It’s hard to be an expert in everything when running a small business. And sometimes the business owner and employees have to take on multiple roles. As an ecommerce business, if you’re in growth mode, you may be shipping out more items than usual.
To determine the best shipping options, it may be best to spend some time developing a small business shipping program and optimizing your contracts to smooth out the supply chain and improve profit margin. To help you throughout the process, we’ve outlined some of our favorite small business shipping tips below.
How does shipping work for small businesses?
There is no one-size-fits-all shipping method for small businesses — and finding the right shipping strategy alone can be a challenge for some business owners. For instance:
- A small business may ship out an occasional item after printing off postage from the USPS website, or the business may rely on omnichannel sales and shipping as its core business, sending out dozens to hundreds of orders at a time.
- A shipper may take orders manually and handle their own fulfillment from a home or storefront location, or it may be completely automated. In this case, the orders may come in from multiple sales channels, automatically directed to a fulfillment center. The fulfillment center then fills the orders from existing inventory and completes all shipping steps without the small business’s involvement.
These extremes show the difference between a small business with a high throughput shipping business and one without any kind of shipping process. Following the steps provided here can help reduce shipping costs for small businesses and ensure business owners are making the best decisions for their company and your shipping situation.
What is the best shipping method for small business?
Just as each small business is unique, so is each shipping method. Fortunately, you have options, the most common are USPS, UPS, FedEx and DHL. And as a shipping company, you can use more than one.
It may depend whether you need international shipping, your items are mostly going to one region, or you are shipping primarily one size product. But we’re getting ahead of ourselves.
Here are 10 small business shipping tips to help you optimize your shipping.
1. Use proper shipping material and packaging to avoid damage
If your products break in transit, or if they arrive bent or in bad condition, your clients will want a refund. You may need to resend the items, which will cost you more in inventory and shipping, plus your staff will have to be ready to handle these incoming complaints. Customers share bad experiences, so even a small breakage can impact future sales from this customer and anyone that reads your reviews.
Fortunately you can prevent most damage by carefully preparing items for shipment, using the right packing material. A fragile item might need bubble wrap or a bubble mailer. Packing material doesn’t have to be expensive or heavy – even crumpled paper can provide protection for some items. Padded envelopes or a bubble mailer can also work as well.
Shipping insurance can cost more in the short run, but save money in the long run. In general, FedEx and UPS provide up to $100 in shipping insurance per package. USPS Priority Mail Express does as well, but USPS Priority Mail may only cover up to $50. Purchasing additional insurance for higher value items may be worthwhile, and a third-party vendor may offer lower rates than the carriers themselves.
2. Find the best package size
Rightsizing your packages can save a lot in the shipping cost. That may mean using a poly bag instead of a box in some cases. It may also mean cutting back on unnecessary filler to shrink the package size.
You can also try cutting the package size in order to reduce the dimensional weight. Dimensional weight is popular with the carriers, as they charge more for larger, lighter parcels than for smaller, heavier ones.
If you are ordering custom packaging, make sure you look into sizing with the carriers, so your boxes are not considered oversized for various rate categories. And if you’re shipping a lot of packages to one location, it may pay to send them on a pallet as freight, rather than individually.
3. Delivery timing
Time is money. If your parcels need one day delivery, that will cost more than ground service. As the shipper, you get to choose the shipping options you offer to your customers. If you offer free shipping, you still need to make a profit on the sale.
To make it worthwhile, free shipping can be offered over a certain threshold. Or free shipping could be via ground service or for USPS service only. You can offer faster service if the customer wants to pay for it. You can also raise prices overall to account for free shipping, as long as you’re not competing on low prices.
There are many options when it comes to reducing shipping costs! Just make sure that the customer understands the timing, because if they get a late delivery, even if it’s free shipping, they may be unhappy.
4. Free shipping supplies
One of the best small business shipping tips is using free shipping supplies. The major carriers, USPS, FedEx, UPS and DHL offer free shipping boxes they’ll even deliver to you, and you can print out a shipping label or get them sent to you in bulk. The shipping carrier benefits because you are more inclined to use their services, and the package sizes are standardized. With those supplies, they can tell with a glance the service level you’re using.
There are, however, two downsides to these free shipping supplies:
- The correct service level must be used with these materials, so if you use a Flat Rate USPS box, you must send the item with Flat Rate pricing.
