Today we want to address an often-significant cost we see everywhere. Let’s break down some of the ways you can save on shipping:
The TCG Accounting Team’s
“Real World” Business Strategy Note
How to Save on Shipping
“It takes four months to ship food aid and 40 percent of the cost is in the shipping. People cannot eat shipping costs.” – Andrew Natsios
Ship happens. Whether you rely on shipping to stock your inventory or you sell goods and pass the cost on to customers, your shipping costs are through the roof.
Shipping costs have jumped as much as 10% in just the past year. Between inflation, supply-chain breakdowns and other problems still coming down the road, the cost of shipping and its effect on your bottom line aren’t likely to improve soon. What can you do about it?
Your best moves
Talk to carriers. It may feel like you’ve got no choice in this area of your business, but carriers do vary prices sometimes. Shipping has a ton of variables, so ask if they’ll work with you to find the most bang for your buck.
Figure your average shipping needs – size and weight of most items, for instance, or how fast the package needs to get there or how fast you need to get it – and call around for the best deal on those factors.
Is there a price break for pre-paying or for paying online? Free pickup or delivery? If the carrier charges by dimensional weight (the amount of space the package takes up, as opposed to its weight), will two smaller boxes do the same job for you as one larger box and save money?
Do they reward frequent customers? The USPS loyalty program for business shippers comes with point accumulations and shipping credits – though you do have to spend five-figure annual minimums for the best deals.
Stand fast regarding guarantees and refunds. Delivery goofs could cost your customers or you completing a job on time. And the way fees are rising, be on guard against unfair early termination clauses in contracts – protect your right to bail if rates get too pricey.
Scatter shipping among more than one carrier whenever possible. First-class mail from the USPS is about the best bargain out there … if you’re shipping less than 16 ounces. After that, your options increase with the price. Why put all your packages in one basket?
Tinker with packaging. If you’re the shipper, flat-rate sure saves time: One box or envelope, one price. Seems simple – but is it best for all your needs? Again, a little homework can save you money.
If you don’t have one already, invest in a postage scale. This tool will give you the best idea of which items (especially light ones) will save you the most money in the smallest possible box or envelope. Carriers usually give a break if you use their own containers. And who says cardboard’s always the best answer? Tyvek and padded envelopes tend to ship cheaper.
The web has more than a few tools to help figure shipping costs ahead of time, such as Parcel Monkey, as well as calculators from carriers themselves such as FedEx and the appropriately named Online Shipping Calculator.
Partner up. If you sell online, check a source such as eFulfillment Service to learn how stuff moves around our country and where fulfillment centers/inventory warehouses fit into that network. Amazon, for instance, has them coast to coast. You might be able to find one you can work with to trim your shipping costs.
Check your chamber of commerce or other business network for local companies you might be able to band together with to get a volume price from carriers.
Trade time for dollars. If you’ve got a few extra days to spare for a package, slower is generally cheaper. FedEx Ground Economy, to cite one carrier’s no-frills service, will save you a couple of bucks, but delivery can take up to seven business days.
Insure it elsewhere. If you need more coverage beyond the basic freebie offered by most carriers, third-party shipping insurance might do the trick whether you’re sending or receiving. You can save a bundle if the package has enough value.
The customer question
Right now, the high cost of shipping is one of those occasional traps in business where there is no easy answer, especially if costs pass on to customers. Charge too much and you might lose business. Charge too little and you lose money.
Realize that some customers will always complain in hopes of getting a better price overall. Your best bet may be to bake the shipping cost right into the price, but even then some buyers search with a filter that separates shipping and actual cost. Best be upfront about the shipping cost, perhaps with an apology and perhaps an offer of a volume discount.
In these ever-changing times, we’re here to help you tackle all aspects of the cost of doing business to help your company.
On your team,The TCG Accounting Team