If your small business relies on the delivery of goods or packaged mail, then figuring out the most cost-effective way to get these products to your customers can be a major concern.
After all, shipping costs can take a massive bite out of your profit margins, and this is especially true since gas prices have been so volatile over the past few years. So you are looking into cutting costs by hiring a logistics company or cutting down on packaging, but that can only cut costs by so much.
At the same time, you may be reluctant to pass on any “added” expenses to your price sensitive customers for fear of sending them to your competition.
It’s not an easy place to be in.
Fortunately, depending on the nature of your business, there are several things you can do to keep those shipping costs to a minimum. Keep in mind that your goal is to both avoid overspending on shipping while at the same time trying to limit the loss of sales due to inconsistent or inadequate delivery.
To help make it happen, here is a rundown of your delivery options as well as some useful resources (if there are any tips or resources that I have left out, then please let me know in the comment section below):
1. Use a postage meter to determine the exact weight of your shipments. Taking the guess work out of the weight of your shipments can help you reduce your delivery costs by 20% annually. You can get a decent postage meter for $25 to $50 which can both weigh your mail and print a postal marking (used in place of stamps). Just make sure that it can handle the weight of your typical shipment.
2. Print postage as you need it and avoid having to deal with shipping rate changes. You basically have two options for printing postage in your small business:
- Use a non-software solution, like a postage meter, to print postage markings
- Use a software-based solution, like an online postage service, to print exact postage only when you need it. When the USPS issues a rate change, both postage meters and Internet postage services are easily updated to reflect updated postage pricing.
4. Use the lightest packing material, such as bubble wrap and Styrofoam popcorn, as well as old newspaper. They all can be a suitable option when shipping items. You can even recycle the shipping supplies you receive when shipments are sent to you or your business.
5. Make sure that you don’t end up sending mail that is unnecessarily too big. Often, you can generate significant savings if you are able to actually reduce the physical size of your shipped merchandise or at least choose packaging that closely matches the size of the items being shipped. Even simply cutting down the size of your mail from a flat-size envelope, e.g. a 9×12″ envelope, so it fits a letter-size 6×9 envelope or #10 envelope, can save small businesses up to 50% a year in shipping costs.
6. Take advantage of free supplies. All the major shipping services, USPS, FedEx, UPS, and DHL offer free shipping and packaging supplies. Use them! This will not only save your business a ton of money, but it will ensure that your items are being shipped in appropriate packaging which will help to reduce damage and loss. All of these carriers also let you pre-order their shipping supplies in bulk, so with a little planning you will always have on hand.
7. Consider flat rate. If you are sending packages that are heavy or parcels that need to go a far distance, then try using USPS Priority Mail® Flat Rate packaging – available for both domestic and international mail. Flat rate means you pay a predetermined cost based on the packaging. So no matter how heavy your parcel is (not to exceed 70 pounds for domestic shipments), or how far you send it, the cost will be the same. Bonus: USPS Priority Mail® Flat Rate packaging can be ordered online at usps.com and shipped to your home free of charge.
8. Consider possible alternatives. Depending on what you are sending and where, you may have cheaper alternatives to the main package delivery services. These include:independent and commercial transportation companies as well any local courier services. There are even online market places that allow you to choose the best transportation and courier service for your job by having these companies offer competitive bids. You may also want to consider using a drop shipper. Just make sure you have an agreement clearly detailing this company’s responsibilities and liabilities when packages are lost, damaged, or returned.
9. Plan your postal runs. If you are unable to schedule pickups for the shipments you are sending out, then try to coordinate bulk postal runs. This may end up saving you a great of time and gas money. In this case, just make sure to include in your customer terms of shipping that orders will be shipped out within five business days once their payment has cleared. That way, you’ll have some breathing room, and your customers will know from the start that their packages may not be shipped out right away.
10. Use delivery confirmation. Track any packages that you send out to make sure that they are delivered in a timely manner. Having a delivery confirmation number is your proof that your item was delivered. You can also use the delivery confirmation to locate a lost package. This could save you from having to pay for cost of a refund. If the package has not been delivered to your customer in a reasonable amount of time, then make it a point to communicate with your customers (if they haven’t already gotten in touch with you), and make sure that you appropriately report the lost on undelivered item to your shipper.
11. Take advantage of the savings offered with parcel post, bulk mail, and third class mail delivery. But keep in mind… sometimes it just pays to send priority mail. Even though it may be cheaper to send via parcel post, etc, you don’t want to lose any customers due to slow shipping times.
12. Can other shipments be included in your account? With some shipping companies, such as UPS, the more you ship, the more you save. There may be other shipments, such as those to or from vendors, than can be included in your account to help you realize this savings.
13. Once you’ve chosen a shipping service provider, consider working with an account representative. Many shipping servicers even have dedicated small business specialists on hand who can match fees and services with the shipping requirements of your business, such as mode of transportation and delivery timing. Your representative may also be able to get better incentives and negotiate better rates.
14. Create a clear, detailed shipping policy and make it available to your customers. Establish transportation cost charge-back policies and post shipping charges next to the price of the merchandise to avoid any last minute sticker shock. It is extremely important to let your customers know when they will be paying for shipping and when your business will, such as when the customer opts for for express delivery, rather then standard delivery. Moreover, if you charge for shipping, then calculate the cost by the weight of the package, not the cost of item.
15. Finally, if you will be shipping products internationally, then it is very important that you do some research beforehand. International commercial shipments may be subject to special duties and taxes that will vary depending on the country receiving the shipment, the method of shipment, and the cost of the product being shipped, among other factors. Moreover, there are some areas that may be deemed too remote or too dangerous to receive shipments.