If your business sends physical products to customers, your profit is linked to how much—or how little—you spend on shipping.
We scoured the internet and asked some of the entrepreneurs we work with here at Bench for their best advice on reducing shipping costs. The result: a comprehensive guide full of strategies and discounts you can use to reduce shipping expenditure.
Grab a coffee and read this guide in a single sitting, or use the links to jump to the section that will benefit you the most:
- Optimize Your Shipping Strategy
- Bookmark These Shipping Rate Calculators
- Batch Process As Much As You Can
- Cut Down Packaging Costs
- Ask Your Competitors for Advice
- Shipping Rate Discounts for American Sellers
- Shipping Rate Discounts for Canadian Sellers
- Use Warehousers for International Shipping
Optimize Your Shipping Strategy
First up, are you using the best shipping strategy for your business model? Amazon and Zappos shaped consumer expectations around shipping to such an extent that free and one-day shipping are proven to drive an increase in online sales.
If you can offer free shipping to customers - do it. If you can’t afford it, or if your profit margin is too low, here are some alternative shipping strategies to consider:
Free Shipping: Conditions Apply
One way to offer free shipping without breaking the bank is to include stipulations on which orders ship free. Here are some ways you can do this:
- Free Shipping for Domestic Orders. Paid Shipping for International Orders.
- Free Shipping - for orders over a certain order amount
- Free Shipping - for a minimum number of items purchased
Say for example that you choose the second option. Include a banner on your site that states “Free Shipping on Orders over $150” to encourage higher levels of spending per order.
Offer Flat Rate Shipping
Apply a flat rate for shipping on all orders incentive that encourages shoppers to buy more since they’ll be paying the same amount. Promote the fact that shipping remains the same no matter how big the customer’s order. You’ll raise your average order size and the customer will feel better about paying the shipping costs.
Offer Free Shipping for Return Customers
Offer a return incentive for pre-existing customers. Send a discount code in a follow-up email to garner repeat business. Sending a free shipping offer to your subscribers is also a great way to boost sales during slower periods.
Charge Full Postage
Easily the least-popular option on the list. Customers are more inclined to accept paid shippping on international orders,, or when they’re buying from smaller online businesses . If you charge full postage, consider incentivizing customers to purchase with your store by discounting the total order cost in some other way (e.g. 10% off coupon).
Adjust Your Product Pricing to Reduce ‘Stated’ Shipping Costs
Customers are more inclined to buy when they feel they’re getting a good deal. If shipping is as expensive or more expensive than the price of your product, you’ll have a tough time selling higher volumes of product.
To bring your ‘stated’ shipping costs down and give customers the impression that they’re still getting a great deal, Etsy seller and part time Canada Post worker Jacquie Vintage suggests adjusting the price of your product.
“If your selling price is $10 and your stated shipping cost is $8.00 (total $18.00), [customers] are less likely to buy than if your selling price is $14.00 and your stated shipping is $4.00,” she says.
“The total spend, $18.00, is the same. The buyer perceives a better deal with $4.00 shipping and is more likely to buy.”
“In my own shop, I try to keep my stated shipping costs under $10.00 for the US, where it’s possible for me to do so. If it actually costs me more in postage, I add the difference into my selling price. It may not be possible for all sellers to do it this way, but it’s worth exploring.”
Bookmark These Shipping Rate Calculators
Calculating shipping rates ahead of time allows you to plan shipping costs effectively and avoid additional fees at the post office.
Here’s a list of links to the common carriers’ shipping rate calculators for you to keep on hand:
American Shipping Rate Calculators
Canadian Shipping Rate Calculators
Batch Process As Much As You Can
Etsy Seller and Bench Marketing Creative Kendra Murphy recommends batch processing everything you possibly can in order to save both time and money.
“Making one trip to the post office to send 20 orders is more time- and cost-effective than 20 trips to the post office to send orders individually,” she says.
Buy stationery in bulk to save making multiple trips to the store. Create an assembly line in your home to expedite the packaging process. Make a stamp of your return address to save yourself from having to write it on every envelope. Create shipping labels that display your logo and print them in bulk from home.
The more you batch process, the more time and money you’ll save on shipping.
Cut Down Packaging Costs
Here are some strategies and hacks to help you reduce expenditure on shipping materials.
Negotiate Bulk Discounts: Always buy shipping materials in bulk and don’t be afraid to ask retailers for a bulk discount.
Buy Packing From These Discount Shipping Suppliers:
- Uline: They have a ton of variation (over 1,300 sizes of boxes, bubble mailers, and cushioning).
- Value Mailers: A great source for affordable packaging, and they offer free shipping.
- Ebay: To find the lowest price on shipping materials, search for your product with the ‘BUY IT NOW’ filter and then sort results using ‘lowest to highest price’.
