Product delivery is a key element to the success of small businesses. Current trends are driven by the delicate balance between consumer pricing and realizing a profit. Customers’ experiences with big online stores like Amazon, which have turned product distribution into art, also influence buying decisions.
Why should you include smart shipping in your business strategy?
Surveying the most prominent online merchants reveals the following shared practices:
- They use clever shipping hacks to build a loyal customer base.
- They have turned packaging into a branding opportunity.
- They have mastered the shipping cost reduction routes.
- They size up the competition’s packaging methods and delivery policies with the full intent of outdoing them.
- They are mindful of public sentiments over different issues—environmental, political, technological, etc.—and it shows in their packing styles.
- They are sensitive to customer feedback.
These companies are aware that the sale does not stop when the product has been paid for. They know that the after-sales experience is equally crucial to business sustainability.
Starting with the basics: What factors go into shipping prices?
This part is not rocket science, and you probably already know the answers from your own shopping experiences. However, revisiting them as an entrepreneur will give you a fresher perspective and help you find the areas where you can optimize costs.
- Dimensions of the package
Unless they have the means to customize their own packaging materials, new businesses are more likely to depend on the standard-sized polybags, envelopes, and boxes that are sold or shipper-supplied. Those containers do not snugly wrap around most products and are especially problematic when transporting fragile, irregularly-shaped objects like ceramic sculptures. In such cases, packing paper, bubble wrap, stretch wrap, and other dunnage types are used to secure the product’s integrity. Consequently, both the merchandise and the space fillers are accounted for in the shipping costs.
Generally, the heavier the package is, the higher are the transport rates. However, the three largest carriers, FedEx, UPS, and USPS, are more particular about the dimensional weight or DIM, which can make shipping heavier parcels with smaller dimensions cheaper than delivering lighter ones that are bigger. Note that prices also take the space fillers into account.
- Volume or quantity
Typically, the higher is the shipping volume or quantity, the greater are the fees. However, various carriers offer discounts with increasing volumes to help businesses reduce expenses.
Shipping services charge based on distance or delivery zones. International destinations usually require tariffs in addition to transport costs.
- Speed of delivery
Expedited shipping is usually more expensive than the regular rate. However, be aware that some e-merchants can offer immediate delivery for free under certain conditions.
The three major carriers automatically cover items that are worth less than $100. Beyond this amount, the sender must declare its value. Depending on the shipping service, as much as $5000 can be covered. To protect sellers from damage, they should purchase insurance for articles of higher value. If your store regularly ships pricey goods, you should start considering a more comprehensive, longer-term liability insurance plan.
- Add-on services
Handling of hazardous or fragile objects, parcel tracking, delivery confirmation and other extra services all increase shipping costs.
How do Small Businesses thrive despite the rising delivery prices?
Minimizing logistics expenses may be an appealing option when you have just started your business, but this may not always be the best move as it may cost you in terms of efficiency. The most popular online merchants made their breakthroughs by ingeniously working with critical aspects of the shipping industry. The most important strategies are outlined below:
- They use inexpensive packing materials.
Budget is tight when starting a business and custom-made packaging may be out of the question at first. At this point, ordinary wrapping materials are acceptable as long as packing is done neatly and securely. Once your sales take off, consider buying in bulk to reduce costs further. Additionally, you may take advantage of the free shipping labels and supplies provided by big US carriers. Unlike plain parceling paraphernalia that is sold in the market, they prohibit customization because those companies have their logos all over their packaging materials. However, they do markedly decrease transport rates.
- They shop for bargains.
Many shippers offer discounts to growing businesses for threshold volumes. However, for monthly deliveries exceeding 100, you may be able to negotiate with your carrier for even better rates. For international shipments, consider logistics providers with established overseas operations, such as FedEx and UPS, to get lower charges. Do not hesitate to shop around to fetch the best prices.
- They choose the right delivery method.
