When starting an eCommerce business, it can feel like you are just there to keep eBay, Amazon, UPS and FedEx in business. They get their cut, hopefully there is something left over for that mysterious thing called “profits”. I have made mistakes by buying the wrong items, and wasted time by using the wrong tools. But nothing cost me more money than doing a poor job of shipping. Here are three things I learned the hard way:
Have Packaging Ready to Go
I started by selling liquidation lots. On a pallet of 50 items, 49 of them would be unique from all the others. This makes for interesting packaging challenges for someone starting out. After having a pile of stuff delivered to my garage, I wasn’t worried about how to ship it, I only worried about selling it. So I took photos of items and listed them as soon as possible.
And things started selling! I was a fledgling success!
Except, I had no boxes. Boxes can be free when you scrounge them from the right places, or cost a few dollars per box online (depending on the size and quantity purchased). But if you take your item to a shipping store, be prepared to pay $8-$20 or more per box.
My exuberance to sell my goods cost me most of my profits in paying retail for packaging. By planning ahead, you can save 300% or more on shipping materials.
Watch The Dimensional Weight
Starting in 2015, UPS and FedEx started charging for items based on the “dimensional weight”. Rather than charging based on how much something weighs, the price normally goes up once they measure the volume of the box. It is easy to find angry mobs of shippers that saw their shipping bills go up 30% or more over night. It is fairly logical of the carriers. They can only fit so many packages on a truck, so that is how they charge customers.
While dimensional weight is a reality that isn’t going away, here are a couple things you can do to ease the pain:
- Don’t get sloppy with box sizes – A giant box that is 75% bubble wrap doesn’t cut it anymore. Find a box that fits your item and the correct amount of fill and padding, no more.
- Check out USPS – USPS didn’t adopt the dimensional model (at least not yet as of this writing in August of 2015). Choose priority for medium sized items, or flat rate for small items.
- Efficient packaging – The pricing changes have spawned advancements in package fill and padding. Find a good fit for your products.
Nickels and Dimes
If you are shipping more than a couple packages per week, scrutinizing everything you are being charged can start to pay off. In my experience, 1 in every 50 of my packages gets lost or damaged. Knowing that, I opt to remove the carriers insurance for most shipments. When that one package goes lost or damaged, I have to eat the cost. But if I have saved $5 on the other 49 or so, it works out in my favor. If you pursue this route, be sure to do so with caution- it might not be for everyone.
Compare carriers to ensure you are getting the best deal. By investing in shipping management software, you can compare with just a few clicks. My favorite is ShipStation*. I have been a customer for about 3 years, and I can’t imagine life as an online seller without it. There are lots of great features (automated pulling and updating of orders across channels among them) but the ability to compare carriers is one of the most important.
Carrier Partner Programs
UPS and FedEx have special rates for members of certain groups or Marketplaces. I won’t list them here since they likely change from time to time, but if you sell on eBay or Amazon, or use Paypal for payments, there may be a way to get 9-13% off your shipping rates. If you can’t find any of those offers, check with the Shipper directly. They may review your shipping volume and be able to offer you something.
Besides the discount rates, you can also save money by opting to schlep packages to their retail store rather than paying for a daily pickup. The practicality of that will depend on shipping volume, proximity of retail stores, and your personal availability, but it might be a good option to save some money.
Keep More For Yourself
Using a these simple principles will help you keep more of what you are making when selling goods online. And isn’t that what it is all about?
*Disclosure: I am a ShipStation customer and this is an affiliate link. If you signup, I get some moolah. So, Thanks!
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