How to Reduce Shipping Costs of Your Shopify Store
Zeynep Avan
Don’t Panic If Shipping Costs Are Eating Into Your Pocket! Rescue Solutions for Your Shopify Store!
Shipping costs can significantly affect the profitability of your Shopify store. Reducing these costs can help you increase your profit margins and attract more customers.
In the world of e-commerce, shipping rates can be a monster, eating away at your profit margins.
Fortunately, there are ways to tame this beast and reduce shipping costs of your Shopify store. In this blog post, we’ll explore tips and tricks to help you escape the beast’s claws and save money on shipping.
Understanding Your Current Shipping Costs
Before anything, you need to know your current situation. By analyzing shipping data, you can better understand the shipping costs and develop strategies to reduce them.
Analyzing shipping data from Shopify Analytics
Shopify Analytics offers detailed shipping data, allowing you to analyze past orders and identify the key factors driving your expenses. This data lets you assess how factors like weight, destination, service, etc., most affect your expenses.
With Shopify Analytics, you can see past orders and detect the factors (weight, destination, shipping service) that drive your costs the most. This way, you better optimize your strategy. You can see how different shipping methods (e.g., standard vs. expedited) affect your costs and compare them. Imagine offering free shipping on heavier items or negotiating better rates for places you ship to a lot. Analyzing different shipping methods also helps you decide which ones to offer and for what price.
Also, with this data, you can categorize shipping costs according to customer location or order value. This can help your shipping strategy be tailored to different customer segments, like offering flat-rate shipping for nearby locations or high-value orders.
Plus, by comparing shipping costs to your revenue, you can identify orders where shipping eats into your profits. This might prompt you to adjust pricing or set minimum order values. Lastly, with this data, you can track shipping costs over time to see if there are any seasonal trends or changes in carrier rates. This allows you to know the trends and proactively adjust your strategy and pricing.
Identifying Cost Drivers
As we briefly mentioned above, you can see what factors like weight, destination, and chosen shipping service are having the biggest impact on your bottom line by analyzing past orders.
By understanding how these factors influence your shipping expenses, you can pinpoint opportunities for savings, such as offering free shipping on heavier items (which may not actually cost that much to ship) or negotiating better rates with carriers for frequently shipped destinations.
With this kind of inside info, you can transform your understanding of current shipping costs from a foggy picture to a clear plan.
Choosing the Best Shipping Carrier for Your Store
Choosing the best shipping carrier for your Shopify store is like finding the most fuel-efficient car for a long road trip (in a world where we don’t have electric cars). It really affects how much you spend on getting your products to customers.
Comparing Carrier Rates
Different carriers offer different prices based on your package’s weight, size, destination, and how fast it needs to get there. By comparing rates from various carriers, you can find the most cost-effective option for each shipment.
You might offer free shipping on heavier items because you found a carrier that gives you a great deal or negotiate even better rates with a carrier you use frequently, so accordingly, you might offer attractive deals to your customers.
Using Shopify Shipping Discounts
Shopify offers many opportunities to businesses. For example, it has a program that allows businesses to offer discounted shipping rates to their customers.
Discounted shipping rates can be based on different factors, such as order value, shipping carrier, etc. As a business, you can choose the criteria and offer your customers a beneficial option to increase sales.
Benefits of Shopify Shipping
Shipping can even be a reason to abandon a cart. If there is a good deal, it might even encourage customers to proceed with a purchase they aren’t so sure about.
Shopify offers services and apps in the Shopify app store that can help you with shipping, such as Shopify Credit, which allows you to earn cashback on shipping labels purchased through Shopify Shipping.
You don’t have to talk to the carriers; Shopify does it for you and negotiates discounted rates with carriers like USPS, DHL, etc. And you can pass these rates on to your customers. These discounts can be significant, reaching up to 88% on some services.
Don’t worry; calculating the costs and rates is not a big deal since Shopify guides you thoroughly and even offers a calculator that helps you see if you are eligible for discounted shipping rates.
You can also create promotions that offer free shipping to customers who meet certain criteria, like reaching a minimum order value. Who doesn’t get confused when they see “Add $10$ to your cart for free shipping”?
