If you are a low-volume merchant struggling with budgetary demands, reducing operating costs without sacrificing quality is always a priority. But, did you know there may be cost reductions hiden in your shipping procedures? Think that just because you are a low-volume merchant, your carrier negotiating power is reduced? Well, this is simply not true. Shipping is a key cost factor for businesses that ship products or receive boxes, packages, materials or merchandise. With a little planning, these costs can be reduced.
Here are thRee ways your company can cut shipping costs!
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Conducting Regular Parcel Audits
Did you know that 5-10% of a carrier invoice contain errors? Common mistakes happen simply because of the amount of human interaction that is still a part of the shipping system. Many carriers like FedEX and UPS provide contractual delivery guarantees, which states: every time a package is delivered late, the merchant and/or shipper, is eligible for a refund (often a complete refund) for shipping charges. Even though these carriers are rarly late, they are hardley ever held accountable for the refunds. While the refund claims process can be intensive, it is worth following up to recoup those refunds. You should regularly perform audits on your carrier invoices for errors. If you don’t have the staff to perform the audits, there are companies that will perform this service for you which are paid a percentage of the savings they recoup. There are also companies, like LateShipment.com or Refund Tiger that will automate the tracking process for you and track which shipments that are late and eligible for a refund.
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Compare
You should analyze your company's unique shipping requirements. Often times you may be paying a higher shipping rate for expedited shipping when another service may be able to get your products to their desitnation within the same timeframe, but at a reduced cost. Figure out what level of service and terms will be most beneficial for your company and evaluate shipping proposals accordingly. Different carriers are better for different requirements. Don’t make the mistake of overpaying for shipping because you chose the wrong shipper.
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Negotiate
It is always smart to rate-shop between carriers regardless of your shipping volume. The default rate quotes provided by carriers for shipping is not what you should actually pay. Usually that price is something that can be negotiated against. Even if you don’t have large shipping volumes, you should always speak directly to a representative and negotiate a much better rate. You can start by directly asking for a lower rate and any discounts available to you.
There are a few tactics you can add to your arsenal. If you are willing to lock into an annual contract, you will gain negotiating power. If you are going to be growing, discuss projected shipping volume strategies. And don’t be afraid to mention other carriers that offer a better rate and/or service. The carriers are often very competitive with each other and may end up offering deep discounts. Additionally, look into your industry’s professional association. They may have a partnership with a carrier that offers pre-negotiated group discounts.
Shipping is a cost burden, but there are always ways you can add money back into your bottom line. Before you look at carriers, make sure you are aware of your company’s individual shipping needs and challenges and adapt your shipping plans accordingly. Then, look for ways to negotiate a better rate with a potential or current carrier. Once you’ve negotiated a contract, continue to be vigilant. Audit your invoices to ensure you are receiving agreed-upon discounts and terms. If there are discrepancies, challenge them. The process of shipping both inbound and outbound is complicated and there are many opportunities to cut costs.
Once you secure the best way to reduce costs through your carriers, take it a step further. Not only can you reduce your shipping costs through the carriers, but you can what you ship your products in can have a significant impact on your bottom line as well.