How to lower your delivery costs when you are a start-up / have small volume?
When setting up an ecommerce site for your business, there are many factors to consider. Delivery and the choice of partner is probably a consideration at the end of this process, however getting the right price for your shipping can be a huge determining factor in your overall profitability.
When you are a start-up, you have little leverage with the carrier community because volumes are initially small and you don’t have a lot of bargaining power, however paying ‘rack rate’ for your shipping will make your products uncompetitive against bigger competitors. So what do you do?
1. Consider your proposition carefully
Do you need to send everything on a fast, express service or can you afford to reduce speed and look at some slower (more economical services)? These slower offerings are generally more sustainable if we are comparing road vs air so it has the benefit of lowering your carbon footprint as well as saving money.
2. Returns
As with outbound there are now also many options regarding returns - can you slow the service down a bit, or even consolidate with other parcels in a central location to really reduce costs? In some cases it’s worth considering - what the value is in even sending the product back, do some items cost more to return than just to refund?
3. Packaging
Be militant about your packaging. The bigger the box – the bigger the carrier charge so taking care to minimise your packaging is not only good for the environment but it’s also good for your P&L. If you have a lot of bulkier products, try to find a carrier that charges on the weight of the item (dead weight) rather than the volumetric measurement of the box – as this can be an unforeseen issue if all of the parcels are volumising when they hit the carrier’s depot.
4. Re-sellers
If you are a market-place with multiple stock points spread out over a big area, then you are generally restricted to using an Express carrier as not many carriers have the first mile depth to pick up everywhere and deliver everywhere. However, there are many re-sellers of Express in the market. That could be a good place to start, as they will generally be able to get a start-up better rates than a start-up on their own.
5. Parcel Integrators
If you have just a few collection points, or ship from a warehouse only, there may be more options open to you. Consider parcel integrators who collect from a number of retailers daily and combine the volumes to the various destinations in order to offer a lower door-to-door rate.
6. Drop-off
Parcel drop-off points are gaining huge momentum in the market – it’s possible that you could access some lower rates if you are able to get your shippers / stock points to drop into a local drop-off network.
7. Using Shipping Software
Many carrier management systems (that generate carrier labels) are often carrier agnostic but some recognise the challenge of being able to get competitive rates and include pricing for retailers to access as part of their package.
8. Innovation through sustainability
As many companies look for environmentally conscious solutions - there are some interesting sites popping up globally to address the challenge of ecommerce delivery. For example, Roadie is a new delivery service in the US which taps into unused space in passenger vehicles. This crowdsourced delivery model accesses vehicles already on the move and utilises spare storage to deliver a range of goods. Or maybe Zedify in the UK which is using pedal power to deliver in major cities around the UK - and offering some really great pricing in the process.
By implementing one or more of these strategies you can effectively manage your operational costs. Remember to keep looking at the topic and revisiting opportunities because as your volume grows, more options will become available to you.
If you need more help and support on this topic we have extensive experience and networks already in place, so please don’t hesitate to contact us at carriboo
