5 Ways to Stop Overpaying in Shipping Costs
When free shipping is the norm, it can be challenging for e-commerce sellers to balance cost vs. benefit. Free shipping keeps them competitive with other online retailers, but it comes at a cost that can dig into profit margins.
Buyers today are looking to minimize the amount they have to pay for shipping. According to a Jungle Scout study, in 2021, 66% of consumers expected free shipping on all online orders. That rose to 80% when consumers were asked if they expect free shipping when ordering a certain dollar amount of products. As customer expectations continue to rise, retailers have to find a way to meet these standards.
This puts many sellers in a hard place to – at the very least – offer low shipping rates. And there are a variety of tactics businesses can use to lower their shipping costs. Here are some of our best tips to stop overpaying on shipping costs.
Negotiate shipping rates
Many carriers offer shipping discounts. The rule typically follows that the more a business ships, the lower rates they can find. But that shouldn't deter small businesses. Even if a retailer is shipping as low as 100 packages each month, it's still possible to cut a deal for lower rates. This can be as simple as reaching out to a carrier representative and learning about their options.
Don't be afraid to consider switching carriers either. There may be better rates out there, and if a carrier knows their customers are shopping around, they might be more likely to negotiate to keep your business.
There are also shipping software programs and APIs – like EasyPost – that have pre-negotiated rates with certain carriers. These programs can help save money while making for smoother logistics on the back end.
Use third-party insurance
Another way to save on shipping costs is to use third-party insurance. Rather than going directly through a carrier, third parties will typically cover packages for a portion of the price.
For example, when you insure a package through EasyPost, you get worldwide package protection against damage, loss, and theft for 0.5% of the package's value. That comes out to $2.50 to cover a $500 package. Comparing that to other major carriers would typically charge around $5.00 to cover a package of the same value.
These savings can add up quickly. Of course, if a retailer isn't shipping high-value items, it could save more to skip out on insurance entirely. But when a business is regularly shipping out expensive items, insurance can be a great tool to recover losses.
Use multiple carriers
Instead of relying on a single carrier to deliver a package, a multi-carrier approach to shipping can increase efficiencies and reduce costs. By comparing rates and delivery times, businesses know they're getting the best option out there.
This doesn't just include large carriers, like UPS, FedEx, USPS, and DHL either. Regional carriers have the advantage when it comes to high levels of service. Combining that with earlier or later pick-up times, it can give regional carriers a competitive advantage over national carriers. This is an excellent option for businesses with customers who are concentrated in a specific geographic area.
Today, it's easier than ever to integrate multiple carriers into your shipping mix with software and APIs. EasyPost's Shipping API is a single integration to dozens of carriers and offers rate shopping across those carriers so businesses can choose what is right for them. E-Commerce platforms can leverage this information to get the best rates possible for the packages they ship.
Reduce package size and weight
While all carriers have their approach to rating, most shipping costs are determined by factors like the weight and size of the package, freight classification, and how far a package has to travel. To save on shipping, avoid packaging goods in larger boxes and heavier materials than necessary.
Instead, strive for efficiency in packaging. Whether it's avoiding larger boxes and mailers than necessary or opting for flat rate shipping from USPS, smaller and lighter package sizes will be cheaper to ship. Other ways to lighten the load include using poly or bubble mailers, lightweight packing materials, and custom packaging.
By reducing a package's size and weight, savings can quickly add up. Ounces turn into pounds, and pennies turn into dollars, saving money in the long run.
Save on shipping supplies
There are several ways to save on shipping supplies – and sometimes it's even free.
USPS, UPS, FedEx, and DHL all offer free shipping supplies to some extent. They usually provide supplies like boxes, envelopes, and mailers and can be ordered online or picked up in person.
Buying supplies in bulk can also bring significant savings. Instead of purchasing supplies like bubble wrap, boxes, or mailers from a traditional store or e-commerce website, purchase directly from a manufacturer or distributor. Doing this cuts third-party sellers out of the picture and rewards buyers with lower prices. For those already shipping many packages, this is an easy choice to make to save money.
Why does shipping cost so much?
Shipping demand is not slowing down, and carriers raise their rates every year to meet it. In the Jungle Scout report, 39% of consumers said their online spending increased in 2021. And 23% expect to increase the amount of online shopping they do in the future.
From increased warehouse spaces to driver shortages and fuel prices, many factors impact the price of shipping. Even though rates continue to rise, retailers can still minimize their shipping costs. By knowing their options and working with carriers, businesses can find the most affordable ways to ship products that will keep their customers coming back for more.
EasyPost works with carriers worldwide to help their customers find the most affordable shipping options. Use our shipping calculator to estimate your savings. Join EasyPost today!