Shipping costs can be a significant expense for businesses operating on various ecommerce platforms. In this comprehensive guide, we will provide cost-saving strategies tailored for each popular ecommerce platform, including Amazon, Walmart, Shopify, Etsy, Ebay, and others. While some cost-saving tips may be specific to each platform, we will also share universal guidance that can benefit businesses of all sizes. All points are current for 2023, including the subject of how to tackle the impact of persistent inflation. Many of these tips are applicable if you choose to start working with, or want to optimize your relationship with a 3PL. A word on who we are and why it’s relevant to the subject at hand –Speed Commerce is an end-to-end provider of customer experience & fulfillment solutions for ecommerce retailers and manufacturers. If your goal is to reduce your shipping costs in a way that can grow your bottom line, we can help while working each of the platforms below and others too. Contact us for customizable solutions. In the meantime, let’s dive in. 

1: Amazon

1.1 Negotiate Shipping Rates

Analyze your shipment volume and negotiate improved rates with Amazon’s preferred carriers.

Leverage the “Amazon Partnered Carrier” program to enjoy exclusive discounted rates.

1.2 FBA (Fulfillment by Amazon)

Consider using Amazon’s FBA service to outsource storage, packaging, and shipping logistics, potentially reducing costs and improving delivery speed.

Optimize the FBA Inventory Placement Service to minimize additional handling fees.

1.3 Order Consolidation

Encourage customers to combine multiple items into a single order to reduce shipping costs.

Utilize automated tools to identify and suggest consolidating orders for customers.

1.4 Use Amazon’s Shipping Tools

Leverage Amazon’s built-in shipping tools and services to take advantage of cost-saving features such as Amazon’s Buy Shipping program.

2: Walmart

2.1 Work with Walmart’s Preferred Carriers

Partner with Walmart’s preferred carriers to access negotiated rates.

Explore the Walmart Fulfillment Services (WFS) program to outsource fulfillment operations.

2.2 Optimize Packaging

Reduce dimensional weight charges by choosing appropriate packaging sizes.

Utilize Walmart’s Packaging Guidelines to ensure cost-effective shipping.

2.3 Take Advantage of Walmart’s Delivery Programs

Make use of Walmart’s Delivery Unlimited program to offer free shipping to frequent customers, while spreading your shipping costs across multiple orders.

3: Shopify

3.1 Shipping Rate Calculation

Accurately calculate shipping rates based on weight, dimensions, and shipping zones using Shopify’s built-in shipping rate calculation features.

Consider third-party shipping rate calculators if your shipping needs are more complex.

3.2 Order Tracking and Notifications

Use Shopify’s order tracking and notification tools to reduce customer inquiries and potential shipping errors.

Integrate with popular shipping carriers’ tracking services to provide real-time updates to your customers.

3.3 Shipping Discounts

Tap into Shopify Shipping’s negotiated rates with USPS, UPS, and DHL to save on shipping costs.

Offer free shipping as an incentive for high-value orders or make free shipping available above a certain purchase threshold.

4: Etsy

4.1 Accurate Product Weight and Dimensions

Ensure accurate product weight and dimensions to minimize discrepancies that could lead to higher shipping costs.

Invest in a good quality digital scale to precisely measure your products.

4.2 Multiple Shipping Options

Offer a range of shipping options to customers, including economy, standard, and expedited services, to provide flexibility and cater to various budgets.

Research and negotiate competitive rates with popular shipping carriers.

4.3 Package Efficiently

Use appropriate packaging, such as padded envelopes and lightweight materials, to minimize weight and dimension charges.

Consider custom packaging that optimizes space and reduces additional handling fees.

5: eBay

5.1 eBay Shipping Calculator

Utilize eBay’s shipping calculator to estimate shipping costs accurately.

Enable calculated shipping to automatically adjust shipping costs based on the buyer’s location.

5.2 Flat Rate Shipping

Consider offering flat-rate shipping options to simplify the calculation process for both you and your customers.

Optimize packaging to fit within specific flat-rate shipping boxes.

5.3 Multi-Quantity Discounts

Encourage customers to purchase multiple quantities of an item by offering discounts on shipping costs.

