How Can Merchants Cut Shipping Costs?

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As consumer expectations for free shipping continue to rise, retailers must explore alternative shipping strategies to improve profitability. These may include modifying packaging, engaging in negotiations with shipping carriers, adjusting shipping schedules, or opting for third-party logistics (3PL) for fulfilment services, as published on Digital Commerce 360.

Cutting shipping costs

Retailers often offer free shipping to please customers, but during the pandemic and supply-chain crisis, they realized the high costs associated with it. Rising fuel costs, limited warehousing space, and a shortage of delivery drivers have made shipping expensive. Retailers are now looking for ways to cut shipping costs, such as outsourcing to third parties or marketplaces, keeping shipping in-house, adjusting schedules or packaging, and negotiating with carriers. Finding the most cost-effective shipping solution has become a priority for wise merchants.

Logistics expertise

Steeped Coffee, a California-based retailer, hired logistics expert Wade Wickus to optimise their shipping processes. Previously, the company handled its own fulfilment, but with a growing customer base and diverse shipping needs, it sought cost-saving solutions. Wickus emphasizes starting with the basics, such as evaluating shipping boxes and product packaging. By reducing the dimensional weight (DIM) of packages and maximizing space efficiency, retailers can lower shipping costs. Carriers like UPS, FedEx, and the U.S. Postal Service compare DIM and actual weight, charging based on whichever is higher. Efficient packaging with lightweight materials helps reduce expenses for retailers.

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Source: Digital Commerce 360


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