It’s better to spend money on products—even if it is more than the shipping fee—than on shipping. By offering discounted shipping, businesses can incentivize customers to buy more products or spend more money.
Shopify Shipping is designed to make shipping processes more manageable and cost-effective, which is good for every business, especially for small and medium-sized businesses.
How to Set Up Shopify Shipping
Fortunately, setting up Shopify Shipping on your Shopify store is easy.
Following these steps, you can easily set up and start using Shopify Shipping on your store.
Optimizing Packaging to Reduce Shipping Costs
Optimizing packaging involves careful attention to size, material selection, and efficient packing techniques. These efforts can significantly reduce shipping costs. Shipping carriers usually make pricing according to package size, so packaging can play an important role in reducing Shopify shipping costs.
What are the expectations of customers? The package/product should not be damaged, it should be delivered ASAP and they should reach the product quickly. After you negotiate with carriers, packaging is all that helps determine the most efficient way to pack items.
Reducing Package Dimensions and Weight
Actually, this is important for everyone since carriers typically charge based on the dimensional weight (DIM weight) or the actual weight of the package, whichever is higher. Whether it is a business-related package or a personal package, you need to remember that you shouldn’t have free space in a package that you’d like to be shipped.
By reducing both the dimensions and the weight of your packages, you can ensure that you’re not paying for unnecessary space or weight, leading to lower shipping rates.
PLUS, smaller packages allow you to fit more orders into a single shipment, which can be beneficial if you’re using flat-rate shipping options or have negotiated bulk shipping discounts with carriers.
Using Lightweight Materials
The delivery process includes different vehicles depending on the shipment destination and shipment company processes. Smaller and lighter packages can be packed more efficiently in delivery vehicles, reducing the number of trips required and potentially lowering the overall shipping costs.
This efficiency can sometimes be passed on to the business as savings. Using less material for packaging not only reduces the weight and dimensions but also cuts down on the cost of the packaging materials themselves. This can further lower your overall shipping expenses.
Offering Multiple Shipping Options
Options are always good from a customer’s point of view. By offering different shipping options, you can allow customers to choose whichever shipping method applies to them. This can reduce shipping costs, especially when low-cost or slow shipping options are available, while increasing customer satisfaction!
This way, you can work with different shipping companies and services. Accordingly, you can make your logistics processes more efficient. This can help you take advantage of discounts offered by carriers and optimize your shipping processes.
Deciding on a Free Shipping Threshold
Free shipping always sounds good for the customer. If there is a little left of free shipping rate, customers would probably prefer to buy another product rather than pay for shipping, even if it means spending a few extra dollars.
Plus, customers may prefer stores that offer free shipping because they do not want to pay shipping fees. This can increase customer acquisition. Overall, “free shipping” increases the average order value and increases customer satisfaction since anything “free” is always the best thing a customer can get.
Don’t forget that this not only benefits the customer satisfaction and sales. By setting the free shipping threshold at a certain amount, you can offset shipping costs with increased sales volume, which makes it easier for your business to recover shipping costs and increase profitability.
Providing Real-Time Carrier Rates
While providing options, it is nice to show the rates to the customer. Real-time shipping rates show customers the most up-to-date and accurate shipping costs. This prevents businesses from facing unexpected cost increases as they instantly reflect changing shipping costs, making budget management and cost control easier.
Also, customers can choose between the carriers depending on their preferences. Maybe they want fast shipping regardless of the fee, maybe they prefer cheap shipment even if it means more days. This can help to reduce costs for the business while increasing customer satisfaction.
Implementing Local Delivery and In-Store Pickup
Offering local delivery or in-store pickup options in Shopify can greatly reduce your shipping costs. With local delivery, you can deliver orders to shorter distances with your own couriers or with a delivery service provider. This saves you the high transport costs associated with long-distance transport.
Of course, you might trust yourself more than you trust the shipping carriers. For local deliveries, you can pack orders with fewer packaging materials and reduce packaging costs from another part of the process!
Plus, there is a lower risk of transport in terms of damaged products. If you deliver with your own couriers, you can better control the transport process. This can help reduce delays and delivery problems.
