5 Expert Tips to Reduce Shipping Costs for Your E-commerce Store
Published May 19, 2023.
Shipping costs can make or break e-commerce stores, especially small businesses. For customers, shipping is an important aspect of the overall online shopping experience since fast and inexpensive delivery often drives customer retention and loyalty.
According to a Baymard study, 48% of cart abandonment is due to high shipping costs, and 22% is because of slow delivery times. This can hurt profitability and make it difficult for businesses to compete with big online retailers, like Amazon.
So, let's see how you can help lower shipping costs for your e-commerce store.
» Find out how to keep track of your e-commerce business expenses
1. Negotiate with Shipping Carriers
Negotiations with shipping service providers can help reduce shipping costs for your e-commerce store through payment options like volume discounts.
To negotiate effectively, you can try these practical tips before you calculate shipping costs:
- Research carrier pricing to find the best shipping method for your business needs
- Leverage shipment volume for better discounts
- Make sure the carrier doesn't adjust other factors in exchange for discounts, such as extending delivery times or reducing service quality
- Build strong relationships with carrier account managers to try and get better deals
- Be willing to switch carriers if better rates can be obtained elsewhere
- Keep up-to-date with carrier pricing and rates to ensure that negotiations are effective and relevant
By implementing these tactics, you can reduce shipping costs and increase conversion rates and profitability by providing quality shipping services to your customers.
Easily Track Profits And Shipping Expenses
To help keep your business performance in shape, monitor your expenses and profits all from one convenient dashboard.
BeProfit: Profit Analysis Dashboard
- Get up-to-date customizable data reports on shipping expenses and store profits
- Build shipping profiles and tailor them to your store's needs
- Access your data from anywhere using a desktop or mobile device
BeProfit allows you to keep an eye on all your e-commerce store's shipping and sales metrics, making it easier for you to maintain your budget and spot your most profitable products.
2. Optimize Your Packaging
Factors such as package weight and dimensions may affect flat-rate shipping costs. This can, in turn, hamper conversions if the rate is higher than what most customers are willing to pay.
To optimize packaging for lower shipping costs, you can try these steps:
- Choose the right box size to minimize extra space and weight in your package
- Use lightweight materials such as bubble wrap or air cushions to protect your items without adding unnecessary weight
- Qualify for fixed flat-rate shipping by using carrier-provided packaging that meets specific size and weight requirements
- Reuse packaging whenever possible to save material costs and reduce waste
- Get free packaging from select carriers such as USPS, UPS, and DHL
3. Use a Third-Party Shipping Platform
Third-party platforms can streamline shipping operations, offering a wide range of carriers to better your chances of finding optimal shipping costs that match your needs.
When selecting the best third-party shipping platform for you, here are some tips:
- Choose a platform that offers pre-negotiated discounted rates with shipping carriers to help reduce costs
- Ensure the platform provides access to multiple shipping carriers, granting flexibility and the ability to compare rates
- Look for a solution that seamlessly integrates with your e-commerce store, simplifying the shipping process
- Evaluate the costs associated with using or subscribing to the platform, ensuring it aligns with your budget and offers value for money
Let's look at an example.
Shopify Shipping is a comprehensive shipping solution that can help you save money, improve your shipping efficiency, and provide a better shipping experience for your customers.
Shopify Shipping can help reduce shipping costs and streamline your shipping operations in the following ways:
- Get the best Shopify discount shipping rates and multiple carrier options that can ship internationally
- Manage shipping from one dashboard
- Easily track packages and safeguard them with insurance
- Save time and costs with seamless bulk shipments
- Cut costs and delivery times with hand-delivery options
4. Offer Free Shipping Strategically
Recent Statista research reveals that 68.2% of global consumers are more likely to buy online if they're offered free shipping. So, introducing free shipping can help add value to customers, encouraging more conversions and customer loyalty.
However, you should carefully consider how this can increase your overall shipping costs.
Here are some tips to balance this strategy with your shipping budget:
- Set a minimum order amount to encourage customers to increase their average order value (AOV)
- Limit free shipping to specific products or product categories to control costs
- Include shipping in the item price to offset the costs associated with free shipping
5. Consider Alternative Shipping Methods
Alternative shipping methods can be a creative way to lower your shipping costs, depending on your business's size and delivery reach. If done well, you can help boost sales with competitive and dynamic pricing, all while focusing on customer experience.
Some methods you can try include:
- Offer in-store pickup to your local customers to eliminate the need for carriers or external transportation costs
- Consider doing your own local deliveries, especially for nearby customers. This can be a cost-effective way to process shipments, especially for small items or orders. It can also improve customer relationships and engagement.
» Want to make changes? Learn how to improve your order fulfillment process
Manage Your E-Commerce Shipping Costs Like a Pro
Now that you have ideas to help trim your shipping costs for better profits and customer satisfaction, you should keep an eye on shipping analytics to take it one step further. Rates and carrier surcharges can fluctuate throughout the year, so using industry shipping analytics can help you adapt your own rates and costs accordingly.
Plus, with BeProfit's intuitive platform, you can track your store's shipping expenses' efficiency and overall profitability in real time. This way, you can analyze problem areas and make informed shipping budget and strategy changes, all to help boost your revenue metrics.