How to reduce shipping costs in eCommerce

The pressure on e-tailers has never been greater. Customer expectations now factor on speed, convenience and low cost delivery options. This puts immense strain and extra expense on e-vendors who, like any savvy business owners, are looking for more bang for their buck.

Like many before, maybe you’ve considered charging a higher shipping price to cover the increased expense of on-demand deliveries, but an increasingly competitive market place eliminates this possibility as a viable option for growth and expansion.

You can capitalize on existing methodologies to successfully reduce your shipping costs. So what are your choices? Well here are 5 alternative methods to help you strategically tackle those troublesome shipping challenges.


1. Shipping Cost Review

Often generically calculated at the very start of trading, many e-vendors overlook the real cost of fluctuating and insufficient shipping charges. These include miscalculated rural deliveries and added expenses such as postal insurance.

In many cases the company absorbs these costs unknowingly, eating into your own well-deserved profit margins. However, organizations can counter-act this by ensuring they have a comprehensive cost measurement system in place, which updates and allocates pricing in such a way that unforeseen costs are somewhat alleviated.

In this respect, by having a clear understanding of live shipping costs, your company will be in a more informed position to save money by incorporating higher costing into your shipping fees.

2. Package Sizing

The majority of shipping companies now use dimensional weight rather than physical weight to calculate shipping costs. To determine the dimensional weight of a package, you need to measure the length, width and height of a parcel and multiply these dimensions to calculate the package’s cubic size.

e.g. length x width x height = parcel dimension

Depending on the carrier, the cubic size of a parcel is then divided by a pre-set figure to attain its dimensional weight. eCommerce companies can capitalize on this option by using smaller product packaging where possible.

With numerous automated solutions available, companies can also install software to accurately measure and weigh each product to choose the optimum packaging for each SKU, thus reducing wastage and excess cost.

3. Packaging Materials

With so many packaging materials available, it can be difficult to identify the most suitable and cost efficient option for your business.

Determining the level of protection needed by your product is a great area to prioritize when deciding on the best packaging. For example, maybe you’re paying for un-necessary protective packaging that isn’t needed. Or maybe your product is delicate and opting for greater protection will reduce returns and cut return shipping costs.

Once you have decided on the type of packaging required, it’s worth exploring various suppliers to determine the most cost effective provider.

4. Leverage Tech

Technology is now used in all aspects of the shipping process, from printing labels, to parcel tracking and delivery confirmations. As well as reducing overall shipping costs, investing in automated technology will also improve productivity, efficiency, accuracy and customer service satisfaction. Most automated shipping solutions available can also be easily integrated with existing systems allowing for convenient and centralized product information.

The Wrap Up

With shipping prices proving to be a significant factor in consumer choice, retailers are challenged to get creative with their shipping strategies.

Apart from the obvious need to meet and improve their bottom line, companies should analyze their current shipping processes, including areas such as package size and material type. Other fields for consideration include the benefits of shipping technology which could potentially streamline cost and improve organizational efficiencies.


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