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11 Ways to Reduce Shipping Costs, Increase Margins, and Speed Up Delivery

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How to reduce shipping costs, increase margins, and speed up delivery

Your business’s profit depends on more than just how much you sell—shipping costs and delivery efficiency also impact your bottom line. With the e-commerce industry continuing to grow, it’s essential to stay competitive, offer a top-notch service, and keep your loyal customers satisfied, all while avoiding fluctuating shipping rates. 

In this article, we offer 11 tips to slash shipping costs, grow your margins, and speed up delivery. 

Luckily, if you’re trying to lower shipping costs, there are plenty of options.

Leverage negotiation power 

The power of negotiation factors into most business deals, and shipping is no exception. While you may have an agreement with one carrier, it can be worth branching out to see what others offer—either to jump ship or use as a bargaining chip to lock in a more competitive rate. 

Tip: Since carriers tend to increase their rates frequently, it’s important to stay on top of current tariffs to avoid overpaying unnecessarily.

Rely on a Delivery Management Platform 

One of the best ways to save money, not only on shipping but on other aspects of your business, like staffing and fleet management, is by leveraging a Delivery Management Platform (DMP).

DMPs offer automation, real-time updates, and tracking, streamlining the entire process from checkout to delivery. Plus, data analytics features provide insight into opportunities to optimize your shipping processes and costs.

Invest in route optimization software

A surefire way to decrease shipping costs is to optimize the delivery route itself. Many DMPs include route optimization software to find the most efficient path and avoid congestion. This cuts costs by saving money on fuel and drive time and enables your workforce to focus on other tasks.

Be smart about tracking inventory

Inventory management systems keep track of exactly what you have in stock and where. This information prevents financial losses from accidental overstocking, as well as stockouts, which can lead to rush shipping fees to fulfill orders, putting you at risk of missing your goals for on-time delivery.

DMPs can integrate with your inventory management system, which keeps everything streamlined and ensures every system has accurate information. 

Switch to just in time delivery

Alternatively, use a “just in time” inventory process. This means placing an order with your supplier only when you require the goods, which removes warehouse and inventory costs. 

However, just in time delivery requires you to be on top of demand forecasting, as it’s important to know exactly what inventory you need and when. 

Maximize your warehouse space

While it’s likely you’ll need to store inventory most of the time, you can do it smartly. Organize your warehouse to get the most out of the space available and avoid the need for additional storage facilities. This helps reduce shipping costs since you’ll send everything from one location instead of dealing with variable costs from multiple places.

For example, assess how your space is used currently. See if you can reorganize by storing items based on size and get rid of any old inventory you won’t sell. You can even reduce the width of aisles or other empty spaces to create more room for stock. 

Consider dropshipping 

Dropshipping is the practice of shipping goods directly from the supplier to the customer, rather than involving your business. It can save money on storage and remove the cost of shipping to and from your warehouse. 

Some studies have shown it’s possible to increase profits by 18.33% with dropshipping as opposed to selling products on your own. This is due to fewer costs for storage, packaging, and more. 

Optimize packaging 

Efficient packaging can reduce the cost of materials and shipping. Smaller, lower-weight packages also cost less to ship, allowing carriers to transport more at once. 

Such packaging improvements are attractive to sustainability-minded customers who appreciate environmentally friendly shipping.

According to a case study by McKinsey, one supplier eliminated customized packaging and replaced it with collapsible packages that were transferred to and from local locations by a third-party vendor, thus reducing costs and packaging emissions by 50%.

Get bulk discounts by consolidating shipments

Many carriers charge by volume, meaning the more you ship, the less it costs per shipment. It’s important to note that carriers often provide discounts for bulk shipments. 

By combining multiple shipments into fewer packages, you may qualify for a bulk discount that helps you pay less in shipping costs per item. 

Provide flexible delivery options

Customers appreciate having the ability to choose what’s most cost-effective for their needs—for example, a choice of standard or expedited shipping. If customers frequently choose the lower-cost option, it’ll help reduce shipping expenses. 

Plus, putting the power in customers’ hands makes it more likely they’ll have a great experience and return again, which is key in last mile delivery.

Offer pickup or delivery to locals

If you’re trying to provide an on-demand delivery experience, a quick option is to offer local customers the ability to pick up their goods directly or deliver them to a nearby specified drop-off.

Offering local delivery lets you avoid paying a carrier. If customers pick up directly, you won’t even incur shipping costs. 

Conclusion

Cutting shipping costs can skyrocket your profit, and there are plenty of ways to do it—whether your focus is on negotiating discounts or better rates, leveraging DMPs for route optimization and inventory management, or changing how you store and package your goods. 

Bringg’s all-in-one delivery platform offers route optimization, inventory management integration, real-time delivery tracking, and more to streamline operations and reduce shipping costs. 

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