How To Cut Shipping Costs and Delivery Times For Ecommerce

https://www.youtube.com/watch?v=NZv6AcS_3v0

Are shipping costs shredding your profits?

Or, worse, is that expensive shipping still taking like a week to ship to your customers?

If so, you’re not alone!

But there is good news. There are a lot of ways you can cut shipping costs and delivery times, and that’s what we’re here to share today.

In this video, we’re going to go into why shipping costs and delivery times are so critical to your success. Then we’re going to provide practical steps to help you take back some of your profits.

My name is Brandon, here on behalf of Fulfillrite. If you need help shipping your orders, go to fulfillrite.com and request a quote. We’ve shipped for thousands of clients and we’re happy to help you ship your orders too. The quote doesn’t cost a thing, so if nothing else, you get some good information about pricing. Link in the description.

But enough self-promotion. Let’s talk about how you can cut shipping costs and delivery times for your eCommerce store.

Why Shipping Cost & Delivery Time Matter

As an ecommerce entrepreneur, you don’t want to just attract customers. You want to keep them.

But, if people see you through the lens Amazon, Etsy, or eBay, that’s hard to do. You don’t have that many brand touchpoints. So the ones you do have really need to count.

That’s why shipping strategy is really important. In particular, cost and delivery time.

So, why does shipping cost and delivery time matter?

Firstly, understand this: retaining a customer is far less expensive than acquiring a new one. In fact, a mere 5% increase in customer retention can lead to a profit increase of up to 95%, according to a study by Bain & Company. So, customer retention is a big deal.

But making people happy isn’t so easy in eCommerce. For one, free shipping is pretty much the default expectation right now. Not much of an incentive.

About 88% of Amazon shoppers said the promise of free shipping is what compels them to shop with Amazon. But of course, unless you’re making Bezos money, this isn’t exactly easy to do! The cost of shipping is going up fast. But here’s the challenge: the cost of shipping is rising, and according to Freight Waves, this is going to continue into 2024 as well.

Even with these issues happening behind the scenes, customers aren’t adjusting their expectations. They expect rapid delivery, with 63% of consumers expecting three-day delivery as the standard, per a report by ParcelLab.

If you don’t take a proactive approach to managing shipping costs, they’ll eat you alive! But if you don’t provide fast, free shipping, customers will be frustrated! It seems like a real catch-22.

Long story short – to retain customers and stay profitable, your shipping strategy must fulfill these expectations of free and fast shipping. So with that in mind, let’s talk about how you can do that. Let’s start with shipping costs.

5 Ways To Cut Shipping Costs

You want to keep more of your profits in your pocket without frustrating your customers. So we’re going to cover five proven ways to slash your shipping costs.

We’re going to start with the easiest pickups and then gradually move to tougher ones.

1. Cut returns.

This sounds obvious, but many businesses underestimate the impact of returns on their bottom line. So much so that if you try to search for data on “what percentage of online orders get returned,” you’ll get a variety of numbers. Even the low ones are huge, and I’ve seen some reports with figures as high as 30%.

But the stats on “returns in eCommerce in general” don’t really matter here. What does matter are the relatively simple ways you can reduce your returns.

Here’s what you should do:

• Make sure your product descriptions and photos are accurate and descriptive.
• Add sizing charts to your shopping pages, especially if you sell clothing.
• Pack your items properly so they don’t break in the mail.

Seriously – if you do just these three things, you can dramatically cut shipping costs just by cutting down on returns. That’ll save you money in other areas of your business too.

2. Stop buying retail postage.

If you go to the post office or UPS store, or their online equivalents, to buy postage, you’re going to get charged full price. But if you go through discount postage firms such as ShipStation or EasyShip, you can get huge discounts on postage. Even your Shopify store will provide discounted postage if you make sure to take advantage of it.

This is a really small action you can take which can save tons of money on postage. We’re talking anywhere from a few cents on the dollar to almost 90% in some edge cases.

And if you end up outsourcing fulfillment entirely? Then your fulfillment center will get these postage discounts on your behalf.

3. Consider third-party insurance.

Technically, buying shipping insurance costs more upfront. However, even if you do your best to cut down on returns, some items are still going to be lost or damaged in the mail. It’s inevitable. And shipping insurance can help you mitigate the costs that come along with that.

