In today’s global digital economy, small business owners are tasked with being able to send their products worldwide without passing too much of the cost to their customers. Handling shipping has to be one of the most, if not the most boring part of running your business, but it is also one of the most important. After all, your customers need to receive what they pay for.
Keeping shipping costs down should be at the top of your agenda. By doing this, your cash flow is increased, and this can help you through troubled times. Although the global economy has improved since 2008, business operators still need to keep an eye on their cash flow, and one of the simplest ways to do this is to keep your costs down and cut where possible.
In a world where eCommerce is booming thanks to the likes of Shopify, Etsy and Prestashop making it easier than ever for anybody to start up their own online retail store, shipping, and other logistical constraints are recognized as being the most troublesome for small businesses.
Shipping Management: 3 Steps to Success
Although you do need to ship your products globally, it’s a pretty straightforward process when you have done your research and have a process in place. Here are our tips to make the task that little bit easier.
1. Decide on a shipping method
First and foremost, you need to decide on a shipping method. There are lots you can choose from and whilst some will be more attractive to customers (e.g. free shipping) you need to consider what this will cost your business. You have three distinct options here:
- Free shipping where you bear the cost. This can work if shipping doesn’t end up being more than 20% of your product’s price.
- Flat-rate shipping where your customers are charged, but it is a fixed cost no matter what or how many things are bought.
- Real-cost shipping where customers are charged the precise cost for shipping their purchase(s) based on size, weight and destination. This may seem attractive, but customers don’t like it and its calculation eats up time.
Most companies opt for flat-rate shipping with the cost depending on the final destination only.
2. Find the right shipping provider
Shipping providers are private companies that have different rates and tariffs, so you should shop around for the best deal possible. How much do they charge you for shipping? What routes do they use? Are these routes efficient? Is there a provider offering the same or similar route at a lower price? Price points will always vary, and they vary from carrier-to-carrier depending on specialties. For example, FedEx is known for global shipping and so international rates with FedEx may be cheaper than with another service, say the USPS or DHL.
3. Try to negotiate
If you use one shipping provider often and are loyal to them, it may be possible to negotiate with them and have your rates discounted. By quantifying how much your business is worth to a shipping provider, use that figure as leverage to get a better deal. It’s not hard to do this—simply work out the average you spend with them each month. This data does take time to collect, however, so as a new start-up it may be a while before you can attempt this. If negotiating doesn’t work then you can always start to move your business elsewhere… unsurprisingly, the shipping provider will probably be quick to try and retain you with a deal!
Shipping Management Isn’t Fun, But It’s Simple
When you take time to consider your options and explore everything that’s out there, shipping management is a lot easier. There’s also nothing wrong with diversifying and using multiple carriers if one offers better rates than others in a certain area such as international shipping.
Over time as you build your company’s reputation and start sending higher volumes of packages out, you will find it much easier to negotiate with shipping providers and get a more favorable rate. In some cases, they may even approach you with discounted rates. You should also always be keeping your eye on other shipping providers to make sure you’re always getting the best deal.