Bulk shipments allow for reduced shipping rates per item.

Section 6: Universal Guidance

6.1 Packaging Optimization

Use appropriate packaging materials to protect products while minimizing weight and dimensions.

Consider switching to lightweight packaging materials to reduce shipping costs.

6.2 Supply Chain Optimization

Optimize your supply chain by streamlining operations and reducing lead times, which can positively impact shipping costs.

Explore consolidating suppliers or negotiating better terms with existing suppliers.

6.3 Continuous Shipping Rate Analysis

Regularly review shipping rates offered by different carriers and negotiate improved rates.

Leverage shipping rate comparison tools to identify cost-effective options.

Special Considerations for Small Businesses

Small businesses often operate on tighter margins than their larger counterparts. When it comes to shipping, they might not have the volume to negotiate bulk rates or invest in advanced shipping solutions. However, there are specific strategies and considerations that can help small businesses keep their shipping costs in check.

1. Understand Your Shipping Profile

Before you can optimize, you need to understand:

Volume: How many packages are you shipping weekly or monthly?

Size and weight: What are the average dimensions and weights of your packages?

Destinations: Are you shipping locally, nationally, or internationally?

2. Flat Rate Shipping

Consider using flat rate shipping options offered by carriers like USPS. If you often send packages that are heavy but small, flat rate boxes can offer significant savings. You’ll pay a set price, regardless of the package’s weight.

3. Third-party Insurance

Carrier insurance can be pricey. Third-party insurance providers often offer better rates. If you’re shipping high-value items, this can lead to significant savings.

4. Regional Carriers

National carriers are popular, but regional carriers can offer competitive rates, especially for local deliveries. Investigate options in your area.

5. Shipping Consolidators

Consolidators, like Pirate Ship for USPS, combine shipments from various shippers to qualify for bulk rates, then pass on the savings. Even if you’re sending a low volume, you can access better rates.

6. DIY Fulfillment

Instead of using expensive fulfillment centers, consider handling packing and shipping in-house until you reach a volume where outsourcing becomes economical.

7. Rethink Free Shipping

While consumers love free shipping, it can eat into margins. Instead:

Set a minimum purchase threshold to qualify for free shipping, encouraging larger orders.

Offer it as a promotional tool during certain times of the year.

8. Reuse and Recycle

Use recycled packaging or reuse boxes and packing materials. Not only is it eco-friendly, but it can also save money. Just ensure reused packaging is in good shape and presents your product professionally.

9. Customer Feedback

Engage with your customers. Their feedback can provide insights on what they value. Maybe they prefer eco-friendly packaging over speed, or perhaps they’re willing to wait longer for free shipping.

10. Stay Updated on Rates

Carriers adjust their rates annually. Staying informed will ensure you’re not caught off-guard and can adjust your shipping prices or strategies as needed.

11. Build Relationships

Build relationships with your local post office or carrier representatives. They can keep you updated on the latest discounts, offers, or tools that can be beneficial.

12. Consider Delivery Times

Faster doesn’t always mean better. If you can’t afford to offer next-day delivery, be transparent with customers about delivery times and provide reliable tracking. Quality service often matters more than speed.

In essence, while small businesses face unique challenges, they also have the flexibility to adapt and innovate. By staying informed, building strong relationships, and continually reassessing your shipping strategy, you can ensure your small business thrives in a competitive ecommerce landscape.

How to Weather The Impact of Inflation on Your Shipping Costs

Inflation has a cascading effect on almost all facets of a business, and shipping costs are no exception. While inflation has been on a downward trend in 2023, certain parts of the economy are seeing ‘sticky’ elevated costs, including services like transport & shipping. These trends may well bleed into 2024 and beyond. As fuel prices rise, labor costs increase, and materials become more expensive, carriers are often left with little choice but to raise their prices. For businesses already grappling with other inflationary pressures, this can pinch margins even further. Here’s how to weather the storm:

1. Lock-in Contract Rates

If you anticipate inflation is on the horizon or are in the midst of it:

Negotiate longer-term contracts with your carriers. While these rates will likely be higher than previous contracts, they might be lower than future spot rates.

Consider a freight contract if you ship in bulk. Locking in a rate can help protect against future price surges.

