1. Shift inner-zone express shipments to more economical ground shipping. If a customer wants priority service, there is a substantial opportunity to cut costs if you have a fulfillment center close to the ship-to address. By shifting these express inner-zone shipments to a ground service, you can save $7–$20 per package and still get it there on time.
2. Add and/or change fulfillment locations. Your headquarters location isn’t always your best shipping location. If you’re going to be shipping across many zones, consider moving your shipping operation to a distribution center in a more central location. Typically, you’ll save about 10% by going from one to two shipping locations and about 30% by going from one to three locations.
3. Improve your packaging. When examining shipping costs, many online sellers focus solely on the transportation mode, forgetting about savings linked to how products are packaged. Changes here can lower costs as much as 10%. Possible strategies:
a. Right-size your packaging. There is a “dimensional weight” penalty for shipping in boxes too big for the product. To combat this, right-size your packages and provide the exact dimensions of each box to the carrier.
b. Change your packaging type. A box that weighs two pounds, four ounces will be charged at the three-pound rate — an issue that can be solved by lightening the box and kicking it back to the two-pound rate. One of the easiest ways to shave off ounces is to switch to a different packaging type, such as a poly bag or jiffy bubble mailer.
4. Leverage a 3PL that has a volume deal with a carrier. One of the fastest and best paths to reducing parcel freight rates is to align with a 3PL that manages parcel transportation for many other companies. They negotiate with carriers using their aggregate spend as leverage. Some 3PLs can offer discounts in the 10-40% range for heavier packages and significant, but lower, discounts for lighter packages.
5. Match the service desired with the right carrier solution. Don’t get locked into one service with one carrier. There are a wide variety of services available across parcel carriers, each with characteristics that may make it a more cost-effective option for some of your shipments. If you are partnered with a 3PL that manages parcel shipping, they should have an excellent knowledge of the available shipping options that could save you five percent to 10%.
Parcel shipping is your richest source of savings from fulfillment operations. And each dollar saved goes straight to the bottom line. If you are already implementing many of these tactics, you’re ahead of the game. If not, it’s never too late to catch up and start saving almost immediately.
Harry Drajpuch is CEO of Amware Fulfillment, a nationwide fulfillment services company that offers 1–2 day delivery to 98% of the US. Amware gives brands the fulfillment know-how and infrastructure to grow without limits. These tips are part of a longer eBook on 10 Ways to Reduce Parcel Shipping Costs. Click here to read the full eBook.
