For better or worse, consumer demand for fast deliveries has increased over the last decade. Despite optimism from some corners that the COVID-19 pandemic would result in relaxed expectations, the “Amazon Effect” has permanently altered shipping. Small- and medium-sized businesses face constant pressure to match standards set by multinationals, but with a fraction of their resources. Without relying on economy of scale advantages, shipping prices can have a huge impact on margins and overall success. The appearance of “free shipping” offers potential competitive advantage, but not when built-in shipping costs translate to conspicuously overpriced products. Every business should use basic shipping tools to fulfill orders as efficiently as possible.
Why Is Shipping So Expensive?
Countless factors contribute to shipping prices. One of the most surprising drivers of price increases among carriers has been the rise of B2C e-commerce. After the pandemic, there was no going back for many shoppers who had never considered ordering online before. This has changed the “delivery density” landscape for many carriers, whose increased orders are disproportionately destined for random residential areas. When a majority of shipments goes to businesses, service is cheaper because fewer deliveries are needed to empty a truck. With more now destined for private residences receiving one or two packages, emptying a truck requires more stops. As a result, carriers’ average per-delivery expenses have risen, which they pass onto their customers to remain profitable.
Additional, and perhaps less surprising, reasons for high delivery costs are based on simple supply and demand. E-commerce growth has created more competition for the finite amount of space available to carry cargo at any given time. Hiring difficulties across the supply chain, from distribution center workers to truck drivers, have complicated capacity issues even further.
The cost of fuel is arguably both the most impactful and obvious factor in shipping expenses. While prices no longer set records, considering diesel’s average 2020 cost per gallon was $2.55, they’re still relatively high. Drivers and carriers pass the expense to customers as fuel surcharges that are figured into standard shipping rates.
How Do Shipping Tools Help?
Shipping tools help businesses find the optimal balance between delivery service levels and cost. They’re designed to make the shipping process more efficient, resulting in quantifiable benefits for:
- The business, such as a time savings that frees up resources to focus on primary responsibilities
- Carriers, which should be passed onto the customer via discounts off rack shipping rates
- Both, as is often the case with all-in-one business shipping solutions available online
4 Tools for Efficient Shipping
Customers expect fast shipping, but keeping prices competitive while turning a profit requires finding ways to save time and money. The following shipping tools can help, and don’t cost an arm and a leg in up front costs.
1) The humble scale
If your product range is limited, perhaps you’ve already compiled a list of each item’s weight for shipping purposes. For more expansive lines, or if you’re used to shipping several items at once, a scale can be invaluable. Relying on someone’s ability to roughly guess the weight of a shipment is a terrible idea. Many people tend to overestimate the weight of packages to be on the safe side. This is almost like throwing money out the window.
The type of scale needed depends on package dimensions and the ballpark weight range of products. A jeweler may be able to get by with a small desk scale for items weighing up to 10 pounds. A bike shop, on the other hand, needs a floor scale with a max weight of at least 150 pounds. In some cases, having more than one scale on hand is smart. If the bike shop sells small accessories, for instance, maybe a desk scale would also help minimize shipping prices.
2) Label printer
Addressing packages by hand may make sense for owners of small Etsy or eBay side hustles with no expansion plans. Businesses that already have or anticipate having steady shipping needs, though, should invest in a label printer. Label printers help businesses to:
- Save time – Hand-writing addresses is labor-intensive, particularly when more than a handful of orders needs to be fulfilled. A printer speeds up the process, enabling resources to handle more orders or shift focus to something else.
- Market themselves – Batch mailers, for instance to lists of prospective customers, are out of the question without automation.
- Improve customer service – Printers enable businesses to squeeze extra information onto labels, like account, order or promo numbers. Including references like these on the outside of packages can help with returns-processing, issue resolution, sorting, etc.
- Keep shipment records – Some of the software needed to initiate label-printing is more sophisticated than others, but it’s all digital. The most basic technology will leave a paper trail shippers can use to double-check that packages have been sent.
Many general use office printers are capable of printing on adhesive sheets that are precut for labeling. In the long run, though, using them for shipping may not be worth the trouble. Producing usable labels can take several attempts due to positioning issues, and switching between labels and paper is a pain. Ultimately the result is ongoing waste, which defeats the point of using shipping tools in the first place.
3) Shipping rate calculator
Several companies offer free shipping rate comparison tools to help businesses find the best carrier for specific shipments. Most tools are capable of comparing U.S. domestic shipping rates across the major global carriers. Others also make international comparisons and may include rates from smaller local or regional carriers and couriers.
Tools on the following sites may be worth exploring:
4) All-in-one online shipping solutions
Small- and medium-sized businesses now may choose from dozens of all-in-one shipping solutions offered by carriers and independent companies. Depending on the provider, service benefits may include:
- Discounted shipping rates
- Built-in recordkeeping and reporting
- Easy integration with existing fulfillment technologies, like shopping cart, inventory, accounting and payment systems
- Shipment status and location tracking
- Customizable label-making capabilities
- Pre-shipping notification for carriers
- Convenience of cloud-based access
Many providers offer free trials, and some even provide a limited range of services that are permanently free. Read A Guide To Small Business Shipping Solutions for more information about specific carrier and service provider offerings.
Use Shipping Tools to Maximize Profits
Inefficient shipping can rob businesses of competitive advantage, profitability and, ultimately, success. Basic shipping tools aren’t expensive or difficult to implement, and lead to immediate time- and money-savings. Learn more about how to save on shipping in the article Take Advantage of Falling Shipping Rates.
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Shipping tools help save money and time, which has a direct impact on their bottom line.
Labor issues, intermittent transport capacity shortages and a jump in fuel costs have contributed to shipping rate increases. Also, carriers have higher average per-delivery costs following COVID-19 due to an increased percentage of residentially-destined shipments.
At a bare minimum, they should use a scale, label printer and shipping cost comparison tool. All-in-one online shipping solutions should also be considered as fulfillment needs grow.