If you’ve recently opened an online store or are planning to do so, you will have no doubt noticed that shipping packages is a key part of your business.
The cost of sending packages is something that can make or break your e-commerce operation. That’s why it requires strategic vision, both before you start your business, and once it’s up and running.
Old hands at selling online will know this already: lowering the cost of shipping is a real challenge. Which is why we’ve put together this short guide to help you.
Low-cost shipping: the differences between traditional e-commerce and dropshipping
Today, we’ve going to explain the key differences between low-cost shipping methods for two e-commerce models: traditional e-commerce and dropshipping [you can find our complete guide to dropshipping here]
In traditional e-commerce, you manage your own warehouse and with it shipping too. So shipping cost-effectively means picking your couriers strategically: understanding which are cheapest for a given type of shipping, agreeing preferential rates with couriers, etc.
Dropshipping, on the other hand, is an online sales model that’s fast and streamlined. As the retailer, you just focus on driving sales and running the online store: managing the warehouse, stock and shipping is outsourced to a supplier.
So, to get cheap shipping in dropshipping, you need to work with your suppliers. Let’s see how.
Cheap shipping with dropshipping
To get cheap shipping for your dropshipping e-commerce business, the first thing to do is pick your suppliers carefully: when choosing, make sure you take into account their shipping rates. Our advice is not to go with a single supplier, but to have a pool of trusted suppliers from which you can choose for each shipment, based on the rates and shipping methods they offer.
A good strategy is to negotiate better shipping rates with your supplier. For example, by committing to a minimum monthly purchase or helping the supplier to crack a new market, you might convince them to cover part or all of shipping costs.
So, to get low-cost shipping with dropshipping:
- Assess suppliers based on their shipping rates.
- Make sure you can draw on a selection of different suppliers; don’t rely on a single supplier.
- Negotiate preferential rates with your suppliers by offering them benefits in return.
Identify in advance countries that are cheaper to ship to
Another strategic action you can take for low-cost shipping – whether you have a dropshipping or traditional e-commerce operation –is to work out where it’s most cost effective to send things.
If you’re shipping outside of the UK, costs will change depending on where the package is going, how it’s being sent and the firm carrying it. Strategically speaking, before you start, it’s important to know the cost of sending a package to each country you plan to sell into.
Once you’ve found out the cost of sending a package to each country, our advice is to concentrate your efforts on countries that offer you the best margins. This may involve investing in local advertising and linguistic localisation, for example. And, of course, you should avoid shipping to countries where your margin is none or negative. Your e-commerce platform should let you select the countries from which it’s possible to purchase your products. Remember to do this, making sure to also remove countries that aren’t financially viable to ship to.
This means that you should structure your e-commerce and advertising efforts based on shipping profit margins. It’s pointless wasting resources on countries that aren’t profitable to ship to!
To summarise, both in traditional e-commerce and dropshipping:
- Work out the cost of sending a package to different countries.
- Invest in advertising in countries with lower shipping costs and higher profit margins.
- Prevent shipping to countries with no or negative profit margins.
Low-cost shipping: get an overview of couriers and online services
If you’re running a traditional e-commerce business, you’ll have to work with couriers to get cheap shipping: this means choosing the cheapest, understanding the pros and cons of different shipping methods and negotiating rates.
Before starting your e-commerce operation, you need to get an overview of courier companies. This is extremely important for properly deciding which couriers to choose for which type of product.
To get started, here’s a list of the main couriers operating in the UK:
- Royal Mail. Although not strictly speaking a courier service, the Royal Mail is a major player in the UK thanks to the reach of its network.
- Bartolini. Denominato anche BRT, è il corriere leader in Italia.
- TNT. An international courier with a good presence in Britain.
- UPS. One of the world leaders in shipping and renowned for its reliability. It has a strong presence in the UK and specially designed services for e-commerce.
- DHL. One of the best known international couriers that even has its own fleet of aircraft. With rates on the high side, it’s generally not a great choice for e-commerce.
When comparing shippers, you should take into account the different variables that can significantly affect the cost of shipping. By doing so, you’ll find the shipping services most suited to the needs of your e-commerce business.
Here are some of the variables to take into account for low-cost shipping:
- The weight of your shipments. Prices for shipments vary substantially over a certain weight. Make sure that your parcels weigh as little as possible by using lightweight but strong packaging.
- Shipping times and methods. Longer shipping delivery times do not always mean lower costs. Carefully weigh up the costs and benefits of each courier’s offering.
- Insurance and tracking. Insuring or tracking a package can be worth it for products above a certain price point.
- Remote areas. For some remote areas that are difficult to reach, couriers charge higher rates. These areas can vary from courier to courier.
Negotiate preferential rates with couriers
To work out how to get low-cost shipping, don’t just search the internet. Once you know your shipping volume and the methods you want to offer your customers, our advice is to get in touch with different couriers – including by phone – to see if there is room for negotiation and to request a personalised quote.
Obviously, the more packages you send, the more likely you are to get a preferential rate. If you are a small e-commerce business, it might be worth partnering with nearby stores on shipping to get better rates from couriers.
Low-cost shipping: choose the cheapest courier each time
Here’s one last piece of advice for minimising your e-commerce shipping costs. Don’t always use the same courier – make sure that your goods are always sent the cheapest way possible.
Identify at least three or four of the cases that most of your shipments fall into. For example: 1) Shipments to the UK. 2) Shipments to the EU. 3) Shipments to remote areas in the UK. 4) Shipments over 10 kg. For each of these cases, identify the courier that offers the cheapest shipping.
Most e-commerce platforms can be set up to ensure that orders are automatically sent using the cheapest courier.
What’s your experience with low-cost shipping?