How can you save money on shipping and packaging costs?
If you run a small, or individual online store you may be spending a lot more money than necessary on packaging and shipping your products to your customers. There are no ways to eliminate shipping and packaging costs, as every courier charges for their services, however, there are ways to save money on shipping and packaging.
Optimise your operation
What can your company do itself?
It may not seem it but the delivery experience is an extremely important part of your consumer’s journey, especially as a smaller business, it’s all about building your brand’s identity and awareness. It isn’t just about getting your package from A to B, the shipping experience relies on the time it takes to arrive, the quality of the packaging, and the overall condition of the parcel when it arrives in the consumer’s hands.
Unfortunately, you will have to prioritise these factors and make sure they are up to a high standard. The shipping and packaging experience reflects you and your company, and if these standards aren’t met then it can leave a bad impression on your customers.
Including shipping costs in the price of your products will help to reduce the price as you will be increasing the price of your products by the amount it would be to ship, especially if you offer free/discounted delivery to customers. This then offsets the price of shipping as the consumer is then paying for the price of the delivery within the price of the product.
A good thing to note is that shipping prices more often than not, influence whether a potential customer will purchase your product or not. If your shipping costs are too high, they may opt to look for a similar product elsewhere.
Offering local pickup will save time and money as you will be able to personally deliver the package to the customer in a location of your choosing and convenience, and will not have to pay your courier for shipping the package. This also adds to the customer’s experience because not only is it more convenient for them, but it also adds a personal touch to your product.
This also eliminates shipping delays and variable costs for your customer, as well as helps you to connect with your community and allows locals to get to know your brand.
Packaging techniques
Can you reuse or change your packaging design?
Reusing supplies like packing paper included in boxes from other deliveries, or deliveries from your vendor, will keep the costs of packaging down and help with maintaining sustainability, which is an attractive attribute to have for your company.
If you can’t do this, look for lightweight protective materials such as air pillows, packing peanuts, and bubble wrap. These may not be as environmentally friendly but if you are able to reuse and recycle leftover or older packaging this will not only help the environment but also keep costs low. The less your package weighs, the less it will cost to ship. This is called dimensional weight or DIM weight. This is a pricing technique used by shippers to determine the cost of shipping your package by using its weight.
It is also smart to make sure that the packaging you are using is the right size for the product you are shipping. It may seem easier just to use a one-size-fits-all style of packaging but not only does this decrease the safety of your package as it allows more free movement inside the packaging, but it can also increase the weight of a smaller package, which in turn increases the shipping cost.
Although it may take a little more time to tailor fit your packaging to different sized and shaped products, it will greatly benefit you.
There are also other materials that can be used to increase the safety of your package, but reduce the weight and thereby the cost of shipping, for example, corrugated packaging, which is stronger than cardboard but lighter due to its air pocket design, and foam inserts which fit the shape of your product and provide an extra layer of cushioning.
There is also water-activated tape that can be used, which has a stronger adhesive and is lighter than regular plastic-based tape. You will not have to use all of these materials of course. Using just enough to ensure your package is safe and that it will not get damaged during transit is sufficient, otherwise the price of over packaging will end up costing you more to ship the package. Just remember that you want your package to be as light as possible, while maintaining safety and functionality in order to reduce the shipping costs.
As a smaller business, it may also be worth bulk buying these packaging materials, if you are not already recycling old stock, as this will save you money over time.
Make the most out of business offers
Take advantage of the companies you work with
Shipping insurance is also a good investment as it will cover or reimburse you for any stolen, lost or damaged goods in transit, meaning that you will not have to front the cost.
All major logistics businesses now offer some type of flat-rate shipping for companies which can save you a lot of money, especially when using the flat-rate option for shipping any heavier packages that you have.
Flat-rate shipping means that the shipping company offers a regular shipping rate suitable for all boxes and packages, despite the weight, size and dimensions of the package. This means that the shipping rate will always stay the same when shipping, whereas standard shipping rates are calculated according to the weight, size and other dimensions of the specific individual package.
There are also ways of estimating how much your shipping costs will be for individual items for example:
You can go to the website of your current delivery company and find its shipping price calculator. You can then compare quotes from various other providers to find the cheapest option for you. Then enter the dimensions of the item you want to ship and type in the location of where the item will ship to. Enter multiple locations in order to estimate the costs of shipping to different locations. Then add 10% to this quote to allow for administration and packaging costs.
This should give you a rough idea of how much shipping your product could cost using different couriers.
Changing rates
Make sure that you know when shipping rates change
Most shipping carriers review and change their shipping rates annually. This is due to a number of reasons, for example, their own costs for labour or fuel. Usually, shipping prices will change in January and it is more likely that they will increase more often than they decrease. It is good to make sure that you are paying attention to not only your own carrier, but other competitors every year, so you can compare the best prices and options that suit your needs.
The amount that you can end up paying on shipping and packaging alone can eat well into your profits. There are no ways of getting around paying shipping costs. But if you can utilise all of these cost-effective techniques, you should be able to save money on shipping and packaging and increase your profit effectively.
