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How To Reduce Shipping Costs And Save Margins?

As fuel prices continue to rise, there is an obvious surge in the cost of shipping. This is not good news for the online shopping industry. While there are goods available at a discounted price, shipping costs are crunching margins for online suppliers.

In a bid to survive stiff competition, there are some suppliers who choose to bear the shipping cost and loose margins while there are a few others who have increased their product prices. There are various ways in which you can reduce your shipping cost, and still save on margins. Use a credit card to purchase your stocks so that you get a discount. There are a lot of card companies who offer this benefit. Check with your bank for options like cash back, discount on dining, discounted entertainment and much more.

Electronic postage is another reasonable option. Online postage service companies like Endicia, Stamps.com, Piteny Bowes and Click-n-Ship offer a reduced price. Bulk shipment orders attract obvious discounts. It is a great idea to compare rates of different shipping companies. Though it is hard work, it will help you save some money. A couple of trade associations also offer discounts on shipping. You will have to pay a membership amount to avail such a benefit.

Other ways to reduce the cost of shipping:

  • First Class Mail is the cheapest option for packages weighing less than 13 ounces.
  • The next best option is priority mail for packages weighing less than 14 ounces.
  • For packages weighing 15 ounces and above, UPS and FedEx should be considered.
  • If the density of your package is big enough, the price of flat rate cartons are cheaper in USPS vis-à-vis FedEx or UPS.
  • Adjust the size of your cartons to avoid extra cost. Do not overstuff your packets.

Using common sense can also help you save money on shipping costs. For example, use air courier for delivery only if required. Use this service only for goods that have a short shelf life or are required on an urgent basis. Using online freight broker systems is another good option. These websites help you find the best deals for in-bound and out-bound truck shipments. Strike a negotiated price with your supplier and watch out for billing errors. You can also outsource your orders for delivery so that you cut down on your costs.

Another way to bypass the shipping cost is to absorb it in your offer price. Many suppliers say that they offer free shipping along with their product. This simply means that they have absorbed the shipping cost in the price of the product. Free shipping has become an instant hit, to the extent that eBay increases your search results if you are offering free shipping.

All said and done, one needs to be careful in understanding the way they want to run their business. At the end of the day, it is all about winning a customer’s trust, but, at the same time, you also cannot lose your profits. You have to make a choice of how to balance both.

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