Staci Americas Blog

How Small Shippers Can Save on Parcel Shipping Costs

In the same way that Isaiah Thomas (5’9”) and Earl Boykins (5’5”) succeeded in professional basketball without being big, small to mid-sized merchants are finding ways to win in the parcel shipping game without the benefit of large-volume buying power.

Robyn Meyer, Vice President of Solutions at Transportation Insight, recently joined host Chad Warzecha on the Unboxing Fulfillment podcast and shared key strategies smaller e-retailers can use to save on parcel shipping costs. Check out her tips below.

 

Influence Customer Behavior to Lower Shipping Costs

parcel shipping costsHow can e-Retailers influence customer behavior and lower shipping costs, you ask? It starts with the data, says Meyer.

By looking at how much is being paid out to parcel carriers, shippers can determine areas of the country where shipping is or isn’t profitable and then direct marketing to affect one of two changes:

  • They could increase marketing in areas where shipping has a high cost per order. Meyer says that can drive profitability by drawing more shipments to that area, thereby lowering cost per order.
  • They could increase marketing to areas with a low cost per order to make those areas even more profitable.

One small to mid-sized shipper that Meyer’s company works with is doing this. She says they have someone from finance that looks at parcel costs per order and per week.

“Even before they receive parcel invoices, they're able to determine what they have paid out or what they will be paying out,” says Meyer. They’re using the data to determine the profitability of shipping to different areas and even how different SKUs impact rates and accessorial charges. Marketing uses the insights to decide what products to promote and where.

 

Let Historical Data Guide Cost-Saving Shipping Moves

"You can't move a customer,” Meyer points out, but data can reveal cost-effective ways to move their purchases to them. She gave one example where the data directed an e-Retailer to rethink a knee-jerk decision regarding shipping during the checkout process.

The client’s e-commerce site provided a number of shipping options that included pick up at a partner location. Traditionally, the merchant had taken the logical route of listing closest locations first. The problem was that the closest options weren’t always the most profitable shipping options. Using data on carrier charges, the seller started offering customers locations with the lowest shipping costs. It was a small move with big benefits that didn’t detract from the customer experience.

 

Take Advantage of the Shipper’s Market and Negotiate

Smaller brands with smaller volumes who think there isn’t much they can do to lower shipping rates should think again. “There's an advantage to being small in the market that we're in today. If any shipper has listened to UPS or FedEx earnings calls over the last 12 months, they’ve heard both carriers say out loud that they are focused on SMB business,” Meyer says.

As a result, the carriers are getting much more competitive in the small shipper environment. Small shippers should leverage that advantage with UPS and FedEx to negotiate discounts and the best rates.

Small shippers also have the opportunity for diversification with the regional carriers who, Meyer says, are more willing to pick up smaller volumes than before the pandemic. She observes that the regionals have adopted the UPS-FedEx model where they'll pick up less than 100 packages from a distribution center and deliver it within a certain radius.

Alternative carriers that are locally set and regionalized add to the plethora of opportunities for small shippers to negotiate services and discounts in today’s competitive market.

 

Optimize Packaging to Garner the Lowest Rates

Warzecha and Meyer agree that one of the easiest ways to minimize parcel costs is optimizing packaging design. Meyer stresses that shippers need to understand whether they are shipping air and how they are consolidating their SKUs. This has a huge impact on their cost to serve.

During the eCommerce boom, many small and mid-sized sellers were rushing to get products out and add new products to take advantage of opportunities, and it’s led to inefficiencies. Meyer says, “They've not really analyzed how those specific products are impacting their surcharges, their fees and their accessorial charges. Many are overdue for an audit of their processes.”

Her suggestions for shippers include reducing the number of box sizes used. The time associates spend matching the SKU to the prescribed box and walking around to find the right box reduces efficiency. “Do you really need 30 boxes for your SKUs or could you wrap it down into 5 to 10 boxes and a polybag?” she asks.

Polybags are an outstanding option for reducing total package weight and shipping price. Staci Americas has seen the benefits in many eCommerce customers’ shipping costs and in the efficiencies polybags create in the fulfillment process.

 

Parcel Shipping Offers Big Opportunities for Small to Mid-sized Merchants

With shipping making up 65% of the cost of fulfillment, small and mid-sized e-Retailers must control costs in this area to effectively compete.

The good news is that, if you have access to the data and some basic analysis skills, there are endless ways to tweak and perfect your parcel strategy and save on parcel shipping costs. continuous, though.

Talk to parcel shipping pros at Staci Americas to learn how we’re helping small to mid-sized merchants step up their game in this arena.

 

 

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