2. Diversify Your Carrier Portfolio

Don’t put all your eggs in one basket:

Work with multiple carriers to benefit from different pricing structures, promotions, or regional advantages.

Stay updated with each carrier’s inflationary adjustments. Some might have slower rate hikes than others.

3. Optimize Packaging

Inflation also affects packaging costs. Streamlining your packaging can lead to double savings:

Use lighter, smaller packaging to save both on material costs and shipping rates.

Consider sustainable or recycled packaging which, in some cases, can be more cost-effective.

4. Implement Fuel Surcharges

If fuel is a major inflationary concern:

Add a fuel surcharge to your shipping costs. This surcharge can be a fixed amount or a percentage, which can fluctuate based on current fuel rates.

Be transparent with your customers. Explain why the surcharge exists and that it’s a measure to avoid increasing product prices.

5. Reevaluate Shipping Policies

Inflation might require a policy overhaul:

Adjust free shipping thresholds. Instead of offering free shipping on all orders, set a minimum purchase amount.

Introduce tiered shipping rates based on speed. Offer standard shipping at a lower cost and expedited shipping at a premium.

6. Embrace Technology

Modern problems require modern solutions:

Invest in route optimization software for in-house deliveries. Efficient routes can save fuel and time.

Use analytics to evaluate shipping costs, identify trends, and make informed decisions.

Adopt automation where possible. Automated packaging or labeling can reduce labor costs.

7. Pass on Some Costs – But Do So Wisely

You might need to pass on increased costs to consumers, but tread carefully:

Gradually increase prices rather than implementing a sharp hike.

Offer value elsewhere. If shipping costs rise, can you enhance customer service, improve return policies, or add value in other areas?

8. Lean on Relationships

Use the rapport you’ve built:

Speak with your carriers. They understand the challenges businesses face and might offer solutions, promotions, or flexible options during tough inflationary periods.

Engage with industry peers. Sharing challenges and solutions in forums or industry groups can yield innovative cost-saving strategies.

9. Regularly Review and Adjust

Inflation trends can be unpredictable:

Stay informed about economic forecasts.

Regularly review your shipping expenses and strategies to ensure you’re optimizing wherever possible.

Inflation can be daunting, especially when it impacts something as crucial as shipping. However, by staying proactive, flexible, and innovative, businesses can adapt to the challenges and continue to thrive in a changing economic landscape.

FAQs on Reducing Shipping Costs

Here are a few commonly asked questions regarding reducing shipping costs on ecommerce platforms:

Q1: Can I pass on the shipping cost to my customers?

Yes, businesses have the option to charge customers for shipping. However, offering free shipping or incorporating shipping costs into product pricing can help attract more customers.

Q2: Should I consider using a third-party shipping software?

If you manage high-volume online sales, using a third-party shipping software can streamline operations, compare rates, and automate shipping label generation, potentially reducing both time and costs.

Q3: How can I handle returns without incurring additional shipping costs?

Consider implementing return policies that require customers to cover return shipping costs, or partner with carriers that offer return shipping programs to minimize expenses.

Q4: Are there any potential drawbacks to outsourcing fulfillment to platforms like Amazon FBA or Walmart Fulfillment Services?

While outsourcing fulfillment may reduce costs and improve efficiency, it does require relinquishing control over certain aspects of your business operations. Evaluate the pros and cons to determine the suitability for your specific business needs.

The Bottom Dollar

Reducing shipping costs is a crucial aspect of running a successful ecommerce business. By implementing the platform-specific strategies outlined in this comprehensive guide, businesses of all sizes can optimize their shipping processes, attract more customers, and improve their bottom line. Remember to continuously review and adjust your shipping strategies as your business evolves to ensure ongoing cost savings and customer satisfaction.

Who are we? Speed Commerce is an end-to-end provider of scalable customer experience solutions for ecommerce retailers and manufacturers. We grow our clients’ businesses by providing winning customer experience strategies such as 24/7/365 ecommerce customer service, order fulfillment, and warehousing. If you like our content and want to see other specific content, or want to learn more about how 3rd-party fulfillment can help grow your bottom line, reach out to us here.