How to Determine the Best Shipping Cost For Your Business
Shipping is a major expense for any ecommerce business. Finding the right shipping company and rates can be challenging, but there are plenty of ways to save money without sacrificing service. The first step in reducing your shipping costs is to audit all vendors and understand exactly what you are paying for, per package and per unit.
To reduce shipping costs, you need to analyze your current expenses, review the services offered by each vendor, compare rates per package and unit, and optimize your supplier list with only those that offer value.
In this post, we’ll cover everything you need to know about shipping cost as a percent of revenue—and how to find the best rates for your amazon business.
What is a Good Shipping Cost?
Shipping costs are generally a percentage of your total order value. The goal is to find a rate that covers the expenses (and a little more to ensure profitability) without driving away customers with high rates. Fortunately, there are a few ways to reduce shipping costs that don’t involve increasing the percentage, and they will be covered later in this post.
Shipping costs can be broken down into three main categories:
- - Order processing
- - Order management
- - Shipping management
These categories of expenses are generally consistent across all shipping vendors. While rates can vary greatly depending on your location, volume, and carrier, these categories are consistent across all vendors. The primary difference between shipping vendors is the rate you pay for these categories.
Finding the Right Shipping Company for Your Business
For online retailers, shipping rates are the most important cost. You can have the most competitive prices, but if your shipping rates are too high, you will end up losing profit. Therefore, it is important to find the right shipping company for your business. Here are a few things to consider when choosing a shipping company:
- Location of your customers
Depending on where your customers are located, you can choose a local or an international logistics company. Local shipping companies can drastically reduce shipping costs when compared to international shipping companies, but you should consider the average transit times of the packages delivered to your customers.
- Volume of shipments
The more packages you ship, the bigger the discounts you can get from shipping companies. This makes it very important to partner with a shipping company that can handle your volume.
- Service type
Depending on the type of service you want, you can choose between a standard service, expedited service, and a specific service.
Optimizing Shipment Rotations
The type of service you choose for your shipments will determine the average transit time of the packages delivered to your customers. While you can’t control the actual transit time of the shipments, you can optimize the shipment rotations to reduce the average transit time. You can do this in a few different ways:
- Route optimization
This refers to choosing the best shipping route for your shipments. You can do this by checking the average transit time of different routes.
- Frequency of shipments
This refers to the number of shipments you schedule in a day. The more shipments you schedule in a day, the fewer shipments you will have on a given day. This can increase the average transit time because fewer shipments will have to travel long distances, but more shipments will travel short distances.
Optimizing Shipment Size and Weight
The best way to optimize shipment size and weight is to choose lightweight and small-sized packaging for your shipments. You can do this by partnering with packaging supply companies that can provide you with packaging materials designed to be lightweight and small-sized.
Optimizing shipment size and weight is important because the cost of transportation is based on the volume of the shipment and the weight of the shipment. By optimizing shipment size and weight, you can reduce the cost of transportation by a significant amount.
Optimizing Package Type and Brand
When choosing packaging materials for your shipments, you should consider the type of packaging material you are using and the brand of the packaging material. The type and brand of the packaging material are important because they determine the cost of the packaging materials. Therefore, you should find packaging supply companies that provide packaging materials at an affordable price.
If you want to optimize the cost of your shipments, you should consider using reusable shipping containers. By using reusable shipping containers, you can significantly reduce the cost of the packaging materials.
Tips to find the best shipping cost
Here are some tips to help you find the best shipping cost for your business:
- -Look at the competition. What do they charge? Are they offering free shipping? If so, how are they doing it? These questions will help you figure out where you fit into the market and how much room there is for improvement.
- -Determine what kind of customer experience you want to provide. Do you want to have fast delivery times or low prices? Maybe both! Once you've figured out what kind of experience fits with your brand identity and goals, it will be easier for you to determine which price point is right for the product or service that best fits those goals.
- -Consider whether or not using a third party service like [company name] could save money on shipping costs without sacrificing quality or customer satisfaction.
- -Use less packaging material (such as bubble wrap) for smaller items like books or DVDs.
- -Package heavier items together so they all weigh less together than they would individually, such as teddy bears or stuffed animals sent in one box rather than individually wrapped in plastic bags or boxes with their own packaging materials inside each one.
- -Send products overseas where possible because overseas carriers charge less for their services than domestic carriers do
Shipping is a major expense for any ecommerce business. Finding the right shipping company and rates can be challenging, but there are plenty of ways to save money without sacrificing service. If you're having trouble deciding on your shipping rates, don't be discouraged. Shipping can be a finicky business. There's no set approach to help you figure out the best method, so it helps to think broadly and creatively to come up with strategies that will work for your shipping situation. As long as you find one that works, then you won't have any trouble succeeding with your business.