U.S. POSTAL RATE INCREASE: 10 WAYS TO SAVE ON SHIPPING COSTS

From USPS to UPS, new postal rate hikes have led to higher shipping costs across the board. Learn how you can help keep shipping costs down. FEBRUARY 02, 2018 If your budget includes shipping costs, the recent US Postal rate increase probably didn’t come as welcome news. The price of a USPS first-class postage stamp increased from 49 cents to 50 cents. Overall, rates increased by nearly 4 percent. FedEx and UPS also raised rates recently. “This year’s increase in postage rates will have a significant impact on our bottom line,” says Katherine Harvey, co-founder of bone broth purveyor Bare Bones. “Roughly 80 percent of Bare Bones’ business is online, direct-to-consumer,” Harvey continues. “Shipping costs already comprise about 40 percent of our total expenses in a year—a huge line item. Unfortunately, the rate increases are not limited to the USPS—they’re touching every parcel carrier and logistics partner we work with.” For Lisa Chu, owner of Black n Bianco, rising shipping costs have been increasingly challenging over the last several years. “It’s become more difficult to compete with Amazon—especially with the free two-day Prime shipping,” she says of her online children’s formal wear retail business. “Profit margins for e-commerce businesses like mine are becoming slimmer.”

Ideas for Managing Shipping Costs

Given the fact that shipping costs are increasing across carriers, business owners may want to have an overall strategy for managing this expense. Here are 10 ways to keep shipping costs under control.

1. Offer free shipping and absorb the cost into your products.

“The best way to deal with increased postage cost is to offer free shipping and factor the shipping costs directly into the products,” says Chu. “Even if the shipping is not as fast as Amazon, online customers have become accustomed to free shipping. Absorbing the shipping cost isn’t a great business strategy, but if your business is in a competitive industry, you might have to do this in order to generate positive cash flow.”

2. Set a minimum order for free shipping.

Increasing the minimum amount of product required to qualify for free shipping can increase profitability, according to Harvey. “Doing this allows us to protect our margin by spreading the shipping costs across a greater number of products,” she says. “Shipping three items to one customer is generally less expensive than shipping one item to three different customers,” adds Chu.

3. Check on box sizing.

Harvey notes that her company is revisiting their box sizes to ensure that they’re able to meet the needs of most customers with one parcel, as opposed to multiple parcels in a shipment. According to Harvey, this can save substantially on shipping costs.

4. Use USPS Flat Rate boxes and envelopes.

With the USPS flat rate boxes, you can ship whatever you can get into each box and envelope size. You pay the same fee no matter what, providing the items fit in the packaging. This can give you control over shipping costs.

5. Ship books by Media Mail.

If you sell books, Media Mail is your least expensive option. (Media Mail is a service specifically meant for sending “educational materials.”) You’ll pay a fraction of the cost that you would otherwise. Just make sure to package the books well to avoid damage. Generally, the longer the shipping distance—such as across the country—the longer the time to destination.

6. Reuse packaging.

Saving on the cost of shipping supplies can save you a significant amount of money. Consider reusing packaging materials, including bubble wrap and packages. You can inform your customers that your company practices sustainability by recycling packaging. When preparing packages, also make sure to do so as efficiently as possible.

7. Use multiple carriers.

You may find that using more than one carrier gives you options that can save you money. For example, you may find that lightweight, small items are often best mailed through USPS First Class Mail, which is often the cheapest option. For heavier, larger items, you may find that other carriers are a better choice.

8. Outsource your shipping.

In addition to the cost of shipping, the manpower and time to ship items can eat into your profits. If you use a shipping company that ties into your shopping cart, you can cut down on overall costs. Though outsourcing by dropshipping may appear costly because of the fees, you may end up saving money in the long run. Because of the volume of packages they ship, fulfillment centers are generally able to negotiate lower shipping costs. (Outsourcing your shipping also means you don’t have to store your merchandise, which can help with overhead.)

9. Try zone skipping.

If you ship large products and shipping is expensive, you may want to try zone skipping. This refers to using a consolidation service that takes groupings of packages going to a certain geographic region. One freight shipment of all of the items helps lower the shipping costs considerably. This only works if you have a high enough volume of products going to a certain region.

10. Consider using courier services.

If it’s geographically feasible, it may cost less to have products delivered via a courier service. Marc Gorlin is CEO and founder of Roadie, an app that arranges for drivers heading in a certain direction to pick up products and deliver them. “The result is a cheaper, easier, green-delivery service,” says Gorlin. Read more articles on saving money.

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