If you run a small business that ships items to customers, you know how expensive postage can be. Luckily, there are several strategies to save money on shipping costs for your small business.
Strategy 1: Use A Platform That Consolidates Shipments And Negotiates For Volume Discounts
Various platforms offer you the ability to print shipping labels, track packages and returns, and use discounted rates that are negotiated on behalf of small business owners across the world.
- Shippo “consolidates pricing across multiple small businesses to ship at negotiated rates.” You can get USPS Commercial and even deeply discounted Cubic Pricing rates. Plus their service is cheap! You only pay a few cents per label (or you can purchase a $7 monthly subscription if you ship high volumes) on top of the cost of the shipping, and the service integrates into your existing cart software like Amazon or Shopify. They offer shipping with USPS and DHL.
- Stamps.com is a Shippo competitor, and also allows you to print postage from home or the office. They offer shipping with USPS only and have impressive statistics – they’ve shipped over $36 billion in postage, and over 30% of priority mail is shipped through them. Like Shippo, they offer integrations with all of your ecommerce sites and offer negotiated low rates, including up to 40% off domestic with USPS.
- ShipStation is another option. They offer rates to small businesses that they comment are usually “reserved only for Fortune 500 companies.” They offer discounted shipping with FedEx, UPS, DHL, and USPS. They also offer advanced analytics to track your shipping and returns.
Strategy 2: Seek Discounts Directly From The Shipping Companies
The US Postal Service, FedEx, UPS, and DHL all offer shipping services for businesses of all sizes and offer shipping discounts. All 3 non-USPS carriers have small business specialists who can provide quotes depending on the volume that you ship. They may even price match or beat each other’s prices if you are a desirable (high volume) client. You may be required to weigh the items, print the postage with a postage meter, pack the items, and pre-sort the items to take advantage of these commercial discounts.
- USPS offers discounted shipping rates on orders of certain sizes
- UPS offers discounts depending on your shipping volume
- FedEx offers discounts to businesses of all sizes through their FedEx Small Business Savings Program
Strategy 3: Buy Postage Directly From Your Selling Platform
If you sell on Ebay or Paypal, you can benefit from their discounted shipping pricing and buy postage directly from them. The user interface is less smooth than the shipping consolidators in Strategy 1 but can still be a great way to get a discount. You can print UPS and USPS labels from PayPal and you can print UPS, USPS, and FedEx labels from Ebay.
Strategy 4: Seek Out Deals On Packing Materials – Get It For Free If You Can!
Don’t forget that shipping isn’t the only cost you incur when mailing items to customers. Packaging can be costly.
If you send items via Priority Mail with USPS, use the free boxes and envelopes provided. Using carrier packaging can also get you more bang for your buck – carriers sometimes charge dimensional fees if you use your own packaging.
They may also offer flat rates for anything that can fit in a particular envelope or box. FedEx, USPS, and UPS offer flat rate envelopes that, when used strategically (i.e. stuff whatever you can in them) can save you a lot of money.
Consider cheaper packaging options where possible as well. For example, packing peanuts are cheaper (approximately $2.70 per cubic foot) compared to bubble wrap (approximately $4.92 per cubic foot). Newsprint is cheaper still at approximately $1.08 per cubic foot. Bubble mailers are an affordable all-in-one solution that can protect delicate shipments.
Of course, you must weigh your customer’s preferences (who likes to open a box to an explosion of peanuts?) when considering the packing materials you wish to use. Buy packaging items in bulk if you can. Uline.com is a reputable site that sells all the packing materials you could ever need, and there are many other discount retailers and wholesalers as well.
Strategy 5: Look Into A Local Carrier
There are other carriers in the United States besides the big three. If you’re in the midwest, check out Spee-Dee Delivery Service, or if you’re on the west coast, try OnTrac. They may be able to offer you competitive rates. One caution is that Spee-Dee Delivery and OnTrac’s reviews are not so hot. But people have lots of complaints about the big 3 carriers as well – we’ve all had a package lost at some point.
In that same vein, explore options for Last Mile Delivery using your existing relationships with FedEx and USPS. With UPS SurePost and FedEx SmartPost, you can arrange for packages to be sent to your customer’s local post office and USPS will take care of the delivery to their home, which can help you avoid residential surcharges with UPS and FedEx. This option works best for packages under 10 pounds. An additional benefit is that USPS delivers on Saturdays, and UPS and FedEx levy heavy surcharges for Saturday deliveries. Three downsides are that you must use your own boxes, customers can get confused when tracking numbers change carriers, and the speed is slower than regular shipping.
Strategy 6: You Don’t Have To Buy Insurance From Your Carrier!
One little known fact is: You can purchase third-party insurance for your shipments. Companies like Parcel Insurance Plan offer discounted rates on insurance that often beat the big carriers.
Strategy 7: Pass Shipping Costs Along To Customers – But Be Careful
If you are operating an e-commerce business that ships items to customers, especially individual customers, you are already well aware that customers are very sensitive to added shipping costs. If you offer free shipping, try to build your shipping costs into the cost of your product so that you cover your own costs. If you don’t offer free shipping, price your shipping appropriately for the consumer, keeping in mind that you may lose sales from customers who are unwilling to pay for shipping.