The internet has created a global marketplace, and has enabled almost anyone to become an entrepreneur. Sites like eBay, Etsy, and Amazon provide platforms for people looking to sell even a single item. The storefront, marketing, and so many other components of a business are provided for at minimal, and mostly variable, cost. While many costs in business have dropped, the global market means that shipping, and shipping costs, has become increasingly important. So much so, that UPS and FedEx are both Fortune 100 companies, larger than 99.9 percent of the businesses whose products they are shipping.
Because of this, managing shipping costs is an essential and often overlooked area for small companies. Many small companies are too busy with core elements of their business to give shipping much attention. Yet, with just a small time investment, there are four ways you can seriously save money:
1. Leverage flat-rate shipping
All of the major companies offer flat-rate shipping options (with USPS's often the cheapest). Flat-rate boxes provide benefits to the company (by standardizing numerous elements in the process), and therefore are often a very good deal for consumers. The Post Office, FedEx, and UPS all provide flat-rate boxes that are available for free (which itself can add up to big savings if you've been paying for boxes). Order a couple of boxes of each size from the companies and determine which are the best fit for your business on the basis of cost, shipping time, box size, and other factors. Doing so could reduce your shipping costs by 15 percent and save you time. If you find some of the information about different zones confusing (companies will often charge different rates depending on how far the package is traveling), don't hesitate to call your provider and speak to your account manager. His or her job is to help you figure out the best approach for your shipping needs.
2. Negotiate shipping rates
UPS and FedEx both know that once you start using a specific company and method of shipping, you are likely to use it for a long time, so each company is happy to provide incentives for you to switch. Assuming you are currently using one of the major companies, a few phone calls to the competitor should net you a quote, which may provide significant savings compared with your current rates. Even if you are not looking to switch, the phone call can still offer great value. Mentioning the rates offered by your current provider is great leverage for negotiating a lower rate. Finally, both shipping companies offer discounts based on volume, so as your company scales, make sure to place a phone call and inquire about a reduction in rates. Often, all it takes is asking.
3. Shop around for shipping supplies
Packing supplies, like death and taxes, are one of those miserable realities. The costs add up, and the materials can take up a disproportionate amount of space compared with their functionality. But resigning yourself to the realities of shipping supply expenses does not mean you can't find ways to cut costs. As mentioned above, flat-rate boxes (along with different-size envelopes) are provided free by the major shipping companies for using their service. Another simple idea that saves a lot of money is shopping around. Most people use a company like Uline, not realizing that they can get the supplies for far cheaper. When we started shopping around, we saved almost 30 percent on packing supplies.
4. Shipping refunds
Another way to save some money is rooted in the policies that the shipping companies have. Both FedEx and UPS offer a slew of money-back guarantees. Often this relates to the time of delivery (e.g., "guaranteed delivery by noon"). Roughly 2 to 10 percent of the time (depending on the method of shipping and time of year), FedEx and UPS do not meet their guarantee and you are entitled to a refund. Handling refunds internally requires far more effort than it is worth for a small business. But that does not mean there is nothing you can do. Package auditing companies manage your account and provide refunds in exchange for a percentage of the money recovered. As Izzy Gewirtzman, CEO of RefundTiger.com, explains: "We take all the work out of the process for you, screening all your packages and filing refunds on your behalf. It takes just a couple of minutes to set up, and any payment we receive is a percentage of refund, so it will always be a net positive for you." Some package auditing companies also offer shipping reports and negotiation services, becoming, in essence, a shipping consultant for your small business.
Until teleportation is invented, substantial shipping costs are here to stay, but for many small businesses, a small time investment can reduce the hit to your bottom line.