Keep customers happy: How to save on shipping without jacking your prices
October 8, 2008 by Jared BilskiPosted in: Communication tips, Cost cutters, Efficiency, In this week's e-newsletter, Latest news & views, Management issues
Rising transportation costs are hitting businesses, and the inflated shipping costs are too great for many companies to shoulder. But if you think the only move is to bump up prices, think again.
Higher shipping costs make companies feel cornered. Raising costs for customers will provide some relief, but it will also make you less competitive. Many companies try to take the pricing hit on the chin and struggle to stay afloat.
Here are five strategies geared toward cutting shipping costs — without jacking prices:
- Plastic payments. Certain business credit cards offer sizeable discounts. Example: Advanta business cardholders can save up to 25% using DHL standard delivery rates. Another plus: Certain cards — like American Express — grant rewards like cash back, flier miles and 5% savings on FedEx’s express and ground shipping, among others.
- Electronic postage. Using online postage providers such as Click-N-Ship or Stamps.com can net you a decent rate reduction — 3% for Express Mail; and an average 3.5% on Priority Mail. Online postage providers also offer greater discounts for larger shipments — though most charge a small monthly fee.
- Fulfillment services. If you have customers in Canada but lack a distribution partner, there are companies like eFulfillment and Amazon.com that will store your inventory for a monthly fee. This helps skirt the expensive costs associated with international shipping duties, customs brokerage fees, etc.
- Business and trade organizations. Chambers of commerce and industry associations will often grant shipping discount programs to members. Members of The National Association of Manufacturers, for example, can receive up to a 62% with FedEx Freight. For companies with significant shipping orders, the discounts greatly outweigh the membership charge.
- Delivery consolidation. Save money by making sure delivery trucks are filled to the brim. If your trucks have 20% or more of leftover space, outsourcing the shipping helps to spread out some of the cost.
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Tags: Consolidation, Electronic postage, Fulfillment services, Inventory costs, Shipping costs
October 9th, 2008 at 1:04 pm
Thank you for mentioning EFULFILLMENT SERVICE in your interesting article. To add a bit to your good advice about shipping cost controls…
1. USPS first class mail (1 to 13 ounces) and priority mail 14 ounces and over) are still a bargain up to about 3 pounds. For package weights over 3 pounds, UPS is normally the best value–especially now that their ground and air fuel surcharge percentages have been reduced (effective 10/6/08).
2. A lot of people don’t realize that they can use UPS or FedEx ground for rush shipments instead of air for zone 2 addresses–the package will arrive just as quickly and at much lower cost. Use of DHL ground in place of air is a bit more tricky as DHL has an extensive list of blacked out zip codes that they don’t deliver to directly–they hand off to the USPS for those addresses.
3. If you ship packages that contain the same product in volume, it is a good idea to research the individual shipping weight. If your packages are just an ounce or two over an even pound, switching to a smaller carton or using less filler could bump the package to the next lower per pound rate and save you thousands of dollars over time.
I hope the above proves helpful to your readers.
John Lindberg – President
EFULFILLMENT SERVICE INC
http://www.efulfillmentservice.com