The best shipping strategy will make you more money than it will cost. There are plenty of options available, depending on the carrier, but the standard ones are the following:
- Free shipping—sellers gain loyal customers for their value-added services. Complimentary delivery is one that 73% of online shoppers say they look for. Chances are, your competitors are already offering it. It may not always be easy to throw into the deal, but there are crafty ways to do it. First, offer it for free if shipping will eat up only a portion of your profit from the product being sold. Second, you may do it for a limited time to introductory items or those with looming expiry dates. Third, you may incorporate the carriage fee into the product’s price. Fourth, for articles considered as consumer favorites, you may offer free shipping above a minimum purchase, which is a proven way to increase sales. Fifth, you may prolong the delivery period as most buyers are willing to wait a few more days if they know that they just got a good deal.
- Flat-rate delivery—many carriers offer this service, which you may pass on to your customers. The price is fixed regardless of size, weight or delivery area surcharges. It works best for products in your store that have similar shipping rates.
- Real-cost carriage—this method allows you to charge the exact shipping cost to the consumer. Calculation of the fees may take time, but the process is transparent, which enhances customer trust. It is most recommendable for parcels that are big or heavy as it protects sellers from shouldering the potentially costly logistics.
- Same-day delivery—various carriers will offer this service at competitive prices. This option can help enlarge your client base within your locality.
- They know when to take advantage of scheduled pick-ups.
In the early stages of your business, you may have considered periodically dropping off packages to the carrier to save on pick-up costs. However, this may become time-consuming and compromise your productivity once your sales start leaping. At that point, it may be time to consider scheduled pick-up services. USPS offers it for free while UPS and FedEx charge convenience fees.
- They know when to use in-house fulfillment versus 3PL.
Smaller businesses are more likely to deliver straight from their stores. With continued growth, however, in-house fulfillment expenditures also rise. Consider outsourcing to a third-party logistics provider when your business has reached this level. Doing so may save you money and time.
What else can I do to make my shipping expenses manageable?
Rather than focus on what costs them money, successful business-owners go proactive and devote more effort to actual marketing. To them, shipping is just another opportunity to sell more of their products. Below are some of the proven strategies that promote repeat business:
- Optimizing the unboxing experience
A booming social media topic these days is the unboxing experience. Many companies have found it to be a cost-effective marketing strategy. Psychologically, the unboxing experience is likened to the thrill of receiving a gift and revealing the mysterious contents inside. The approaches are variable, and include any combination of the following:
- Creative packaging—product presentation is every bit a part of selling. You do not need to spend so much on custom-made wrappings. Effective use of labels, folding styles, and coloring can create so much impact, and there are plenty of packaging ideas in cyberspace.
- Inserts—these include discount coupons, small product samples, personalized thank-you cards, additional information on your products, promotional stickers and many others that consumers may find functional or visually appealing. You can also sneak a short survey sheet inside the package to get feedback about their buying experience, which can help improve your marketing tactics.
- Of course, you need to make sure that they receive their purchased item intact.
- Having a good returns policy in place
Most online buyers check out returns policies first before making a purchase. This is because of the inherent risks of web shopping. Returns happen to a lot of businesses, even to traditional retail stores, so it is best to be prepared. Having a customer-centered returns policy in place reassures consumers, and seeing it in action enhances their buying experience, making them more likely to purchase again from you.
- Allowing customers to recycle packaging
Environmental consciousness is increasingly becoming a factor in buying decisions. Using non-hazardous packaging materials that can be recycled or composted helps customers associate your business with eco-friendliness. It also helps to minimize packaging waste whenever you can. These relatively inexpensive measures can go a long way in promoting your brand.
In conclusion, technology has truly made modern commerce increasingly complex and competitive. Shipping your products adds to your risks and expenses, but there are ways that you can adopt to make it grow your business. Remember that a smart logistics strategy both enriches the customers’ experience and expands clientele.
Burns, R. (2019, January 2019). Guide to Shipping for Small Businesses: Know Your Options and Save Money. ShipBob. https://www.shipbob.com/blog/small-business-shipping/.
Estay, B. (2020). Next Steps After the Sale: Your Guide to Small Business Shipping. Big Commerce. https://www.bigcommerce.com/blog/small-business-shipping-tips/.
Tabor, B. (2018, November 5). The Small Business Guide to Product Packaging. Tweak Your Biz. https://tweakyourbiz.com/business/start-ups/small-business-product-packaging.
Williams, D. (2019, May 20). The Art of Unboxing: Five Companies with the Best Packaging Experience. Packaging Gateway. https://www.packaging-gateway.com/features/unboxing-five-companies-best-packaging/.