Partnering with Fulfillment Services
We all can agree that the fulfillment of an order is the most important thing in e-commerce. It has a direct connection with the success of your sales. When shipping takes longer than expected, the customer is unhappy.
Is the package damaged? The customer is unhappy. What do unhappy customers do? They don’t shop from you again; they talk to others about this bad experience, sometimes leave a review about this, etc.
A fulfillment service is a third-party provider that offers a warehouse and prepares and ships your orders for you. Using a fulfilment service is a great option if you don’t want to prepare and ship orders yourself, or if you can no longer ship products manually because your business has grown beyond the limits of your current storage capabilities. Fulfillment services can be very useful for increasing the operational efficiency of your Shopify store and improving customer satisfaction.
Choosing the Right Fulfillment Partner
Each business has different needs, and each fulfillment service provider has different things to offer. Having the perfect match, in other words, choosing the right fulfillment partner, is critical to the success of your Shopify store. Choosing the wrong provider can lead to delays, errors, and customer dissatisfaction – in short, chaos.
How can you decide on the best partner?
Of course, there are more things to think about when choosing the best fulfillment partner but these are the main points to keep in mind while choosing the right one for your business.
Benefits of Third-Party Logistics (3PL)
3PL refers to when a company outsources logistics operations such as warehousing, packing, shipping, and returning orders to an outside supplier. For Shopify stores, using 3PL is an effective way to reduce shipping costs, increase delivery speed, and improve overall operational efficiency.
Third-party logistics services (3PL) offer several strategic benefits for Shopify stores. These companies increase the profit margin of businesses by providing lower transport costs thanks to large volume shipments. At the same time, they offer faster delivery processes with strategically located warehouses and extensive distribution networks, which encourages customer satisfaction and sales.
Actually, the main aim is to deal with shipment processes seamlessly in a professional way. 3PL firms lighten the workload of businesses by undertaking logistics processes such as packing, shipping and returning orders, so business owners can focus more on marketing, customer service and product development. Businesses don’t have to worry about stock management, keeping track of stock levels, automatically fulfilling orders, and preventing stock shortages.
Also, 3PL firms sometimes support the expansion into global markets by offering international delivery and customer services. That’s why the specific needs of your business, such as budget, operational requirements should be considered when choosing the right 3PL company.
How Can Juphy Support Your Shipping Strategy?
Juphy can be integrated with your Shopify store and shipping carriers to access real-time tracking information. If a customer asks, “Where is my order?” Juphy can retrieve the tracking number and provide an update on the shipment’s location.
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Reducing Returns with Personalized Assistance
Juphy is all about personalization. Most of the returns are results of wrong choices or unfulfilled expectations. Juphy AI helps customers find the best products for their needs, reducing the likelihood of returns and saving on return shipping costs.
You can ensure that product information, including descriptions, specifications, and sizing charts, is consistently accurate and clear with Juphy. This reduces the likelihood of customers receiving products that do not meet their expectations due to misinformation.
Also, Juphy can provide automated customer support and assistance throughout the purchase journey and post-purchase process. This includes answering product-related questions, order tracking providing sizing guidance, and offering troubleshooting tips. All these ensure a better fulfillment of purchase, including all the processes until delivery.
By proactively addressing customer concerns, Juphy also helps ensure that customers make informed purchase decisions, potentially reducing the need for returns.
Conclusion
Let’s wrap it up. The complexity of the shipping process and costs in your Shopify store require a strategic approach that integrates data analysis, carrier optimization, and efficient packaging practices.
By leveraging tools like Shopify Analytics to understand cost drivers and implementing Shopify Shipping for discounted rates, businesses can effectively manage expenses while enhancing customer satisfaction.
Luckily, you are not alone on this road, and Shopify is ready to be integrated with your helpers. Partnering with fulfilment services and utilizing third-party logistics can streamline operations, reduce shipping times, and expand market reach—Shopify lets you work with these partners in a win-win way.
Juphy helps you to reduce shipping costs by providing the most needed information and automating customer interactions, especially for order tracking. This helps businesses decrease returns, allowing them to focus more on growing and developing their operations.