- You may want to provide your customer with a branded experience, and that is harder to do with another company’s boxes.
It’s still possible to do some branding inside through tissue paper, crinkled color paper, or logos, stickers and packing slips. And if your products are made with their own shippable boxes, you don’t have to spend money on additional packaging.
You have a choice when shipping your products, and that is to send them yourself, or have a fulfillment company do it for you. Fulfillment can cost you more or save you money – or both.
Hiring people to fill orders, print out shipping information and make the shipping arrangements is time consuming. Outsourcing that costs money too, but you then can use your staff for other purposes, and it may help your business to thrive and grow by handing off this manual effort to a company that specializes in it.
Fulfillment companies may have negotiated discounts on shipping rates, and they may also include shipping supplies in the fee. If you use a distributed fulfillment strategy, where your products are spread throughout the country at various warehouses, shipping might be less expensive because they’re closer to the various customers, thus cheaper to ship.
6. Choose the best shipping service for you
There is no single shipping service that can handle all your shipping needs. You might choose one shipping carrier to work with because you can get the best deal overall, but your shipping needs and shipping strategy might dictate working with several.
You might find that USPS Flat Rate shipping is best for certain items, as your products fit in the USPS boxes, you don’t have to weigh them, and you always know how much it will cost and what to charge the customer (if it’s not free shipping). UPS and FedEx now also offer flat rate boxes. The shipping process is more streamlined this way.
You can also use a hybrid approach like FedEx SmartPost or UPS SurePost, which begin with the specific carrier, and then move to USPS at a distribution center close to the customer, for last mile delivery. This service may be slower than just using UPS or FedEx, but it’s less expensive.
For international packages, you might always use DHL because you find they have the best rates and services for your international shipping needs. If you’re shipping frequently in your local area, a regional carrier or courier might be a good option for those shipping needs.
7. Additional services
If you need additional services, you might choose a carrier based on those. All the carriers want to get small business shipping customers. UPS and FedEx have some small business programs, with discounts, packaging help and some consulting services. These are generally free, with the idea that they’ll build a relationship with you and get your business going forward.
USPS offers free package pick-up which you can schedule separately. That can be a big cost savings for small businesses, as FedEx and UPS charge for this. FedEx offers temperature-sensitive shipping for small businesses.
8. Shipping platforms
Your ecommerce business may have help available to you on your shipping platform, saving your small business money. Or you can get your own shipping software, integrating it into the platform. This software can determine the shipping rate for each carrier and each shipment, so you or your customer can choose which one to use.
You can set shipping rules so they are applied automatically in various conditions. You can use your own negotiated carrier rates, or the rates the platform or software company negotiated. You can print postage directly from these sites. The shipping software companies may charge a fee for this, either monthly or per label. You may be able to try them for free, to see if it saves you money and provides helpful services.
Returns are a big part of retail and ecommerce, and making this a smooth process will save you money. You have options! You can include a return label in every package to make it easy for customers to send the item back, or you can send a return address label they can use to ship back on their own dime. The advantage is you make it easier for them, but don’t foot the bill. You can also give the customer the choice of shipping it back prepaid, but the amount would be deducted from their refund. Making it easy for the customer is key if you want to maintain a positive relationship. But it also cuts back on the time your staff spends processing returns online. And that saves your small business money.
10. Contract optimization
You can negotiate directly with shipping carriers for small businesses for discounts, including accessorial fees. You’ll need to have some shipping volume to negotiate shipping discounts for small businesses.
Shipware can help your business lower the cost to ship, starting with an analysis. Our experts complete a comprehensive analysis of your current shipping solution, to see where and what you’re shipping, commonly used accessorial fees, service levels, carriers used, etc. It’s a much more comprehensive process than this.
We delve into the data in ways that are hard for your business to do on its own. We incorporate benchmarking data to see where you have opportunities to save money, basing this also on the years of carrier-side experience our experts have. Then we develop a shipping solution negotiation plan you can use with the carriers.
We’ll walk you through the contract optimization process, so you know exactly what to do. And in the end, you’ll likely save a lot of money. Our customers save up to 30% on their annual shipping costs after using our negotiation services. Please contact us at (858) 879-2020 to learn more.