Though you may want to reduce your company's shipping costs, you don't want to diminish your customer's experience in the process. When packages arrive on-time, customers recognize, appreciate, and reward such efficient operations in the form of repeat purchases and word-of-mouth promotion. This all sounds great for your business, but how can you slash your shipping costs while maintaining customer expectations?
Establish Available Discounts
Businesses often fail to negotiate good rates on all shipping service levels. If missing out on good feded and ups discounts isn’t bad enough, the industry has a 2% to 5% late delivery average. If you could get 2 to 5% of your shipping fees returned to you, do you think it would be worth having someone investigate the possibility for you: The customers at Source Consulting believe so. Both FedEx and UPS discounts are available as long as you know how to ask.
Acceptable Customer Service Level
You should clearly establish what constitutes an acceptable service level to your customer. If your policy is to deliver in 5 days to a customer who is willing to receive products in 30 days, the higher cost you incur could prevent you from being more competitive on price or other features your customer values more highly.
Compare Different Delivery Methods
Look at the costs of the different delivery methods being offered by your carrier and determine which service will provide reasonably fast delivery and the lowest cost. Here’s where sellers who deal in consistently sized items can shave some shipping costs. Remember, if anything happens to an item you send, be it damage or an unusually lengthy delivery time, your customer will blame you.
Know Your Shipping Practices and Package Characteristics
By knowing your shipping practices and package characteristics you have the information to reduce shipping rates and improve your bottom line. Determining how much to charge customers for shipping can often be a vexing proposition. Remember to account for the cost of insurance, packaging, and special delivery requests.
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Lower shipping costs can serve you and your customers well, especially if you sell the same sort of items on a regular basis. If the items you sell vary in size and weight, it might be best to lean towards charging less fees – you’ll avoid the risk of having your fixed cost sway too far one way or the other, either overcharging your customers or under-collecting at your own expense. Don’t blind-side your buyers with additional costs they never saw coming!
Author
Rich Harkey
Rich Harkey
Senior Strategy Manager
Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry.
As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts.
Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results.