6 Ways to Maximize Your Shipping Budget

With peak season and its accompanying shipping surcharges just around the corner, you may be wondering how to gain more control over your shipping costs and get the most out of your shipping budget. You’ve come to the right place.

Does Your Business Have What It Takes?

Controlling shipping costs is easier said than done. It’s the one part of ecommerce fulfillment that is, for the most part, out of your control—unless, that is, you have one key business attribute working in your favor: size. If your online business ships thousands of orders per day, you have advantages that smaller brands are missing.

With large shipping volume:

You can negotiate discounts on shipping.
You may have the flexibility to work with more than one shipping company.
You may have the resources to run your own fulfillment operations.
You may be able to take advantage of brick-and-mortar locations to offer package pickup.

Without large shipping volume:

You don’t have much leverage when it comes to negotiating discounts.
The technology required to rapidly scale fulfillment operations is likely out of reach.
You do have the option to pool resources with a volume shipper, such as a third-party logistics (3PL) and fulfillment company that does have leverage.

Even large online businesses can benefit from outsourcing to a 3PL. A partner like ShipMonk has owner-operated fulfillment centers across the country and around the world. We ship hundreds of thousands of packages every day, and we’ve got it down to a science. So, if you’d rather concentrate on growing your business than worry about scaling fulfillment operations and negotiating with shipping carriers, you can leave it to the experts. Now let’s talk 6 ways to maximize your shipping budget.

Controlling Shipping Costs

Whether you’re a large online retailer or a growing ecommerce brand working with a 3PL, the objective is the same: keep shipping costs from eating into your profit margins while pricing your goods competitively. Here are six ways to achieve this.

1) Shipping Software

In order to calculate the shipping method for each order you ship, you need a system that integrates with multiple shipping carrier systems and has data analysis capabilities. You can either invest in shipping software, or entrust a 3PL partner like ShipMonk with the technology to handle it for you. Ideally, your shipping software will sync with your warehouse management system to automate the most labor-intensive parts of the shipping process.

Eliminates time consuming calculations and rate comparisons.
Automatically selects the most affordable method for on-time delivery.
Should give merchants full transparency into the selection process and actual costs.
Automatically prints shipping labels and notifies the carrier.
Automatically updates inventory as each order is shipped out.

2) Prioritize Flexibility

You may think that negotiating with a single carrier from a single location will give you the best rate, but don’t sell your business short. Alternate carriers and multiple warehouses may not only deliver better rates and faster delivery times, they give you the flexibility you need to ensure your packages arrive on time no matter what’s happening in the outside world.

ShipMonk’s Virtual Carrier Network (VCN) utilizes a carrier-agnostic selection system that compares rates, reliability, and availability to ensure that orders are delivered on-time at the best possible rate.
A 3PL with multiple locations can distribute inventory across the country and utilize local and regional carriers for more affordable delivery.
Store inventory at ShipMonk’s Tecate or Tijuana, Mexico, fulfillment centers and save thousands of dollars on import duties and tariff fees with qualifying Section 321 shipments.
Offer in-store pickup if you have brick-and-mortar locations.
Select a 3PL that can offer 2-day shipping to 100% of the continental US.

3) Enable Predictability

While flexibility is important, you can’t develop a pricing strategy without reliable shipping costs. That means eliminating surprises whenever possible.

Look for solutions, such as ShipMonk’s VCN and 2-day shipping services, that offer predictable rates regardless of weight or distance.
Take steps to reduce returns and reshipments.
Consider flat rate shipping if your products are heavy for their size.
Ask your 3PL or logistics partner if they offer transportation management services to lower costs on inbound freight shipments.

4) Optimize Packaging

Because shipping rates are based on package weight and dimensions, anything you can do to reduce size and weight will pay off.

Keep options open. While it’s tempting to buy in bulk and ship everything in the same box, there are hundreds of packaging and dunnage options out there. Your fulfillment center should be able to provide the best combination for every potential order.
If a product is fragile or awkwardly shaped, consider custom packaging to protect it from damage throughout the entire supply chain and prevent shipping delays, returns, and unnecessary labor costs for repackaging and reshipping. Pro tip: Custom packaging does double duty as a marketing tool and damage protection. If it’s eco-friendly, you get extra credit.
Consider shipping well-packaged items without the added expense of an exterior shipping package.

5) Reduce Risk

Lost, stolen, or damaged packages, inaccurate picks, and returns can double or triple your shipping costs per order. Most can be avoided.

Give your customers the option to choose exactly when and where their orders are delivered.
Offer shipping insurance to protect against loss and reduce reshipment costs. MonkProtect™, ShipMonk’s post-purchase suite offers merchants an automated claims portal, branded tracking, and an added revenue stream with customer-selected package protection.
Partner with a 3PL that fully owns its fulfillment operations, where you have more control over performance, order tracking and customer service.

6) Enhance Peak Season Capabilities

Unfortunately, peak season surcharges cannot be avoided. They are an unfortunate cost of doing business in November and December, but there are a few ways to mitigate the damage.

Stay on top of supplier lead times, vacation schedules and international holidays. Book freight shipments early to avoid peak rates and delays.
Offer early-bird savings to lengthen your sales window and relieve pressure on fulfillment and shipping operations.
Ramp up fulfillment operations to process orders on time and avoid expedited shipping costs.
Clearly communicate holiday shipping cutoff dates and set realistic expectations for customers.
Enable customers to drop off returns at packing centers or participating retailers so they can be shipped in bulk from a single location.
Staff and train customer service teams to manage extra volume and quickly resolve unexpected issues.

If you are struggling with ways to maximize your shipping budget, drop us a line. There’s nothing like working with a 3PL partner that actually understands your needs and delivers customizable solutions for scalable, affordable shipping.