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Order fulfilment

Strategies to reduce shipping costs

Versha Kamwal
September 30, 2021
mins read

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Shipping costs form one of the most substantial expenses for ecommerce businesses, especially the direct-to-consumer (D2C) brands.

On average, 67.91% of all shopping carts are abandoned across the world in a year, i.e. $4.6 trillion worth of merchandise. While high shipping costs constitute 58% of those cart abandonment.

The above statistics clearly demonstrate that shipping costs not only impact the customer experience but also determine the profit margins for your business.

Undoubtedly, this number turns out to be a significant loss for ecommerce brands concerning conversions and revenue. That is why D2C brands must entice customers with shipping offers such as free shipping. Although, it sounds like a dream for customers, it is an equally exigent task for the D2C brands that often results in bearing huge cost of shipping.

In this blog, you’ll learn strategic ways that D2C brands can implement to minimise shipping costs.

How can D2C brands reduce shipping costs?

1. Reduce the shipping distance

When you are selling online, your customer base is scattered across the country. Usually, D2C brands pay high shipping fees when they ship orders to customer locations that are far away from their warehouse. For example, if you have a warehouse in Haryana, you have to bear higher shipping costs while shipping an order to a customer located in Kolkata than to a customer located in New Delhi.

As a solution, you can reduce the shipping distance by splitting your inventory in multiple fulfilment centres spread across India covering all the shipping zones, i.e. North, East, West and South. This way, you can save on shipping costs while providing express shipping.

Eshopbox's distributed network of fulfilment centres
Eshopbox's distributed network of fulfilment centres

2. Negotiate shipping rates

Courier companies charge shipping rates based on the shipment weight, package dimensions, customer location, and the prefered shipping speed. Unless, it’s a flat-rate shipping service where you pay a standard fee for every order—whether small or big. Notably, all courier companies give discounts on specified shipping volume—the more orders you ship, the better shipping rates you can get. To reduce your shipping cost, you must try to get shipping quotes from multiple courier companies and choose the best service at a reasonable price.

Although, it's unlikely for a D2C brand to have access to discounted rates due to low order volume. But, if your order volume is high you can surely get bulk delivery discounts. Most importantly, you can also partner up with a 3PL provider like Eshopbox and get access to negotiated shipping rates.

3. Reduce the weight of the package

All major courier companies calculate shipping costs using a pricing technique, i.e. volumetric weight. Here the shipping cost is dependent on the size of a package, unlike flat-rate shipping. If you’re using too big of a box for a lightweight item, you have to pay more because of the higher volumetric weight. So it's advisable to use the appropriate size of boxes for avoiding any packaging mistake that can lead to higher shipping cost. For example, you can use a small box with sufficient (not too less or too much) amount of dunnage to ship small cosmetic products instead of using a big box with too much of bubble wrap.

Boxes of different sizes
Boxes of different sizes

4. Find discounted supplies

Usually, courier companies provide packaging supplies at a discount. You can also purchase such supplies like boxes, dunnage, bubble wrap, airfill, and poly mailers in bulk to save money on shipping expenses. However, you must not neglect the quality of packaging as it can prove to be a costly mistake in the long run. Low-quality packaging materials and supplies can increase the risk of damaging orders in transit.

With a tech-enabled 3PL provider like Eshopbox, you can reduce packaging costs. Every order is automatically rated to maximise cost savings as Eshopbox considers all the packing options while ensuring quality packaging materials.

Packaging materials and supplies
Packaging materials and supplies

5. Switch from boxes to poly mailers

If your D2C brand sells small, non-fragile products like clothing, you can ship your orders in a mailer envelope or a polybag which are far more cost-effective than boxes. The smaller dimensions of the packages will take less space on a shipping truck—minimising your shipping costs. Moreover, using poly mailers means less usage of packing supplies like tape and bubble wrap that can help you save even more money.

Benny Gold ships its products in poly mailers
Benny Gold ships its products in poly mailers

6. Insure with third parties

The best way to cut shipping costs is to cut down on extra services. Shipping insurance is such an extra cost that protects you against shipping exceptions of lost or damaged orders during transit. Usually, courier companies provide shipping insurance to ecommerce brands. But, third-party package insurers are significantly cheaper. You can also opt for third-party shipping insurance to minimise shipping costs.

7. Use prepaid shipping

Prepaid services are most likely to be more pocket-friendly than post-paid services—the same applies to shipping services. Many carriers offer discounts on prepaid shipping and you can take advantage of them. You can simply pay for shipping upfront for a certain period of time and cut down your shipping costs.

8. Select the most appropriate mode of transportation

Shipping costs are also dependent on the mode of transportation that you use for shipping your D2C orders and it's crucial to know which option is the most cost-effective. While shipping by sea is often less expensive than shipping by air, shipping by rail is normally less expensive than shipping by trucks. By analysing your customer location and the shipping speed required, you can come up with the best choice that suits your budget and turnaround time (TAT). If required, you can also opt for a hybrid transportation plan by combining the modes of transportation to reduce travel time while also lowering costs.

For instance, you have to ship an order from Pune to Ahmedabad. Instead of air shipping, you can opt to ship that order by train. When the order arrives at Ahmedabad, you can ship the order via shipping truck to its final destination, i.e. customer's doorstep.

9. Increase the visibility of the supply chain

There are instances when any shipping exception or issue can cause delays or damage to customer orders that can ultimately lead to high shipping costs. You can stay ahead of such issues with real-time order tracking. For example, if you don't see any progress in order status for a long time, you can get in touch with the courier partner and ask them to address the problem immediately. Such complete visibility can enable you to avoid the cost of sending another product if the first product is lost in transit. Thus, you can react to such issues more easily as they arise, which will save you time and money in the long run.

Bottom line

The degree to which you reduce expenses is one of the most crucial factors that determine the success of your D2C brand. Shipping costs will increase exponentially if they are not closely monitored and controlled. And at the end of the fiscal year, you'll notice that they've taken a significant bite out of your profit margin. Thus, it's imperative to opt for the most shipping strategy from reducing the shipping distance, availing the best shipping rates and partners, reducing the weight of orders to increasing the visibility of the entire supply chain.

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