But don’t buy it from USPS, UPS, FedEx, or directly from any carrier! Carrier-provided insurance can be expensive. Explore alternatives like Shipsurance. They can offer savings of up to 50% or more compared to carrier rates.

4. Trim down your packaging and product weight.

Shipping rates are often determined by dimensional weight, which factors in both the size and weight of the package. Reduce your package dimensions or use lightweight materials wherever possible to save big.

Even a single inch in one direction or an ounce of weight can make a huge difference in postage prices. Try to optimize your packaging first. Once you do that, consider making your product itself a little smaller and lighter too.

5. Locate fulfillment centers near your customers.

If you’re shipping in-house, this isn’t an option. But if you’re working with a fulfillment partner, or considering doing so, you’ll want to make sure your items are stored as close as possible to customers. That way, the postage prices will be a lot lower because the items don’t have to travel as far.

Remember, it’s not about making drastic changes all at once. Small, consistent improvements can lead to significant savings over time.

Now, let’s focus on how to trim those delivery times.

4 Ways To Cut Delivery Times

OK, real quick, I’m going to level with you. It’s really, really hard to cut down on delivery times if you ship in-house. This is a lot easier to do with a fulfillment center, or 3PL. (That’s short for third-party logistics.)

If you don’t work with a 3PL, here’s the basic problem you’ll run into. Even if you use discounted postage, you’ll end up paying extra for two-day shipping. And the difference between that and basic postage prices, such as USPS First Class or UPS Ground, is huge. But if your customer is far away from you and you want to cut your delivery time, your only option will be to pick the more expensive postage.

With that important caveat in mind, here are four ways you can cut down on delivery times.

1. Optimize your in-house shipping processes.

Even simple changes can make a big difference. Make sure you use shipping software that integrates with your ecommerce platform to automate label printing, tracking, and more. This can drastically cut down processing time.

A lot of small businesses struggle with shipping delays simply because it’s time-consuming to pack boxes and print postage in large volumes, especially if you’re busy on other small business tasks. So any steps you can take to automate the process will help you ward off preventable delays.

2. Find a trustworthy 3PL.

There are two reasons for this. First, a high-performing 3PL can ship faster than any business that doesn’t specialize in shipping. Second, 3PLs are strategically located close to large populations of customers, which means items don’t have to travel as far, meaning shorter delivery times.

But it’s really important that you do your research first. We’ve got other videos where we talk about this at length, but let’s just say this is one part of your business where due diligence is super important.

3. Find 3PLs close to your customers.

If you’re shipping less than a few hundred orders per month, you probably only need your inventory in one warehouse. Splitting inventory between locations can be tough.

But if you have thousands of orders per month, it might make sense to keep some on, for example, the west cost of the US, the east coast of the US, some in Europe, and so on.

This helps cut down on delivery times, and also can be a huge cost-saver once your order volume is high enough!

4. Offer expedited shipping options.

If you can’t always provide two-day shipping, that’s OK. There are still ways to work with that.

In fact, many customers are willing to pay extra for faster delivery. A report by Walker Sands found that nearly 80% of consumers said they would pay for expedited shipping if they needed an item by a specific date.

So all you have to do here is make sure expedited shipping is available when customers need it. This is easy to set up in most systems like Shopify.

Remember, the faster your customers receive their orders, the happier they are. That means more repeat business, better reviews, and ultimately, more profit.

As much as you can, start implementing these tips, and watch your delivery times go down!

And there you have it, practical ways to cut shipping costs and delivery times for your ecommerce business. Small steps can lead to big changes, especially when customer retention is your main area of focus.

My name is Brandon, here on behalf of Fulfillrite. If you need help shipping your orders, go to fulfillrite.com and request a quote. We’ve shipped for thousands of clients and we’re happy to help you ship your orders too. The quote doesn’t cost a thing, so if nothing else, you get some good information about pricing. Link in the description.

If you enjoyed this video, please take a moment to like and subscribe. Don’t forget to slap some postage on that bell so we can express ship new videos to you as soon as they drop. And last but not least, if you have any questions, leave a comment below. I will personally answer as many as I can.

Thanks for watching!