7 Tips for Reducing Your Shipping Costs The simple task of sending and receiving goods can be one of the most expensive and often overlooked aspects of a business.
By Peter Gasca Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
One of the biggest challenges for new entrepreneurs is the unexpected and often overlooked costs of shipping. This not only includes costs associated with shipping products to customers but also the costs of having supplies shipped to you.
Of course, there are many responsibilities that require the attention of new entrepreneurs while launching a business, and any number of ways to reduce costs in other aspects of the business. Shipping, however, can account for as much as 25 percent of your overall costs, so why don't more entrepreneurs dedicate resources to managing it?
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What many entrepreneurs do not know is that a small investment in time can result in huge savings and even make business easier on you. Here are seven tips entrepreneurs can use right now to help get control of their shipping expenses.
1. Get acquainted with your representative.
Every major carrier, including FedEx and UPS, have representatives around the country, even in remote and rural areas. The job of these reps is to negotiate rates, answer questions and make the shipping process as comfortable as possible for entrepreneurs.
Of course, reps are sales agents, so their goal is to get you to ship as much as possible. The more you ship, the more they benefit. With that said, our FedEx reps were crucial in the growth and success of our first company, all because we leaned on them for information, resources and help.
2. Leverage flat rate shipping.
All major shipping companies offer flat rate options, which are great for standardizing the process and helping ease the variability normally associated with shipping costs. USPS, FedEx and UPS all provide flat rate boxes for free, which in itself is a huge savings.
Shipping companies set flat rates by zones, or distances the package travels. If you find information for different shipping zones confusing, be sure to speak with your representative and understand and compare the pricing before you decide to use them.
3. Negotiate shipping rates.
Carriers know that once you start using a specific company for shipping, the inconvenience and cost to switch will keep you a customer for a long time. For this reason, companies will provide incredible incentives to secure you as an account -- you just need to ask. They will also help you with the process and even subsidize the costs of switching if you are already using another company.
Even if you are not looking to switch, it is always a good idea to price compare once in a while and determine what the competition is offering. Rates, benefits and even technologies change, and if you have a good relationship with your existing rep, you should be able to renegotiate any new benefits into your current agreement.
Finally, both FedEx and UPS offer discounts based on volume, so as your company scales, make sure you communicate these changes to get better rates. Again, all it takes is asking.
4. Use their equipment.
Most major carriers, such as FedEx and UPS, can and will provide software and equipment for your company, including computers, printers and scales. Depending on your volume and what you negotiate, many will provide it at no charge or find grant money to help subsidize the costs.
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5. Manage your supplies.
Packing supplies, like death and taxes, are one of those miserable realities for entrepreneurs. There are large and incredibly effective companies that focus only on shipping supplies, such as ULINE, which can typically ship within a day, provide customized volume discounts and even provide incentives for large orders.
A little time and research, however, can lead you to smaller companies that will bend over backwards to get your business.
Yonah Rothman, sales director at Complete Supply USA, says, "We find that most entrepreneurs default to companies like ULINE, not realizing they can get the general supplies for far cheaper. When we tell them we can provide the same supplies at a 25 percent discount, they cringe at how much money they've wasted."
Lastly, packing supplies, such as bubble wrap, are expensive to ship (you are, after all, shipping air) and can take up a disproportionate amount of space compared to their functionality. For this reason, look for partners who can provide equipment to make the packing supplies directly in your facility. Most will even subsidize the cost and installation as long as you agree to purchase the supplies from them.
6. Consolidate your accounts.
Because shipping rates are often based on volume, it benefits you to ship as much product on your account as possible. This includes incoming shipments of supplies and raw materials. When possible, ask your vendors to ship product on your account, which many will do. This also eliminates any markup you may be paying on that cost.
Be careful, however, as many shipping companies require payment within 15 days, while your vendors may provide longer and more flexible terms.
7. Seek out shipping refunds.
Another way to save some money is in the on-time shipment guarantees provided by large carriers, including FedEx and UPS. While shippers are incredibly effective, roughly 2 to 10 percent of the time, depending on method of shipping and time of year, FedEx and UPS do not meet their guarantees and you are entitled to a refund.
Many of these refunds go unclaimed. Package auditing companies, such as Refund Tiger, can manage your account and provide refunds in exchange for a percentage of the money recovered.
As Izzy Gewirtzman, CEO of Refund Tiger explains, "We take all the work out of the process of screening your packages and filing for refunds. It takes just a couple of minutes to set up account and our fee is a percentage of what we save you -- if no refunds are processed, you pay nothing. It will always be a net positive for entrepreneurs."
In addition to refunds, package auditing companies offer valuable shipping reports and assistance with negotiating.
Shipping will continue to be a significant business cost so long as the Internet continues to enable aspiring entrepreneurs around the world through platforms such as Amazon, eBay and Etsy. For this reason, new entrepreneurs -- and many experienced entrepreneurs -- should prioritize their shipping functions to find serious savings and benefits.
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