The boom in eCommerce has meant a huge number of parcels are sent across the globe every year, reaching an estimated 131 billion packages. Major retailers like Amazon have also increased consumer expectations when it comes to delivery. So how can small businesses compete?
Unfortunately, there is no one size for all approach, but it is manageable. Read on as we discuss your options for small business shipping.
What Factors Influence Shipping Costs?
Several factors may influence the cost of shipping. Once you know them, you can understand how to calculate them and choose the best shipping options.
Distance
This is the most obvious but one of the hardest to predict. With eCommerce, you could have customers anywhere in the world.
If you are shipping in the US, each carrier will have zones which domestic rates are based upon. It can be hard to find out how much the cost will be for individual zones. A multi-carrier rate calculator may help.
When you are shipping internationally, you should have a grasp of taxes and fees. Some countries also forbid you from sending certain items in the post, so check if you can send goods there before offering postage.
Speed
Consumers want more options when it comes to shipping. Some will want items delivered the next day, while others won't mind waiting to save money. Generally, the more you expedite shipping and speed up the delivery process, the more the price increases.
Weight and Dimensions
Several ways of calculating the cost based on the weight and dimensions used are available depending on the carrier you choose. However, the size and weight of an object will generally mean an increase in shipping costs.
Some companies may use a process called dimensional weight. Calculations are made based on the size and shape of a parcel rather than its weight. Small heavier parcels will be cheaper, while large light ones will cost more.
Cubic pricing is another option. Not all shipping will be eligible for this, but it can save money for specific products. It works best for small, heavy packages as they won't get charged at higher rates.
Shipping Options for Your Customers
Shipping charges can have a huge impact on a customer's decision to use your services or not. Put the price too high, and you will lose out to more competitive offers. Go low, and you'll end up absorbing the costs into your profit margins.
Flat Rate Shipping
Flat rate shipping means charging one price for postage, whatever and wherever your customers are. It works best if you have smaller packages that are all similar in weight and size. While costs may go up and down slightly, it should balance out in the end.
Free Shipping
Free shipping is a tough one to manage. Inevitably, you will end up raising your costs to compensate. However, this can make your products and services less competitive.
It is possible to use it to your advantage. You may offer free shipping as an incentive, adding it to people's orders if they spend over a certain amount. Using it as a limited-time offer may also improve sales.
Keep in mind that free shipping does not also mean the fastest. Many customers will be willing to wait longer if they are getting free postage.
Real-Time Rates
Real-time rates are used less frequently in the world of eCommerce though, for many businesses, they remain the best option. If you are selling large items or specialist products, then it may be your only way to offer a competitive service.
You can set up real-time shipping quotes easily. This gives an accurate price immediately and means your customers won't be under or overcharged.
Ways to Reduce Small Business Shipping Costs
How you decide to ship products can have a huge impact on your profit margins. If you can manage to reduce these costs, you can make large savings. Below are our top shipping tips for streamlining costs.
Negotiate Rates
When you have large, regular orders, it is a benefit for any couriers and shipping services to get your recurring business. Many of them will offer incentives and lower rates for businesses that do so.
Even if you don't have large volumes, speak about offers for new businesses and small-scale customers. There may still be incentives in place to help you save money.
Reassess Your Packing Materials
Packing materials may also cut into your budget quite rapidly. If you have invested in branded packaging, decide if it is worth the cost. You may also be able to utilize discounts by ordering items in bulk.
Outsource
If you want to save time and money, then you may consider outsourcing. These companies will have expertise in logistics, getting your items where they need to be without a fuss. Many of them can also store your inventory and package them.
Returns
Returns are bound to happen when it comes to selling online. They can be one of the most troublesome parts of eCommerce sales. Returns also have a huge influence on customer service and how customers perceive your brand.
You need to offer a great returns policy as customers can't physically feel the product or experience it when buying. If they know it's easier to return; they are more likely to try it.
International returns get complicated. They may incur added fees, tariffs, or high postal costs. In some cases, it may be easier to offer a refund.
Organizing Your Company Shipping
Now you understand small business shipping more comprehensively, start by looking at your inventory. See what types of products you will be shipping. From here, you can decide what options will best suit your customers and try to reduce costs.
Fas Postal Services should be your first stop for postal solutions in Allen, Texas. We can provide everything from printing services to mailbox rental. Contact us to discuss your needs and let us help streamline your business shipping.
