If you’re a small business owner, you already know that any steps you can take to cut down your company’s expenses – no matter how small – will have a direct impact on your organization’s success.
So even if you think that you’ve whittled your shipping costs down to the barest minimums, take a look at the techniques described below. Just a few simple tweaks of your logistics process could result in serious savings!
Negotiating with Carriers
Tip #1 – Pit different carriers against each other
Shipping rates aren’t set in stone. If you want a better deal, call up your account manager and ask to negotiate better rates that will encourage you to continue doing business with the company – and not one of its competitors.
According to Jack Mitchell, president of the shipping consulting firm PANCGroup, “[S]mall businesses often don’t realize they also may have negotiating power. If FedEx knows UPS is vying for your business, you’ve got something to negotiate.”
Tip #2 – Become a USPS bulk shipper
Not everyone will qualify for the USPS bulk shipper program, but if your company is eligible, you stand to save as much as 50% on standard first class rates (even more if you’re a non-profit). If you’re willing to pay annual fees and permit costs totaling $380, plan to ship 200 or more identical pieces of mail and are capable of sorting the mail yourself, the program is definitely worth a look.
Tip #3 – Check out regional and local carriers
Though USPS, FedEx and USPS tend to offer the most competitive rates, regional and local services (for example, OnTrac in the Western states) may come up cheaper on some routes. Look into options in your area, but be careful to weigh the time needed to compare shipping rates from these second- and third-tier carriers against your potential cost savings.
Tip #4 – Test hybrid services
If you meet certain weight and size restrictions, UPS’s “SurePost” or FedEx’s “SmartPost” services can save you as much as 50% over standard rates by routing your packages through your customers’ local postal service office. Delivery times will be longer, but the money you save may make the tradeoff worth it.
Tip #5 – Buy prepaid shipping
Many carriers – including FedEx and UPS – offer prepaid shipping programs that provide discounts of up to 20% if labels are purchase in bulk and in advance. For this to make sense, though, you’ll need to anticipate shipping several same weight packages in the future. Don’t get caught up by discounted rates if you won’t actually use the services you’ve paid for.
Minimizing Packaging Costs
Tip #6 – Buy shipping materials in bulk
When it comes to buying shipping materials, one of the worst things you can do is to purchase your boxes or shipping envelopes on a “one off” basis from your carrier or from your local office supply store. Paying retail is a quick way to run up your shipping costs, so take a look at companies like Uline that let you purchase in bulk at reduced rates.
Tip #7 – Take advantage of free carrier packaging
Of course, if you play your cards right, you may not have to pay for packaging at all, as the USPS and other services offer several sizes of free boxes and envelopes. Be careful, though, as these packages may lock you into certain shipping services or rate tiers that don’t make financial sense. Evaluate the rates you’ll pay for different shipping speeds with and without these packaging options to avoid losing money.
Tip #8 – Reuse shipping materials whenever possible
When it comes to shipping and packaging discounts, volume is key. But that doesn’t mean that small businesses without significant shipping volume can’t cut their costs! One way to minimize expenses is to save the packaging materials you receive on personal and professional shipments. Reusing these items isn’t just eco-friendly; it’s friendly on your wallet as well.
Working with Customers
Tip #9 – Offer discounts for shipping multiple items
If you sell in per-item marketplaces like Ebay or Etsy or other types of online stores, offering shipping discounts to customers that purchase more than one item decreases your overall costs and drives up the average value of your transactions. It’s a win-win for you and the customer!
Tip #10 – Pass on extra fees to customers
Setting a limited number of standard shipping rates might save you a few headaches, but it can cost you a pretty penny. Carriers may assess more than 75 special fees on top of their standard rates for such things as Saturday deliveries or required signatures. Calculate shipping costs ahead of time to pass on as many of these costs as possible to your customers.
Other Savings Opportunities
Tip #11 – Ask suppliers to use your account numbers
Not all suppliers will go for this, but shipping products against your account numbers diminishes the amount of markup that can be added to your bill and bulks up the volume of business done on your account. Eventually, these extra transactions can give you the leverage needed to negotiate even better rates with your carriers.
Tip #12 – Check for professional association discounts
Do you belong to a local Chamber of Commerce or an industry-specific professional organization? If so, check your member handbook, as many of these groups have pre-negotiated discounts with both shipping carriers and packaging suppliers.
Tip #13 – Look into third-party insurance options
Finally, if you’re shipping a large number of expensive items, look to companies like Parcel Insurance Plan or U-PIC Shipping Insurance, which offer coverage at an average $0.45/$100 of insurance (compared to the usual $0.80/$100 charged by most traditional carriers). It’s a small thing, but over time and multiple shipments, it can definitely add up!
With all of the recommendations described above, it’s important to carefully assess them according to your shipping needs – rather than blindly applying these arbitrary strategies. By determining exactly how each technique will impact your business’s bottom line, you’ll be able to save money on shipping costs without adding any unnecessary stress to the delivery process.