Companies can get competitive in terms of cost at a product level but face challenges maintaining the prices when shipping costs are taken into consideration. It is one of the biggest expenses for numerous small businesses. Depending on the nature of business and contract negotiation, shipping cost is either borne by the buyers or sellers. Regardless, since it accounts for a significant percentage of the product cost, companies are looking for measures to reduce and realize savings on the shipping costs. Here are some of the ways to trim the shipping costs to remain competitive in the marketplace:
Negotiation with Multiple Carriers
All shipping companies have pricing schedule based on volume, product type, and distance. It would be unwise to explore rates of multiple shippers constantly. Shipping needs of businesses may change over time and so may the pricing. Another place where small businesses can save money is while negotiating shipping volumes. Although service providers may affix a fixed rate for volume shipping, businesses can negotiate to lower the shipping rates for a fixed volume.
Reduce Shipping Errors
Majority of the money spent on the shipping cost of wasted in correcting shipping orders delivered to the incorrect location. Such errors not only increase the shipping cost but also increase the overall shipping time thereby reducing customer satisfaction and repeat business. Since small businesses may not be able to afford real-time wireless warehouse management system and bar-coding solution, it is necessary to double check all shipments against the original order to make sure the address is validated.
Using Packaging Provided by the Carrier
Proper packaging is essential to ensure that shipments reach the destination safely and intact. To ensure safety and for branding purpose, companies might want to use their own packaging which can incur an additional dimensional fee if the size exceeds regulations set by individual carriers. Additionally, companies can make simple packing mistakes such as using the wrong-sized box, using weak or compromised box, use wrong packing material, or poor taping job. Using packaging provided by carriers not only eliminates the extra-dimensional fees but also ensures that packaging job is proper. Companies can save as much as 10%-20% of the shipping cost this way.
Consider Hybrid Services
Many carriers are now offering hybrid services like FedEx SmartPost and UPS SurePost which can cost half as much as standard delivery options. Such services reduce the transit time, minimizes handling and maximizes cost savings. These services reduce the delivery cost by collecting packages from you and shipping them to the post office that is closest to the destination. The post offices then use local mailman to make the final delivery. Although it can lead to substantial cost savings, it can slow down the delivery time.