Shipping costs continue to eat into retail margins and the last mile is the primary culprit: This final stretch of delivery can account for 30–40% of total transportation costs. Ultimately, the last mile remains the most complex, fragmented part of the supply chain.

Retailers looking to improve profitability must treat shipping cost reduction not as a tactical exercise, but a strategic operational priority. That means rethinking everything from network design to delivery execution.

Here are 10 ways to reduce shipping costs while improving delivery performance and customer outcomes.

How to reduce shipping costs

 

1. Map the supply chain and fulfillment footprint

Shipping costs originate with network design. Retailers that analyze their supply chain data holistically can identify inefficiencies in warehouse placement, fleet allocation, and delivery territory coverage.

Tools like supply chain modeling and network optimization software allow retailers to simulate how changes in fulfillment location, zone skipping, or hub-and-spoke design affect cost per delivery. A key metric to monitor for greater savings is the average distance from fulfillment center to delivery zone.

2. Use multiple carriers to increase flexibility and cost leverage

A single-carrier model often leads to higher rates and limited service coverage. Multi-carrier strategies allow retailers to match orders to the most efficient provider based on cost, speed, region, and SLA.

According to Bringg’s 2025 State of the Last Mile Report, 68% of retailers now use 3PLs for more than half of their deliveries, and 38% say managing multiple carriers is their top operational challenge.

The key is coordination across the entire fleet network, not just access. Retailers need systems that dynamically select carriers using real-time data like location, performance, capacity, and cost.

3. Optimize delivery routes in real time

Every extra mile driven increases fuel, labor, and vehicle wear costs. Route optimization tools use real-time traffic data, stop constraints, and driver availability to create efficient delivery plans that reduce mileage and improve route density.

Bringg data shows that retailers who adopt continuous optimization across fleets reduce miles per order and improve deliveries per route, which are two levers that directly cut cost per delivery.

4. Consolidate shipments to maximize volume discounts

Carriers often offer better rates when shipments are grouped. Retailers can reduce shipping costs by consolidating multiple orders going to the same region or delivery zone. This approach improves truck utilization and lowers cost per package.

Consolidation also reduces packaging material and labor costs, especially during peak periods when smaller, single-item orders flood the network.

5. Offer pickup and alternative delivery options

In-store pickup, locker collection, and third-party pickup points reduce the number of last-mile stops required and lowers delivery costs. These options also give customers more control over when and how they receive their orders.

Bringg data shows that 53% of retailers increased their use of pickup-point delivery in 2023, and many plan to expand this further in 2025.

6. Reduce excess packaging and shipment size

Oversized packaging increases both material costs and transportation expenses. Right-sizing shipments based on product dimensions helps reduce dimensional weight charges and improve vehicle capacity utilization.

Retailers can reduce costs further with standardized packaging rules, minimized filler, and audited packaging-to-product ratios across SKUs.

7. Use crowdsourced fleets for local, high-frequency zones

Crowdsourced delivery (gig economy drivers) offers flexible, on-demand capacity. This tactic is especially useful for same-day or short-distance delivery zones and can reduce costs compared to maintaining a large in-house fleet or relying solely on national carriers.

However, it requires visibility and control systems to ensure service quality. Without proper oversight, inconsistencies in training, communication, or handoff can erode CX and lead to higher redelivery rates.

8. Adjust delivery timing to optimize cost

Delivery promises often default to speed. But faster isn’t always better (particularly regarding the customer experience) or necessary. Retailers can reduce shipping costs by aligning delivery timing with network capacity, rather than customer urgency.

Customers are often willing to accept slightly longer delivery windows if the experience is consistent and transparent. Retailers can test different delivery SLAs and analyze impact on cost-per-delivery and cart conversion.

9. Implement collaborative delivery models

Some retailers are experimenting with bundled or shared delivery: where multiple brands deliver to the same neighborhood using a single driver or vehicle. This shared model reduces the number of trips and can improve density in low-volume areas.

While still an emerging model, it reflects a growing shift toward network efficiency over brand exclusivity in logistics. It’s particularly relevant for urban markets with overlapping service zones.

10. Monitor and benchmark every cost driver

Without accurate data, cost reduction becomes guesswork. High-performing retailers benchmark their performance across key metrics like:

  • Cost per delivery
  • Deliveries per route
  • Average delivery distance
  • Failed delivery rate
  • Vehicle utilization

Bringg’s State of the Last Mile report found that 75% of retailers now track last-mile KPIs across fleet types, and 72% invested in visibility tools in 2024 — yet visibility and cost control remain top challenges.

The more granular the insight, the easier it is to reduce waste, renegotiate contracts, or reallocate resources.

Retailer considerations for shipping cost reductions

Retailers operate with a customer lens — and cost-saving measures that degrade the delivery experience can backfire. In fact, 84% of shoppers will not purchase from a retailer again after a single negative delivery experience.

Here’s what to consider before implementing shipping cost reductions:

  • Returns logistics: Retailers, especially in big and bulky or high-value verticals, face mounting pressure to offer convenient returns. But reverse logistics is costly. Retailers should factor in return rates, pickup costs, and warehouse routing when evaluating last-mile strategies.
  • Omnichannel challenges: Many retailers want to route online orders from stores to reduce last-mile costs, but lack accurate inventory visibility or integrated systems. According to Gartner, 85% of supply chain technology leaders rank reliability in their top three most crucial factors for last-mile operations and 48% list it as their top consideration.
  • Customer delivery expectations aren’t monolithic: Some segments prioritize speed, while others prioritize flexibility or convenience. Retailers that segment delivery options by customer profile and surface them earlier in the funnel can guide shoppers to lower-cost fulfillment paths.

Reducing delivery costs comes down to smarter deliveries that align customer preferences with profit levers.

3PL considerations for shipping cost reductions

Third-party logistics providers face different pressures than retailers. While retailers focus on delivery experience as part of the brand promise, 3PLs are typically measured on operational performance and profitability. Cost reduction strategies must account for:

  • Contracted service-level agreements (SLAs): 3PLs often operate under rigid SLAs, which limit the flexibility to optimize routes purely by cost. Delivery windows and time-on-site expectations must be factored into any route or carrier optimization.
  • Exception management and failed deliveries: Bringg reported that 31% of retailers cite visibility over deliveries and customer support, including failed deliveries and exceptions, as a primary challenge. For 3PLs, these failed or rescheduled deliveries quickly erode margins. Real-time visibility and dynamic reallocation of routes or drivers can help reduce these costs.
  • Gig driver reliability: While crowdsourcing offers cost flexibility, inconsistent training and lack of control over independent drivers can increase failed delivery rates, especially for complex products. 3PLs must invest in visibility and exception management to mitigate risk.
  • Multi-client, multi-system complexity: Most 3PLs manage logistics for several clients, each with their own systems. According to internal market research, 60% of 3PLs run more than six technologies in their transportation stack, making unified cost control difficult.

To reduce shipping costs without compromising service, 3PLs must align pricing, capacity, and route planning across diverse clients, systems, and service expectations.

Lower costs, better service, more control

Retailers and 3PLs can’t control fuel prices or wage inflation. But they can control how their network operates. Shipping cost reduction isn’t about cutting corners. It’s about orchestrating smarter, more efficient operations across every delivery mile.

The opportunities to streamline costs and improve margin are abundant based on a simple ethos: streamline what’s already under control and every mile becomes more profitable.