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How to Reduce Shipping Costs

High shipping costs is off-putting for customers so it is crucial for ecommerce businesses to find the right balance. Reducing the initial costs as much as possible is the key to both companies and their customers benefiting the most, and this ultimate guide to reducing ecommerce shipping costs will show businesses of any size how to save lots of money.



What are Shipping Costs?

Ecommerce shipping costs cover all the aspects of packaging and posting a package within the ecommerce industry. They include the cost of the necessary transportation by a carrier such as UPS to get the package from the shipping carrier to the customer, including surcharges and fuel charges as well as any other factors related to the amount of distance the package must travel to its destination.

How are Shipping Costs Calculated?

There are four factors used to calculate delivery costs and it will help every ecommerce business to understand how each works so they can learn how to reduce shipping costs. These factors reveal ways to reduce shipping costs and are as follows:

  • Package weight
  • Package dimensions (dim weight)
  • Fuel surcharges
  • Zone distance

The heavier the package, the more effort required to move it from one place to another, so this factor has a significant impact on the shipping costs. The shipping volume or size of the package, also known as its dim weight, also has an effect, as the larger a package is the more space it is takes up during delivery. Fuel surcharges are a reflection of the cost of fuel used by services delivering orders to shoppers.

The distance deliveries travel has been divided into eight domestic zones by the USPS. Zone 1 is for packages being delivered within a 50-mile radius of the point of origin, and Zone 8 is for packages travelling over 1800 miles.

How to Save on Shipping Costs: 19 Top Tips

There are many ways to reduce your shipping costs if you are a seller, whatever the size of your business. Here are the 18 very best ways to lower your shipping rates and increase your profits.

1. Add Shipping onto Customer Orders

Simply passing the shipping rates entirely onto the customer can save a business money. It may be a deal-breaker for some customers if the costs are very high, but this issue can be overcome by offering the customer various shipping options according to their needs from cheaper standard delivery or tracked shipping, to the more expensive next-day shipping.

2. Sell to Countries with Affordable Shipping Charges

Different countries have different shipping fees so you can often save money by selling to countries with more affordable shipping fees. For example, one nearby shipping destination is Canada which has a First Class Package International Service rate starting at $14.25. The starting rate to the United Kingdom is just two dollars more at $16.25, so it can be advantageous to a US-based business to extend their reach across the Atlantic ocean.

3. Compare the Pricing of Different Shipping Carriers

It is important to compare the rates offered by different shipping carriers such as UPS and FedEx as it is one of the best ways to reduce shipping costs for an ecommerce store. One shipping company might offer better rates domestically, while another may have better rates for international deliveries. Another still might offer a better rate for heavier packages. Here are the major shipping companies and their strengths:

  • USPS – Good choice for smaller parcels delivered within the US.
  • UPS – UPS has excellent ground shipment for larger packages within the US.
  • FedEx – Fast delivery times including overnight and 2-3 day shipments.
  • DHL – Huge global reach and environmental commitments.

4. Consider Regional Carriers if you Need Cheaper Shipping Solutions that Do Local Delivery

For local deliveries, the cheapest option might be a regional carrier. These operate in specific areas, either one state or multiple connected states.

5. Consider Using Packaging Provided by Your Carrier

You can reduce your packaging costs by using the packing materials provided by the shipping carriers. Small businesses should also look to reuse packaging wherever possible, though it is essential to ensure the old address labels are removed or covered completely.

6. Reduce Package Dimensions

As package dimensions impact the shipping costs charged by shipping companies and carriers, it is important to make your parcels as small as possible. Ways to reduce the size of your package include:

  • Using smaller boxes.
  • Better fitting boxes means less filler material.
  • Pack multiple products in one box.

7. Opt for Hybrid Services

Hybrid services use different carriers to pick up deliveries from your business and move them onto another delivery service who are better positioned to make the final delivery. Each of the carriers involved is able to move the package more cost-effectively this way than if one of the carriers were to complete the entire delivery all by themselves.

8. Get Shipping Insurance with a Third Party

With so many parcels and letters delivered every day, some are bound to be lost, stolen or damaged along the way. Third party shipping insurance covers the cost of these losses, and can be crucial for a small business who ships products of significant value. Carriers often offer their own declared value coverage, but there are also dedicated third party shipping insurance specialists such as Shippo, Arpin International Group, InsureShip and U-PIC.

9. Use Bubble Mailers to Reduce Shipping Costs

Bubble mailers and poly mailers are excellent product packaging ideas for shipping non-fragile orders. These padded shipping supplies provide enough protection for non-fragile items without taking up much more space than an envelope, and do not weigh as much as the cardboard used in boxes.

10. Pay the Shipping Costs Online for Cheaper Postage

You can get cheaper postage costs and save time going to the post office by paying online with shipping software like Pirate Ship. This gives you access to the Commercial Pricing discounts offered to companies shipping over 50,000 deliveries a year with USPS without worrying about all rights reserved.

11. Get Suppliers to Use Your Account Number

To access the higher volume discounts organically, you can increase your shipping volume by getting your clients to use your account number when they ship their own shipments.

12. Buy a Postage Scale

Small businesses should use a scale to weigh each individual package to ensure they only pay exactly what is required for each package, instead of rounding up to a higher c

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