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Scrutinize your operating budget and you may discover that shipping expenses — ever present and necessary for obtaining inventory and delivering products to customers — are squeezing your bottom line and cutting into profit margins. Taking some time to trim those costs may offer significant opportunities for savings.
Comparison shop and negotiate
The biggest names in the shipping industry — UPS, FedEx, DHL, and the U.S. Postal Service — aren’t the only games in town. And because they all compete with each other, it’s wise to shop around for the best price. If you ship large volumes of merchandise, you may find that some shippers are willing to lower your costs. Generally speaking, pricing schedules are based on volume. The more you ship, the lower your rate.
Shipping account number
Ask suppliers to use your shipping account number. This approach has two major advantages. First, it tends to increase the shipping volume on your account, which can lower your overall rate. Secondly, it can also keep vendors honest. For example, if you ship via FedEx, request that the supplier use your FedEx account number, so you can check online to verify actual shipping expenses. Include this requirement with each purchase order and your suppliers may not be tempted to pad their delivery invoices.
Shipping is expensive. Fuel surcharges, recipient signature fees, and extra charges for Saturday deliveries are common. Your pricing should reflect those costs. If you’re selling online and can’t afford to offer free shipping, consider increasing the price of your products to cover delivery expenses. Buyers may balk at paying $8 to ship a $15 item, but may be willing to spend $3 for shipping to obtain a $20 product. Your company garners the same sales revenue either way.
Slash packaging expenses
Your customers will gladly inform you that shipped items were damaged in transit, as they should. But ensuring that your products arrive in pristine condition requires well-designed and costly packaging. How can you reduce packaging costs? Consider using packages provided by your carrier. You won’t run afoul of their size regulations or end up paying “dimensional fees.” Order several boxes of each size to determine the optimal packaging for your needs. Other options that may work for you include recycling previously used containers or shopping online auction sites for inexpensive packaging materials.
Shipping costs will likely always be a part of your company’s expenses, but implementing a few of these ideas may reduce your bottom line.
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