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“Efficiency is doing things right; effectiveness is doing the right things.”
-Peter Drucker

Shipping Costs & Your Bottom Line

While trying to keep costs low and profits high, your small business will implement efficiency measures to save time, money and hassle. One element of your small business that you should further examine is shipping.

You’ll find out that your true shipping costs boil down to more than just destination and weight. All elements of shipping costs have an effect on your bottom line. Statistics can help put things in perspective. According to Kissmetrics, an analytics and marketing blog, 28 percent of shoppers will abandon their cart due to unexpected shipping costs.

Here are a few ways to make sure your shipping costs stay low to keep your profit margins high.

Understand Rates

As of this week, the United States Postal Service is lowering shipping rates across the board. An exigent surcharge that was put in place in January of 2014 expired this week leading to the rate reduction. The surcharge was put in place after the Post Office took record loses due to the Great Recession. The losses were recouped thanks to the surcharge, which is why the rates have been reduced.

It would also be beneficial to small business owners who handle their own shipping to get a better grasp on rates like DIM (dimensional) weight charges and how to avoid them. Although the charges may seem small, they add up. This article gives a good overall explanation of the DIM rates.

When you get a better grasp on what you are truly paying for when shipping your product, it is best to compare the different shipping providers available to you.

Do Your Research

You, the small business owner, have negotiating power. Do your research on the rates between different shipping providers. These providers like DHL, UPS and FedEx are well aware of their competition and often times will work with you on rates to get your business. The more you ship, the lower your rates can be.

Depending on what type of business you run, you may be a part of trade organizations. It is in your best interest to see if membership in these trade organizations can get you discounts on not just shipping services but other services as well.

The actual source of your packing materials you use to ship your items has an impact on your shipping costs. Compare websites such as ULINE, Paper Mart and Nashville Wraps, an eco-friendly wholesaler, to look for the most cost-effective shipping materials.

Consider Fulfillment

Understanding shipping rates, knowing where to get the most cost effective materials and knowing when to use discounts are all ways to keep shipping costs low, but another way that wraps all of these things in one (excuse the pun) package are fulfillment services.

Just like IT and bookkeeping, shipping can also be outsourced. If you determine that fulfillment is right for your business, you can save time, money and space. As you would when considering contracting out to another company, do your research. Some of the most popular fulfillment services include ShipBob, RedStag and ShipWire.  Contracting out services in which you are not an expert grants you more time to focus on the core areas in your business.