How can I reduce shipping costs for my small business?
Don’t let shipping costs nibble away at your small business’ profit margins.
How can my small business save on shipping costs?
Shipping orders can be expensive. Many online retailers and home-based businesses feel that rising shipping costs are starting to cut into their profits. With added pressure from competitors who offer free shipping, it’s easy to feel like online sales are a market only big companies can compete in.
Although it often feels like shipping fees are just the cost of doing business, there are strategies that you can put into place to keep more money in your pocket while making customers happy, such as finding the right shipping rate, using a multi-carrier shipping strategy, and accessing mail discounts with a postage software.
Should your small business offer free shipping?
Free shipping has become the standard for online sales. Although many believe that customers want next-day shipping without having to pay for it, statistics show that online shoppers are, in reality, a lot more flexible.
- 74% of shoppers consider free shipping an important factor when making a purchase online.
- 45% of online shoppers will shop around if they feel that the shipping options provided aren’t satisfactory or too expensive.
- Only 2.5% of online shoppers rated fast shipping as important to their purchase.
Although most shoppers prefer free shipping, they don’t mind waiting a bit longer for their orders to arrive if it means they can save a little money. That means you don’t need to splurge on overnight rush delivery for every order.
In fact, unless a customer specifically needs it and is willing to pay for it, overnight delivery should not be a part of your free shipping strategy.
If you want to offer free shipping, there are some conditions you can put in place to keep shipping costs under control. Set a minimum order amount that must be met before free shipping takes effect. Customers are more eager to spend money on themselves than on shipping carrier fees.
Free shipping can also be limited to domestic orders within your native country so that you can avoid overspending on international shipping rates.
Creating a multi-carrier shipping strategy for your small business
One strategy to avoid overspending on shipping fees is to stick to a routine when it comes to shipping. This is where multi-channel shipping can help your small business.
What is multi-carrier shipping?
Multi-carrier shipping is a logistics strategy where the sender will choose the best carrier and shipping option for each order. That means that when a customer doesn’t require next-day delivery, a more appropriate shipping option can be used so that shipping costs are reduced without compromising customer satisfaction.
By sticking to just one option, like the USPS® Flat Rate Box, small businesses risk overspending on shipping when they don’t need to. This is important if you offer free shipping, as the money saved can be reinvested into growing your small business.
Some factors to consider when choosing a shipping option include the weight of the package being shipped, where it needs to go, and the delivery window expected by the customer.
Comparing carrier options for every single order can take a lot of time if you do it manually. The good news is you don’t have to with the help of a postage software like PitneyShip, which can compare shipping options across the USPS®, FedEx®, and UPS®.
Dealing with online customer returns
In retail, customer returns are to be expected. Online sales are no exception. On average, 40% of online shoppers have returned an order over the course of a year. This percentage increases when it comes to selling clothing where buyers may order the wrong size.
Although it would be easy to brush this off as a minor inconvenience for your small business, the truth is that your ability to make the return process easy and issuing a prompt refund are all part of delivering good online customer service. 88% of online shoppers are would never buy from a site again if the returns process was complicated, or took too long.
Conversely, 95% of shoppers who had a pleasant experience making a return said they would gladly purchase from that retailer again. Remember, it’s always better to create a return customer than to leave a bad impression just to make a quick dollar.
One way to make sure returns are easier for customers is to include a return shipping label in the package and include the price as part of the shipping fees. This will help you calculate the actual cost of shipping while building trust with your customers.
Lower shipping costs are not just good for your business, they’re good for everybody
By better controlling what you spend to mail orders out, you pass the savings on to the people interested in your products and give yourself an opportunity to put money back into your small business. You’ll also be in a better position to offer free shipping and easy returns.
Learn more about small business shipping and how the right tools can help you reduce shipping costs.