An e-commerce retailer recently saw his monthly shipping costs drop from $120,000 to $80,000, a savings of $500,000 per year. Here’s how he did it.
- He got rates from both UPS and FedEx. Then he used each rate to negotiate better offers from the other one. He kept going back and forth until they wouldn’t budge any lower.
- Next, he implemented shipping software from Shipstation. Using their API, he wrote code that goes out and looks up the daily shipping rates from both UPS and FedEx. It then automatically ships out packages using the best rate for that day.
The following additional tips from real-world e-commerce retailers can help you to lower your shipping costs even further.
General Savings Tips
- Use a rewards-based credit card to pay for your shipping costs. Soon your shipping costs will collect you enough points to fly anywhere.
Tips for Shipping Large & Heavy Packages
- In general, UPS is the cheapest option for retailers dealing with large and heavy packages. This is because UPS has some fixed price offerings above a certain weight. You can negotiate for these rates by opening an account with UPS and after you have achieved a certain monthly spend.
Printer & Shipping Label Tips
- Thermal printers are an online retailer’s best friend. They are faster, smaller and print better. They also do not require ink cartridges, which is big savings. UPS will lease thermal printers for $3 a month. UPS will even give you the thermal sticky paper for free after you reach a certain volume.
- Some retailers prefer buying a cheap laserjet printer. The toners for the laserjets can be ordered for as low as $20 and last several months.
- You can order free labels, boxes, packing slips from UPS, FedEx and USPS websites. All of them will ship these supplies straight to your address. FedEx and UPS also offer non-branded, generic shipping labels that can be used with any shipping company.
- Another printer that is popular with retailers is the Dymo 4XL label writer. It is a thermal printer and works with all the shipping careers. You can order one of these for $150. You’ll need to use Dymo compatible labels with this printer. A box of 12 rolls of these labels can be ordered for roughly $20.
- Another model that is popular among online retailers is the Zebra LP2844 thermal printer, which costs roughly $100 on ebay. A box of 12 rolls with 200 4×6 labels can be had for $65.
- Some retailers have said that they got a free thermal printer from FedEx. This will depend on the volume of business you do with FedEx. So call your rep to find out if you qualify.
- When you achieve some level of volume (spending $1000/month), ask UPS to assign you a rep. One retailer got his shipping costs reduced by $300 a month after working with their rep.
Insurance and Damage Claim Tips
- If you need to file damage claims on insured fragile items, make sure to use packing materials from the shipping company. Sometimes they will try to avoid claims by saying your packaging wasn’t durable or approved. You can get your own packaging approved but it’s a painful process.
Inbound Shipping Tips
- Once you have opened an account with a shipper and received discounted rates, you can use your new discounts for inbound shipping. Have your suppliers bill you 3rd party and now you have cheaper inbound shipping.
Low Volume Shipping Tips
- Sign up for eBay and get 17-20% off retail prices on UPS shipping.
- UPS gives Amazon sellers 37% off but anyone can signup for it – ttps://www.ups.com/mrd/promodiscount?loc=en_US&promoCd=BLTBNQGJ7&WT.mc_id=VAN701346
- One retailer who ships 60-80 packages a month, was able to get the flat rate option from UPS. Under this option, any package that is under 900 cubic inches is $10 flat rate shipping and anything over is $35. The weight limit for both options is 150lbs.
- For small parcels that are less than 1 lb, USPS is often the best option.
Driving to the Post Office & Time Savers
- If you have a UPS driver who drops off regularly at your day job, they will gladly take any and all packages you have to ship out. I always bring my daily shipments to work with me and give them to our driver. Saves time when the alternative is to drive all the way to a UPS store or pay extra to schedule a pick up.
- UPS offers FREE smart pickup for a year when you first sign up. This can be a huge time saver.