How to Reduce Shipping Costs so You Can Increase Profits

It’s hard to stay stable in any business, despite the rapid growth of ecommerce. The coronavirus economy is booming, and unemployment rates are skyrocketing. In periods like these, keeping a close eye on your expenditures is more critical than ever.

We can only continue doing business because of shipping since retail stores will close soon. It’s a necessary evil. It’s not free.

In fact, over half of all online sellers face the most significant challenge in shipping. Here are a few ways to reduce shipping costs and save money to better weather the storm.

Work With Multiple Suppliers

There’s no rule in dropshipping that you must give all your business to one supplier. Diversification is an excellent strategy for finding the best products at the best prices. The same rings true when it comes to shipping costs.

Lots of products are available from more than one supplier. You might find a product to sell from Amazon that’s also available from AliExpress and SaleHoo. So, if the product is correct, but the shipping price isn’t, don’t be afraid to shop around to snag a better deal and increase your ROI.

This is also a sound strategy in today’s economy. With coronavirus hitting factories and warehouses and governments constantly updating what is deemed “essential business,” your suppliers could face a halt in production at any time. When you have a diversified supplier pool, you can tap into one of your other resources if another is out of commission.

Nurture Supplier Relationships

As the COVID-19 pandemic hits every corner of the world, we’re in a unique situation where everyone faces the same “challenge” and seems to be taking on a “we’re all in this thing together” mentality. Relationships are becoming more critical than ever before.

Successful business is built on solid relationships. And we’re not just talking about your customers, business partners, or even employees (though they’re important, too). We’re also talking about vendor relationship management.

Suppliers are a critical part of every dropshipping business. Without them, you wouldn’t have anything to sell. So, you want positive working relationships that foster open communication and collaboration. Contact your suppliers and ask how they’re doing during this time. See if there’s anything you can do to help them get through any bumps in the road.

Now, what does being friendly have to do with shipping costs?

Open dialogue allows you to more easily broach the subject of shipping costs in the first place. Having a good rapport will make suppliers more likely to trust you and open to new ideas on optimizing these fees in a mutually beneficial way.

Now, merchants and suppliers can work alongside instead of parallel. “Make sure that you’re entering into a partnership, not a transactional relationship,” says Bradley Day of HELM Boots. “The days are gone where the relationship consists of accounts buying and brands selling.”

Together, you can brainstorm ideas to minimize packaging, get better rates from carriers, or source from different fulfillment locations if available.

USPS and Other National Carriers

USPS, China Post, and Royal Mail are national carriers available to drop shippers. And they vary entirely in cost, delivery time, and tracking. China Post, for example, might take 20 to 50 days worldwide, while USPS can deliver in just two to 15 days but is limited to the U.S.

The critical thing to note is that these changes. And, yes, it might be overwhelming to research the cheapest carrier for every product for every destination – but that is the only way to know you’re paying as little as possible to fulfill every order.

ePacket Shipping

And then, we have ePacket shipping, which is available in more than 40 countries for products sourced from China and Hong Kong. ePacket shipping offers affordability and an extra layer of reliability with built-in tracking.

Like FOB shipping, ePacket isn’t always the most affordable. It also isn’t always quick – packages take about two weeks to a month. But it’s reliable and, in many cases, affordable.

Ultimately, you want to look at all your options, the associated costs, and other pros and cons like delivery time, tracking, and more.

Free on Board (FOB) Shipping

Free on Board (FOB) shipping is when the seller records the sale the instant the goods leave their warehouse, while the buyer waits to register the purchase only after they have both received and accepted the shipment at their warehouse, the destination. Should there be an issue with the load, the buyer is responsible for filing a claim for any damages, etc.

This all sounds like the buyer is responsible for shipping costs, and that’s true. But there is a cost-saving benefit here: You can choose the warehouse that offers the most affordable shipping options. This might be because of location, shipping method, or other reasons. Please find out your FOB shipping costs and compare them for each site.

Set Default Shipping Methods

This sorting through shipping costs, methods, and options can be a lot of work. But here’s the easy part: You can customize shipping settings for each supplier.

So, let’s say one supplier offers the best shipping rates via ePacket. You can choose to ship all of their orders via ePacket. However, a different supplier offers free AliExpress Standard Shipping. So, you’ll want to assign that shipping method to all orders from that supplier.

This takes a lot of the manual processes out of it. You can set it and forget it and only check back when you want to reassess your shipping expenses.

This way, orders for those products will automatically be routed most cost-effectively.

Prioritize Countries With Affordable Shipping Rates

Ecommerce is fantastic because you can reach a global audience. There are no boundaries … until you have to ship the products to customers.

International shipping comes with its own set of regulations and requirements – and costs. Shipping fees vary depending on the origin and destination locations.

It’s more cost-effective to ship these products to the U.S. instead of Canada. As such, you’d want to target that geographic location to lower shipping costs.

On your advertising platforms, select the audience in the countries where it’s cheapest to ship. There’s no reason to waste ad dollars on a region you don’t want to pay to ship to.

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