With ecommerce businesses nowadays, low shipping cost or even free shipping offer is the primary key to increasing profit margin. Due to the pandemic and supply chain chaos, freight carriers increase your competition by regularly raising their shipping rates.
Obviously, in 2023 passively relying on standard freight forwarders with fixed price brackets is no longer a good option. Small businesses now need an intelligent approach that opens the door to savings reaching as high as 50% of “business as usual” freight charges.
Here are seven ways with changes you can begin implementing today to reduce the shipping costs.
Table of Contents
- 1. Optimize packaging solutions
- 2. Shorten the shipping distance
- 3. Understand taxes and duties
- 4. Freight forwarding off-peak season
- 5. Become a loyal customer
- 6. Insure with third parties
- 7. Work with hybrid services provider, 3PL, fulfillment services
1. Optimize packaging solutions
As package weight and dimensions impact the shipping costs charged by shipping companies and carriers, it is essential to make your parcels as small as possible.
Don’t forget that carriers also seriously consider the dimensions of the package when calculating shipping costs. In recent years, carriers noticed they were losing money on large – yet light – items. So that when the “theoretical” weight to packages is based on how much volume the box occupies applied, they charge for whatever earns them more money – the actual weight of the package – the “dimensional weight.”
The fact is we are unmanageable to reduce the weight of products, but we can slim down the packaging and its infill. To avoid paying extra for space the package takes up; there are three main things we need to keep in mind:
- Using fittable boxes with the products
- Better fitting boxes means less filler material.
- Pack multiple products in one package if it is possible.
For small businesses, it is essential to save as much as possible, so the best solution is to use the packaging provided by your carrier or fulfillment partners. It is the best offer to provide you with sufficient support for different products while maximizing cost savings. NextSmartShip’s Just–The-Right Packaging Solution here might be one of the best options for you.
2. Shorten the shipping distance
All logistics providers set postage costs based on how close the origin and destination zones are. A package will have to travel between fewer zones with a shorter shipping distance, which means less expensive shipping. As a result, the customer saves money; they are more likely to be satisfied.
The number of warehouses depends on your business size and order volume. That is why it is essential to work with an eCommerce fulfillment company with multiple warehouses. Amazon has hundreds of warehouses globally that quickly deliver a high volume of orders. However, for small and medium-size eCommerce sellers to deliver between a few warehouses or fulfillment centers in different continents and countries is enough. The remaining concern is the distance between the manufacturers and your global customers.
NextSmartShip is an example of the best partner to help you solve all the problems. With two fulfillment centers on the West Coast and East Coast of the US, NextSmartShip can quickly ship out products to American households within two days. The other five centers are based in Canada, Germany, the UK, Australia, and China will help you deliver globally between 3-14 days.
3. Understand taxes and duties
For global ecommerce sellers to ensure a smooth shipping experience, it’s best to understand the custom duty and import tax well before you start shipping internationally. Especially when you are currently using dropshipping or fulfillment services that provide tax packages, you shouldn’t rely 100% on them.
Tax package solutions might include some hidden fees, and you might ignore the list of items exempt from import duty when your customers from all around the world. So the more you know clearly, the more you can save shipping fees without some headache terms that may come later.
Each country has its specific import duty tax, which applies to each HS code (Harmonized System Codes). The three most common taxes are import Duty, VAT (Value Added Tax), GST (Goods and Services Tax). There are two main taxes calculation methods (also known as Incoterms). However, to calculate it, there’s a lot to consider. Customs will charge extra taxes on your shipping costs which mainly depend on your imports.
So to avoid complications while saving both time and money, you will need your freight partners to explain clearly about tax and duty of each continent and country you want to deliver the goods. Ensure that your shipping agency has no hidden fee and is 100% transparent to maximize saving up from delivery fees.
