How to Reduce Shipping Costs for SMEs
Some of the most common questions you will receive as a businessperson are related to shipping. Without realizing it, shipping costs can influence consumers' decisions about whether to buy your product or not.
Ecommerce research group Baymard Institute found that nearly half of online shoppers abandon their shopping carts because of additional costs, such as taxes and shipping costs. While you can't change the tax price of a product, there are several ways you can reduce shipping costs.
Why are shipping costs so high?
Sending a product to consumers is a complicated process and requires a lot of costs, resulting in high prices. This happens because there are invisible factors, such as labor, fuel, package weight, package dimensions, and value.
One of the challenges faced by SMEs is shipping costs. This process is quite troublesome, because once the order comes in, you are only tasked with making, packaging and sending the product to the expedition. After that, everything was out of control because delivering the package on time in good condition was the expedition's responsibility.
You need to remember that shipping costs are the costs used to send goods to consumers safely. Some of these are boxes, ropes, stickers, labor for packing, courier costs for picking up and sending goods, and if there are import and export costs when shipping internationally.
How to reduce package weight
When it comes to sending packages to consumers, weight is money. The larger the package, the more expensive the shipping costs. Even if it's only worth a few hundred or thousand per package, think about how much a package would be worth for hundreds of orders.
Therefore, make a light package. This is done to reduce shipping costs, and increase profit margins. To reduce the weight of the package, you can do several things, namely:
1. Make a wavy box
Corrugated boxes are a type of packaging that is stronger and lighter than ordinary cardboard boxes. This is because corrugated boxes have small air-filled grooves between the inner and outer layers of the box.
2. Use light materials
The aim of choosing packaging material is to ensure the product is safe and reduce weight. There are so many types of package materials, ranging from heavy to light. Several light materials for wrapping packages, such as packing paper, bubble wrap, and foam cloth.
3. Design your own package
The more the package fits the shape and size of your product, the less material you will need for the package. This way you no longer need to worry about supporting materials, because the product is already in safe and suitable packaging.
4. Use packaging of the right size
When thinking about cutting shipping costs, one thing you can do is change the package packaging. In the shipping process, you also need to pay attention to how the product is packaged. It's easy to use packaging that is slightly larger than the actual product you are shipping, but this can add to shipping costs.
Do research on how your product is packaged. Start by measuring your products, and find out how many products are typically shipped at one time. This will help you see what size packages are usually sent.
5. Try using a flat-rate system
Regardless of weight, shape, and size, flat-rate charges will only be one and the same rate. The immediate benefit of flat-rate is that you have converted variable costs into fixed costs. For example, if you plan to send 10 packages within a specified weight range, you already know exactly how much it will cost.
6. Know the prices
To avoid losses, always monitor changes in shipping costs. Freight forwarders will review their rates annually. This is due to higher costs, such as labor and fuel. New fees will usually be implemented at the beginning of the year in January or throughout the year. Therefore, always monitor the shipping expedition, and see how much difference it makes.
7. Offer self-pickup
The final way to reduce shipping costs is not to use a courier service. At the start of the Covid-19 pandemic, support emerged between the community and SMEs. People are starting to buy products from SMEs for daily needs, including hampers for people they give to them during the holidays.
This phenomenon produces new habits. Merchants directly deliver orders to consumers, or allow consumers to take orders to your store. This delivery and pickup can save you costs.
Apart from that, both can help you connect with consumers, make it easier for consumers to shop for your products, and ensure there are no delays. These things can build consumer loyalty to your business.
There's no doubt that shipping costs can quickly eat into profit margins. By reducing shipping costs you can increase purchases quite significantly in terms of sales, time and resources.
Company executives must know the flow of goods and materials from before they enter the company until the goods reach consumers. This of course involves a delivery process that can be understood in the Supply Chain management program so that it can produce value for producers and consumers.
