods

Diversifying your shipping strategy by exploring alternative shipping methods can lead to significant cost savings and efficiency improvements. 

For starters, consider the benefits of regional carriers for short-distance deliveries. These carriers often offer competitive rates and faster delivery times for local shipments compared to national carriers, again, providing both cost savings and a better customer experience.

Another avenue worth exploring is using postal services for specific types of shipments. These types of services can be a cost-effective solution for smaller, lighter packages, especially for businesses that primarily deal in low-weight items. The savings on these shipments can add up over time, contributing to a more cost-efficient shipping strategy.

For businesses shipping larger volumes or heavier items, freight consolidation services present a valuable opportunity. 

By consolidating shipments with others that are headed to the same destination, you can take advantage of reduced shipping rates due to the shared cost. This method lowers expenses and reduces the carbon footprint of your shipping operations, aligning with eco-friendly business practices.

Step 7: Offer shipping promotions strategically

Crafting strategic shipping promotions can significantly enhance your ecommerce strategy, striking a balance between attracting customers and managing costs. 

Free shipping thresholds are a prime example, encouraging customers to increase their order value to qualify for free shipping. This not only boosts your average order size but also cleverly manages shipping costs by offsetting them against higher sales volumes.

Implementing real-time or flat-rate shipping options serves as an excellent marketing tool, simplifying the decision-making process for customers. Flat-rate shipping, in particular, offers transparency, letting customers know exactly how much they’ll pay regardless of the order size or destination. 

Increased granularity can reduce cart abandonment rates here, as the average abandonment rate is more than 70% and research shows that shipping costs are the key influencer. This means greater transparency, resulting in happier customers who appreciate straightforward pricing without surprises. 

Local pickup options present an increasingly popular alternative for customers, however, they offer both pros and cons for both parties.

On the plus side, they eliminate shipping costs for both the business and the customer, potentially increasing local sales. However, they require a streamlined system for order preparation and customer notifications and not all businesses have the necessary infrastructure or staff in place to manage this efficiently.

Ultimately, the key to strategic shipping promotions lies in really understanding your customer base and aligning your shipping options with their preferences and your business goals. 

Slash your shipping costs with Linnworks

By following these seven strategic steps, you can unearth how to get low cost shipping, significantly reducing expenses and enhancing customer satisfaction, all while positioning your business for sustainable growth. 

From auditing your current shipping practices to strategically offering shipping promotions, each step offers a path to not only saving money but also adding value to your customer’s experience.

Enter Linnworks. Our solution streamlines your shipping and fulfillment processes, bringing efficiency, cost savings and satisfaction to both you and your customers. With Linnworks, you’re not just managing shipping, you’re optimizing your entire ecommerce operation for success.

Ready to revolutionize your shipping strategy and boost your bottom line? Book a demo today and discover how easy it can be to implement these steps and achieve your ecommerce goals.