If you own a business, you know how important it is to keep costs under control. Unfortunately, shipping is one area where many businesses struggle to accomplish this goal due to the complexity of supply-chain logistics and management.
This post will provide several strategies you can use to cut down not just on direct shipping costs but make your whole shipping process faster, cleaner, and easier to manage.
These strategies are not just about increasing raw revenue. By focusing on smart tactics that improve the efficiency of shipping and supply chains, rather than just cutting costs and corners alike, you can bring numerous benefits to your small business.
For example, faster and easier-to-track shipping is not only cheaper but can bring massively increased customer satisfaction along with it.
By following the tips and tricks in this post, you’ll free up resources to invest in other areas such as marketing, product development, and expanding your customer base.
Assess Your Current Shipping Process
Before you can make a positive impact on shipping costs, you have to evaluate how you’re currently running your operation. To ensure you are doing a comprehensive review, make sure to analyze each of the following areas:
Packaging:
This area includes answering questions such as: what materials are you currently using? Are you producing your own shipping supplies? Could you save money by outsourcing?
This area is critical because it contains many hidden costs.
One such cost often comes from having materials shipped to you in the first place. Another is that different types of packaging materials will naturally vary in cost.
Your shipping provider may even be charging you more based on packaging materials. For example, heavy, fragile, or bulky supplies will likely be more expensive. Even your distributor’s location may have a bearing on the total cost.
Labeling:
This area is another complex zone that asks you to balance branding and efficiency.
For example, are you printing labels in-house? While such practices let you create distinctive brand aesthetics, you also lose out on bulk-rate discounts for higher volumes of generic labels.
Pre-printed labels are the most cost-effective choice. They save you time and money, as well as make it easier to get packages out quickly.
But, if you want custom labeling and/or specialty fonts and colors to stand out from competitors, that decision can pay large dividends in brand awareness.
The key is to evaluate this area to identify and balance competing costs.
Carriers:
It’s essential to weigh your options when selecting a carrier. Different carriers offer different service levels; each option can affect how fast or slow your orders arrive, not to mention the fees associated with each one.
Shipping Rates:
This is one area where you may have some leverage if you negotiate with multiple carriers for better rates. Paying close attention to shipping rates will give you an edge when negotiating discounts.
Once you understand your current operations, it’s time to look for ways to streamline them. This process could include anything from buying pre-printed labels in bulk or purchasing automated labeling machines with custom labels.
Ultimately, by assessing and taking steps to reduce costs, you’ll be able to increase efficiency while improving the bottom line of your business.
To showcase a few strategies for optimal efficiency, let us delve deeper into those last two areas: carriers and their rates.
Getting the Most out of Shipping Carriers
One of the best ways to save money when shipping is to negotiate with your current and prospective carriers. Depending on the number of shipments and the total volume you’re moving, there will almost always be room for negotiation, especially if you compare rates between different carriers.
To get the most out of your negotiations, walk in prepared. Make sure you do your research beforehand to understand all the fees associated with each carrier’s services as well as any potential discounts they offer.
Knowing what other companies have been able to negotiate can give you leverage during negotiations. Ensure you understand their discounts on shipping fees, insurance costs, and shipping volume.
By doing this work ahead of time, it’ll be easier to evaluate and compare offers so you can make the best decision.
Once you’ve done the research, it’s time to start negotiating with the selected carrier. In many cases, you may find that a particular service might be cheaper than another when bundled with another offered by the same carrier.
This kind of negotiation can ultimately save money if handled correctly.
After you’ve negotiated a better rate with a shipping carrier, it’s important to track your progress to ensure that they applied the negotiated rate. This tracking verifies that you’re getting the best deal and that savings are not slipping away.
Negotiating with shipping carriers is a crucial step to reduce your shipping costs. By researching rates, understanding discounts available, and negotiating with multiple carriers, you can reduce shipping costs while still providing customers with the level of service they expect.
Streamlining Your Shipping Process
Once you have negotiated better rates with a carrier, the next step is to look at ways to streamline your shipping process.
For example, look for ways to reduce key cost-scaling factors, such as the weight and size of packages that directly increase costs as they grow.
Focusing on these numbers lets you make smart changes, like consolidating multiple shipments into one larger shipment for most or all of their journey.
In the field of microeconomics, this often involves leveraging what is called “economies of scale,” or how some processes can do more efficiently in larger rather than smaller quantities.
For example, by reducing the weight and size of individual packages while consolidating shipments, you can take advantage of lower rate tiers that many carriers offer at the same time as volume discounts!
In addition to saving money, making these changes will also make your operations more efficient and effective. Quickly get orders out the door and improve customer satisfaction by eliminating extra steps or redundant processes in your shipping process.
The key to successful shipping is finding ways to save money by thinking efficiently rather than cutting corners that could negatively impact your customers.
Find Partner Businesses
Another way small businesses can save money on shipping costs is by partnering with other small businesses in their area or industry.
While this strategy may seem counterintuitive, the reality is that many times two separate companies ship to similar areas, which means they can pool resources and reduce the cost associated with each shipment.
By leveraging the volume of shipments from multiple companies, you can potentially get access to better shipping rates than if you were shipping alone. In short, partnering with other small businesses to save on shipping costs can be a smart and effective strategy.
Consider contacting other small businesses in your area or industry to see if a shipping partnership would be beneficial.
The volume of shipments between different companies can potentially give you access to better shipping rates while optimizing your logistics processes with advanced technology.
This approach can ultimately improve customer satisfaction at a lower price point for both parties involved.
Use Technology to Your Advantage
Another smart strategy to think efficiently about shipping is to stay on top of emerging technologies that can be game-changers when it comes to managing shipping and billing processes.
For example, by utilizing automated shipping software, businesses can reduce the risk of error while also saving time and money.
Automated shipping software can help businesses compare rates between different carriers, track shipments in real time, take advantage of volume discounts, and manage packaging materials. It can even provide customers with up-to-date tracking information for their orders.
Shipping software also saves businesses money by minimizing the number of packages they ship. By optimizing routes, businesses can reduce the cost associated with shipping individual packages and allow more bundling of shipments.
Additionally, shipping software can generate reports to help businesses identify areas where they overspend on shipping costs and what steps they can take to reduce them.
Advanced shipping solutions even offer features like predictive analytics, which help businesses anticipate demand for their products and optimize order fulfillment accordingly.
This feature ensures that businesses only have enough inventory on-hand to meet customer demand and don’t pay for unnecessary packaging materials or other shipping fees.
Finally, some software also includes specialized features to manage returns and refunds. These features make it easier for businesses to keep track of items they need to return and process any applicable refunds efficiently.
Start Cutting Shipping Costs And Boost Your Bottom Line
Reducing shipping costs is an important part of running a successful small business. By implementing effective processes, using technology such as shipping software, and partnering with other small businesses to pool resources, you can save time and money while creating a better customer experience.
To implement these strategies, try using tools like AddressValidator, a platform that makes shipping a breeze.
AddressValidator reduces errors in shipping labels and order forms, which can lead to increased customer satisfaction and fewer returns due to incorrect addresses.
In addition, AddressValidator’s integrated platform allows for full address validation in real-time for over 200 countries worldwide, allowing you to expand globally without the worry of dealing with international shipments.
For those looking to take advantage of the cost-saving potential of reducing shipping costs, AddressValidator is a great tool. With its comprehensive suite of features and powerful data quality tools, you can trust that your shipments will be sent quickly and accurately at a cost-effective price point.
