Shipping can be the trickiest part of running a small business, and it can also be the most pricey. If you’re looking for a way to cut down on business costs, the best way is to rehaul your shipping system, from vendors to customers. Read on to find out more about shipping solutions and the best small business shipping services!
How to choose the right vendor
Shipping doesn’t start with sending products – it starts with buying supplies, which is why it’s important to choose the right vendors.
To choose the right vendor, you can use these simple steps:
- Use your connections to get recommendations for vendors.
- Narrow your search to a certain area. This will keep your shipping costs down.
- Read reviews to learn how reliable each vendor is.
- Research on each vendor’s financial stability and experience.
- Compare total prices for vendors (including purchase price, shipping, and product quality).
- See which vendors have values similar to your business’s.
How to compare vendor options
The best way to compare vendor options is to create a scoring system based on the traits you need and want from a vendor. Using your scoring system, you can give each vendor a numerical grade in each area of concern, total their scores, and see which vendors have the highest score.
Why finding the right shipping partner is critical
Finding the right shipping partner is critical for several reasons. A single reliable, trustworthy shipping partner will save you time, stress, and money.
Your customers hold you accountable for good shipping, which can make or break your business. Shipping fees can also eat up your profits if you don’t balance service with affordability.
The different types of shipping
There are 8 main types of small business shipping services.
Full truckload is when an entire vehicle (or several) is used to drive a shipment from a distribution point to the destination. This can be a reliable, fast delivery method for large shipments, especially for perishable items.
Less than truckload is when a vehicle carries shipments for several companies at a time. This is cheaper than a full truckload but is slower due to multiple destinations.
Flatbed shipping is when a flatbed carries shipments that aren’t in an enclosure. This is good for shipments that aren’t easily packaged or need to be lifted by a crane.
Intermodal shipping is when a shipment is transported by 2 or more of the 3 shipping modes: air, water, and land. This is typical for international shipments.
Rail service shipping is when a shipment is transported by rail. This is good for large shipments, slow delivery, and cheap rates.
Airfreight is when a shipment is transported by airplane. This is fast but expensive.
Ocean freight is when a shipment is transported by ship. This can take the form of sea containers or tankers that transport liquids and gases.
Milk run shipping is when a shipment is delivered from a central warehouse. It is good for repetitive, regular deliveries.
Tips for managing costs for small business shipping
We have 10 main tips for managing costs for small business shipping!
Crunch the numbers
Before you do anything, you need to crunch the numbers to understand what exactly you need from small business shipping services.
Here are some ways you can spot what can save you money:
- Calculate the total cost of same-day delivery compared to slower shipping methods in terms of customer satisfaction, order fulfillment, and shipping fees.
- Determine how much you currently pay for additional services including packaging, tracking, proof of delivery, and insurance.
- List the typical weights and dimensions of your products.
- Find out if your carriers offer discounts for prepaid shipping.
- Learn about how much distance affects your shipping fees.
- Note down how often you ship to see if you can get a bulk shipping discount.
Explore your shipping options
You may like your current carriers, but it’s good to explore other small business shipping services to see if there are any cheaper providers who are just as trustworthy.
Here are some tips for exploring your shipping options:
- List what traits are most important for you in a shipper (e.g. speed, shipment protection, transparency, sustainability).
- Check how each carrier calculates base shipping fees for your typical product weights and dimensions.
- Compare prices for different delivery speeds, delivery days, distances, packaging, tracking, and insurance.
- Find out if hybrid shipping services could fit your business.
- If you have a low-volume business, check your local USPS branch for their rates.
- If you sell on a platform or marketplace, check if it offers discounts for bulk shipping.
- If you don’t want to handle shipping, research if a third-party logistics company (3PL) would be better for you.
Another way you can save money is by packing intelligently since some shipping services charge based on the packaging and not the actual product.
Here are some ways you can package intelligently:
- Choose packaging that is just the right size for the majority of your products. This reduces the amount of dead air you have to pay to ship.
- Look at different packaging materials to see what offers enough protection while being affordable.
- Buy your chosen packaging in bulk for discounts.
- Pre-measure your packaged products to accurately predict your shipping fees for carriers that aren’t flat-rate.
- For non-fragile products, you could reuse packaging.
Plan your shipping strategy
Now that you’ve built your foundation, it’s time to plan your shipping strategy.
Make sure to include these factors in your strategy:
- Selling platform/s
- Shipping services that you’ll offer to your customers depending on factors like product categories and their location
- Packaging materials for each product or product category.
If you’ll use a 3PL, provide them with your list of desired shipper traits and let them do the work.
Negotiate for better shipping fees
Once you’ve established rapport with small business shipping services, try to negotiate for lower fees using 2 main strategies: benchmarking and cross-modeling.
Benchmarking consists of looking at a company with similar products, prices, and shipping volumes, then using their shipping fees as a benchmark for negotiations.
Cross-modeling consists of learning where your carrier has the highest profit margin, finding ways to boost their profit margins even more, and using this leverage to negotiate for lower costs.
Automate with shipping software
If you handle high volumes of orders, you can save yourself time (and thus, money) by automating with shipping software.
There are many free or cheap shipping software that can:
- Compile shipping rates,
- Generate shipping labels,
- Organize your pending and active shipments,
- Summarize shipping costs.
Motivate customers with free shipping
This may sound counterintuitive, but you can actually save on shipping costs if you motivate customers with free shipping.
If it doesn’t increase your prices too much, you can include the average cost of shipping in every product’s base price. This maintains your profit margin, covers shipping, and delights customers since they only have to pay for a set price.
If it does, you can offer free shipping for orders in a certain price range. This motivates customers to buy more to reach the price minimum, increasing your profit margin even with shipping included.
Ensure deliveries with third-party companies
If you often take out insurance on your shipments, you can save money by insuring deliveries with third-party companies.
Compared to insuring through carriers, third-party companies often charge half as much.
Limit your shipping distance
If your shipping costs are still too high, you can cut down on expenses by limiting your shipping distance.
The farther the distance a shipment has to travel, the more you have to pay. Check your carriers’ shipping zones and see which zones you can afford to cover for your customers.
Use a freight shipping marketplace
Finally, you can use a freight shipping marketplace like GoShip to easily compare freight carriers, their services, and their prices.
Visit GoShip.com today and find the most affordable carriers that are right for your business!