NextSmartShip is a tech-centered fulfillment logistic powerhouse with complete visibility on many of the items mentioned above to ensure you know what you’re being charged for at every stage in the process. At the end of the day, calculating taxes shouldn’t have to be hard because our tax package solution is 100% transparent. Even if you choose to pay for tax when receiving a personal advisor from us will help you roughly calculate the tax amount ahead to help you ease the process of calculation. Doesn’t that sound nice?
4. Freight forwarding off-peak season
Shipping a few days later or earlier can make all the difference with ecommerce online store owners by reducing delivery costs. Different from retailers, we can easily tell the specific time of the week is off-peak, but with global sellers, we are talking about at least one month difference between other seasons of the year.
Traditional warehouses help you stockpile goods and charge daily by dimension and weight. The longer you stocked products there, the more you need to pay, so it definitely can’t be counted as efficient ways. On the other side, for warehouse and fulfillment combined, few services would provide free storage up to a month, so you can easily stock your products ahead of every peak season.
For example, before back to school season, you can place orders for your seasonal goods one month ahead of September. All your products will be just on time to your consumers while enjoying 30 days of free storage services. Especially notice this during high peak season as the end of the year while supply chain unstable. Shipping off-peak is undoubtedly an excellent option for small and medium business owners.
5. Become a loyal customer
Becoming a long-term partner or loyal customer is always one of the best ways to enjoy the best services from any company, especially for freight forwarding. Therefore, spending time learning about shipping carriers while maintaining a good relationship with them from the beginning is an excellent way to reduce your shipping costs.
As a newcomer or a small/medium ecommerce business owner working with more than one shipping partner is quite impossible when you serve international customers. So, finding the right and reliable shipping partner is extremely important. Cause once your supplier knows that they have and will continue to have a stable business for a while, they will offer you more favorable terms from time to time.
Instead of switching to another supplier and trying several shipping services, build a better relationship with your current partner. You will soon be surprised by the benefits of close business relations. Every trusted company always brings out the best for their loyal customers. Plus, getting a long-term contract is one way to lock in a good price. This is a better option than getting adjusted prices up every year.
6. Insure with third parties
If you’re shipping expensive things, you’re undoubtedly aware that insurance may be prohibitively expensive. Overcharging clients for insurance expenses is how UPS, FedEx, and other carriers generate money.
For every $100 of insurance, carriers typically charge around 80 cents. Other third-party organizations, such as Parcel Insurance Plan (PIP) and U-PIC Shipping Insurance, charge a fraction of the price, often around 45 cents every $100. It can save you over half of your money! This allows you to actively work to spend less money to acquire your customers, saving a lot from the shipping cost and even working with the ROI for high-value products.
7. Work with hybrid services provider, 3PL, fulfillment services
Nowadays, hybrid shipping services like UPS SurePost and FedEx SmartPost with affordable and fast shipping services meet with most ecommerce business owners. They offer post office pickup and deliver packages directly to your customers. However, the service doesn’t extend to international destinations and slower delivery time.
For small and medium-sized businesses, third-party logistics (3PL) or fulfillment services are one of the best solutions to maximize costs for their business activities. They can ship globally. Logistics is a part of global order fulfillment services, including receiving goods from the manufacturers, warehousing, processing, sorting orders, packing shipping, and even after-sale services.
Ease to understand, when using this service, the shipping unit will handle all related tasks for you from packaging, inventory management, and order fulfillment. It helps save time and costs of materials, warehousing, packaging staff, and other related transportation activities.
NextSmartShip specializes in simple, affordable, and effective logistical solutions for small to medium-sized businesses. With seven fulfillment centers worldwide, your products can be delivered at the closest distance to your customers. We do bulk business with many carriers over the world. We can obtain favorable shipping costs and provide the best solution to your business.
2021 is about to end, and 2022 is coming with huge opportunities and potentials for the ecommerce world. It can be a fresh start, a rise to try again, and success only when you keep trying. Good luck and NextSmartShip will stand on your side – we are the best partner to help you grow.