Reuse and Recycle: Wherever possible, reuse packaging. If you get a product in the mail, why not reuse the bubble wrap rather than pull out a new batch? Whatever can’t be reused, recycle it. This will save on garbage costs and you’ll get karma points from Mother Nature as well.
Mailers: Try Polymailers for products that don’t require boxes; they are inexpensive, light, and come in a range of sizes.
Ask Your Competitors for Advice
“If you can find people who have done something similar before, it’s good to find out where their failures were, or where they missed an opportunity,” he said.
Fire off an email to one of your competitors and ask them if they’d be willing to trade advice on shipping strategies. You never know who’ll say yes, and you might gain some invaluable new tactics to reduce your shipping costs.
Shipping Rate Discounts for American Sellers
Here’s a list of the best carrier-specific shipping discounts we found for sellers who ship from within the U.S.:
Regional Rate Priority Mail: A low-cost shipping alternative for commercial and online customers who currently use Priority Mail. This option includes up to $50 of insurance with most shipments, includes USPS Tracking, and there are no fuel surcharges. Also, you’ll get free Package Pickup service at your home or office.
Media Mail: A USPS mail class restricted to delivery of books, film, and recorded media. Generally the cheapest way to ship heavy items up to 70 lbs, Media Mail is commonly referred to as the “Book Rate” among book sellers. However, you need to be careful that the contents of the package actually meet Media Mail requirements or you run the risk of the package being sent back to you along with a fine.
USPS Business Solutions: Receive online shipping discounted rates and free USPS tracking.
ShipStation Partnership Discounts: ShipStation is a web-based software that helps e-tailers process, fulfill, and ship their orders. They offer the following USPS discounts to their users:
- Up to 49% off Priority Mail, and up to 56% off Priority Mail Express
- Up to 22% off First Class Package Service
- Up to 18% off First Class Package International Service
- Up to 18% off Priority Mail International, and up to 20% off Priority Mail Express International
- Up to 40% off USPS Package Insurance Rates
SurePost: This is the UPS starter service for bulk shipping. There is no minimum shipment required per month, and the prices are based off weight. You do need to sign a Commitment To Ship agreement to get these prices.
UPS Connect: This is UPS’ small business postage solution. They currently offer a 20% discount on air and international shipping for new subscribers.
FedEx Save Now: Get up to a 16% discount on select FedEx Express services, and 8% off select FedEx Ground services.
Discounts Using Hybrid Services
ShipStation recommends using hybrid services when you’re shipping low-weight residential packages. You can save as much as 50% with this method. UPS SurePost and FedEx SmartPost are hybrids between UPS and USPS, and FedEx and USPS, respectively. Here’s how hybrid services work:
FedEx or UPS picks up your package and eventually drops it off at a USPS sorting facility near your customer. Delivery times are longer, but if that’s not a problem for your business model, the savings make it an option worth investigating. Talk to your shipping carrier if you’re interested (hybrid services are only available by contract).
Shipping Rate Discounts for Canadian Sellers
While there are fewer shipping carriers in Canada than in the US, you should still shop around for rates. As your volume increases, it’s even more important to hunt for the best price (eventually you’ll qualify for volume discounts). The big names to look at include FedEx, Purolator, Canada Post, and UPS Canada.
Canada Post Venture One: Small business owners are eligible for a 5% discount on certain products and services. There aren’t any special requirements for this discount, and you can apply online or at your local post office.
Canada Post GST/HST Discount: If you buy more than $5.00 worth of postage at the post office for items going outside of Canada, you don’t need to pay GST/HST (thanks to Jacquie for this tip!).
FedEx Business Bonus: For the first six months after opening your business account with FedEx, you’ll save 30% off FedEx Express and 15% off FedEx International ground. After six months, you’ll save up to 15% off FedEx Express shipments.
UPS Get More Member Card: As a member you’ll receive 10% off UPS shipping and packaging.
Purolator Business Rewards: With a new account, you’ll save 30% off listed prices, and after that savings depend on the amount you spend on shipping per month.
Use Warehousers for International Shipping
If you ship goods overseas, you can reduce international shipping costs by using a third party logistics company. Also known as Warehousers, these companies can save you 35-40% on shipping costs. The only hitch is that Warehousers do tend to work with larger businesses that have a high volume of goods to ship overseas.
If you’re still a small or mid-sized operation, one solution is Shipwire - a Warehouser for growing businesses. They have warehouses in the US, Canada, Europe, and Asia. You can setup an account for free, and you’ll start paying for their service once you’re storing or shipping product from one of their international warehouses. Pricing varies by the amount you’ll be storing and shipping. Use the Shipwire calculator to determine how much you’ll pay to see if it’s the right fit for your business.