Question: How can I reduce shipping costs?
How can a small niche business compete with the likes of Amazon when it comes to shipping? Every year our shipping rates increase, but it seems like the big guys get deeper shipping discounts. Is there a co-op for independent retailers where together our numbers would qualify for competitive rates? Do you have any other suggestions for how we could cut down our shipping costs?
Shipping is one of those unglamorous-but-crucial things that every ecommerce company has to deal with. No matter what size you are, you want to do it well for yourself and for your customers.
We get that, which is why our Shopify Shipping team is dedicated to helping merchants of every size handle their shipping quickly, easily, and as cost-effectively as possible. (Most recently, they updated our app so you can print shipping labels from your phone.)
Since they spend their whole day thinking about how to help make your shipping experience better, we asked Thea Earl, product marketing manager for Shopify Shipping, to tackle this question. There are three main parts to her answer, so let’s break it down.
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How can a niche business compete with Amazon?
The million-dollar (billion-dollar?) question. But when it comes to shipping, and competing against Amazon’s ubiquitous free shipping offers, Thea has some great advice for businesses of any size.
“It’s true that free shipping is an excellent marketing tool for your site and for your business. But it’s not just free shipping that helps convert customers—any opportunity that you have to offer really clear flat rate for shipping, like $5 domestic shipping, will help your customers know what to expect when they hit checkout.”
Setting clear expectations is something you can do no matter what, but if you’re really interested in offering free shipping, there are still ways you can make it work as a small business.
“One of the ways that you can offer free shipping is to build shipping into the price of your product. If you don't want to build in the full shipping price, maybe you could build in a few extra dollars,” says Thea. “Depending on what you're selling, you want to make sure you're still keeping your prices competitive, but this is a great way to offset some of your shipping costs while still keeping that shipping price ‘low’ or ‘free’ for your customers.”
Thea also notes that knowing your margins can help you stay competitive in the shipping space. “If you have products that have higher profit margins, it’ll be easier for you to cover the cost of shipping without actually changing the price of the product.”
On top of all that, she wants to reassure you that yes, the prices are going up for everyone. In the logistics industry (aka shipping) it’s pretty routine for carriers to increase their rates every year based on a number of factors.
How can we cut down on our shipping costs?
If increasing prices isn’t in the cards, and you want to trim down on costs to help make your shipping more affordable for you and your customers, there’s one big thing that’s within your control.
“When you’re thinking exclusively about cutting costs, the biggest factor you can change is your packaging,” says Thea. She sees a lot of merchants who could be saving some cash by trimming down the weight of their packaging.
“It's really easy to buy or get packaging that is a little bit bigger than what you're actually sending, like if you're using a box when you could be using a poly mailer, or even a padded envelope if you need a little bit more protection. Your shipping cost is dependent on the size of the package and the weight of the package. Cardboard is heavy, and anywhere you can trim down weight will help you win over time.”
And if you’re currently paying for your packaging, a bit of research could save you some money.
“Almost all of the carriers give away free packaging. So for example, the USPS has poly mailers and boxes that they just give away for free. They’re for specific mail classes, and sizes, but it’s worth taking a look to see what you can get for free. The same goes for UPS and DHL Express.”
Whether you’re getting your packaging for free, or ordering custom packaging to level up your unboxing experience, knowing what types and sizes of packages you use most often can also save you money.
“Start by measuring your products, and figure out how many you typically send at one time. That will help you figure out what sizes will fit for the orders that you ship most often. So if you're selling 1 item at a time, versus several, just look at your order history to figure it out and order packaging that would fit with your normal orders.”
Is there some way to qualify for a bulk discount?
There’s no easy way to say this, because it’s a shameless plug, but that’s exactly what Thea and her Shopify Shipping team work on every day. Specifically, they work with carriers to negotiate competitive prices for all Shopify merchants, which you can access via Shopify Shipping.
Right now, that means that Canadian merchants get negotiated rates with Canada Post, and US merchants get negotiated rates with DHL Express, UPS, and USPS. Your specific rates will depend on your plan, but if you’re looking to save money on shipping across the board, Shopify Shipping is a great way to do it.