How to reduce shipping costs

As an e-commerce business. According to the Wall Street Journal, total spending on shipping costs was a record of $1.5 trillion in 2017. This was before the massive spike in e-commerce sales in 2020. Now the question is, how do you know when you've paid too much for shipping?

Though logistics costs include supplies, administration, warehouse rent, customer service, labor costs, and inventory-on-hand costs, the main costs are from transportation (aka shipping). According to eDesk, 50.3% of logistical expenses come directly from transportation. The next highest fee comes from inventory on hand. Considering that most companies, excluding drop shippers, must deal with stock on hand, we're going to leave that part to the other professionals. We are here to talk about shipping costs. It is crucial to understand your bottom line. Not sure how to price your products for profit? Check out this article.

How to reduce shipping costs

Get commercial pricing

Not every carrier offers commercial pricing, but it's important to ask your carrier representative. When you work with multiple carriers, they tend to offer special pricing when shipping many parcels.

Work with a 3PL

A 3PL or distribution center is a great way to reduce shipping costs. Though you naturally will lose out on profits when you do not run your run warehousing, you have the opportunity to reduce shipping costs when you ship from multiple locations, reducing your expenses on long-distance shipping. You can't always control the package's weight or size, but you can control where the box is shipping.

Use multiple carriers

Companies tend to stick with one carrier, but a multi-carrier fulfillment system allows your business to price shop. Do not limit yourself to price shopping online at large carriers. Local and small carriers are a great way to reduce pricing.

Hire a shipping solution

A robust shipping app not only finds you the most competitive rates but also integrates seamlessly with your existing systems to streamline your entire shipping process. It should offer real-time rate comparisons, effortless label printing, and a clear, user-friendly interface that saves you time and reduces errors. This is exactly what ShipWise delivers. Transform how you handle logistics and scale your operations with ease. Interested in maximizing your shipping efficiency? Demo ShipWise today!

In 2019, companies, on average, spent 11% of their sales on logistics costs. Keep in mind that smaller companies generally spend more money on logistics costs, so the best practice is to budget based on a percentage instead of budgeting based on a dollar amount. Additionally, companies spend less on logistics costs depending on the dollar-per-pound product value, regardless of size. Shipping can be expensive, but by utilizing all resources available and sticking to a budget, there are effective ways to reduce these costs.