Despite the increasing availability of same-day and instant delivery, more than 50 percent of consumers choose delivery options based solely on price and 20 percent prefer the cheapest available home delivery option, according to a recent McKinsey study. Consequently, regular parcel delivery (delivered several days after the order) should continue to play a major role in your ecommerce strategy.
With narrowing profit margins, the basic cost-saving tactics for parcel shipping—choosing the smallest and lightest packaging, using USPS First Class Package for everything up to a pound, negotiating rates with carriers, and using an advanced postage system—may fall short. It’s time to get creative with automation strategies and delivery options with world-class parcel shipping software.
The following 6 tips can help North American retailers minimize your parcel shipping costs and keep those profits flowing
1. Use a Cloud-based Shipping Solution
An automated, cloud-based shipping app enables you to quickly and easily compare shipping rates, print shipping labels, send customer confirmations, leverage discounted carrier rates, track shipments and streamline returns. Automation drives costs down.
2. Rate Shop Every Shipment
Save money by comparing rates and delivery times for every shipment, interactively (one order at a time) or in bulk (using automation rules in the shipping system). Rate shopping capabilities with real-time pricing transparency combat the unpredictability of shipping rates and surcharges.
3. Choose the Right Pricing Model
Free Shipping: To avoid cutting into your profits, free shipping works best for high-margin items and low-shipping-cost items. A minimum sale to qualify for free shipping helps balance out shipping costs with higher profits.
Flat Rate Shipping: Based on the average cost of a package, this is the best option for retailers shipping commodity items of a similar shape and size; pricing can reflect either order totals or weight ranges. With the right formula, you can come close to covering your actual shipping cost.
Exact Shipping Costs: Shopping carts make it possible to set up real-time shipping quotes. Ideal for heavy or oversized shipments, customers pay your actual expected cost, sale by sale.
4. Take Advantage of Less Than Truckload (LTL) Freight for Oversized and Bulk Shipments
If your buyers aren’t motivated by delivery speed, you could save more than 50 percent (compared to parcel shipping costs) using LTL freight for shipments too big or expensive for parcel shipping.
5. Consider Hybrid Last Mile Delivery
If speed isn’t an issue, hybrid services like FedEx SmartPost and UPS SurePost can cost significantly less than standard FedEx and UPS delivery options if you meet size and dimension requirements. Packages originate with FedEx or UPS but go to a United States Postal Service (USPS) sorting facility for delivery to the customer.
6. Streamline Shipping with Automation Rules
If you ship multiple parcels every week, shipment options can be pre-programmed in your shipping platform to save you time and money. Automation rules ensure the smartest (or cheapest!) shipment every time.
How Can Descartes Help
Descartes ShipRush™ helps small-to-medium ecommerce businesses and omnichannel retailers manage parcel, freight and LTL shipping efficiently and cost-effectively:
- Import orders from more than 70 carts, marketplaces, and CRM/accounting systems
- Compare real-time, side-by-side carrier rates and delivery dates from one central rate dashboard
- Print shipping labels for FedEx, UPS, USPS, and other major US and global carriers look up and track orders from any web browser
- Get discount postage: up to 60% off base USPS rates, and FedEx savings up to 21%
While shipping innovations such as drones may someday become a routine method of fulfillment, for now, automate, evaluate all fulfillment options, listen to your customer’s budget and delivery needs, and continue to use parcel to help keep shipping costs in line.