After years of work with all kinds of online shops, there’s a topic that comes up more often than expected, even from those brands with more experience in the sector. I’m talking about how to reduce shipping costs for online shops.
To achieve this, optimising the packages for shipping is key. Packaging has a clear and primary function: to protect the products that are sent. This is why protection and safety should be the main qualities of the packaging you choose for your products.
However, once the packing material ticks these boxes, it’s up to you to optimise the packaging to reduce its volume and, therefore, its shipping costs.
1. Measure "real weight" and "dimensional weight"
One of the first concepts that surprise businesses selling online, big or small, is dimensional weight also called volumetric weight.
The majority of online shops understand that shipping costs depend on the "weight" of the parcel. After all, couriers send their shipping rates for different weights (in kilos or pounds). Needless to say that these rates will also change according to the destination of the package.
What these couriers don't say is that they won't necessarily choose the weight of the parcel (real weight) in kilos or pounds, but that they can also select the "dimensional weight" (a.k.a measurements) as a way of charging for the shipment. Obviously, they will always choose whichever is the highest.
Real weight simply refers to the weight in kilos or any other mass unit. (Nerd moment: the kilogram is actually a mass measurement unit —not weight—, being weight really measured in Newtons or by doing the formula kg·m/s2. Basically, "real weight" refers to the number you get on the scale when the parcel is weighed.
Dimensional weight, on the other hand, takes into consideration the weight and volume a package has. Its volume will allow for more or fewer packages to be sent in the same van, truck, plane or container, hence the differentiation.
Let’s illustrate this with some extreme examples.
Imagine that you are sending a huge corrugated cardboard box with the following measurements: 300x200x200cm. The box is empty, but it can easily fill up the space in a delivery van.
The real weight of this parcel could fluctuate between 15 and 20 kg. However, the van would be filled with a single package, instead of dozens or hundreds of goods.
This is why all shipping companies set up simple formulas to ensure maximum profitability. These formulas specify how much weight they can carry in a cubic meter. This quantity tends to be between 167 and 200 kg/m³ if the courier or messenger works with metres (or between 6,000 and 5,000 cm³/kg if the measurements are to be in centimetres).
Likewise, if we have a shipment with the following measurements: 100x100x100 cm and its dimensional weight is under 167 kg, the shipping company will charge the rate for 167 kg, even though the “real weight” is 50 kg. If a package with the same measurements weighs 250 kg, they’ll charge based on that measurement (250 kg) instead of 167 kg. Remember: they always choose the highest.
The formulas to calculate dimensional weight are:
- LENGTH x WIDTH x HEIGHT (m) x 167 = LENGTH x WIDTH x HEIGHT (cm) / 6,000
- LENGTH x WIDTH x HEIGHT (m) x 200 = LENGTH x WIDTH x HEIGHT (cm) / 5,000
Although these can vary from courier to courier.
For instance, a shipment that is 30x40x20 cm would be 4 kg in dimensional weight. If you want, you can check it out with a calculator.
This means that when a shipment is over 4 kg, you will be charged for its real weight, but if it’s under 4kg, they will use the rate for packages that are 4 kg.
2. Always round the weight up
As a result, independently of which one is higher, you’ll probably get a number with decimals. For example, 4.8 kg. Couriers’ rates tend to be set by weight ranges, by kilos for instance. They will always round up, which means that for a 4.80 kg package they’ll charge the rate for a package that is 5 kg (not the one for a package that is 4 kg or something between 4 and 5 kg).
This can seem of little importance. However, choosing packaging without optimising it can make you automatically pay more for all your shipments.
For example, the difference between a box that is 35x25x22 and one that is 35x24x21 (notice that we only subtracted 1 cm from two dimensions) can make you pay a rate for a 3 kg package or a 4 kg package. For a shipment with exactly the same products and weight!
3. Think through the packaging
The type of packaging that you’ll use for the shipments should be thought of before starting selling online, always with optimisation in mind.
Normally this isn’t the case. Like everything related to shipping, packaging seems to be always left for last. This serious mistake can take its toll on the costs the online shop has to face.
Depending on the products you sell online, the size of the packaging can go from the size of a small notebook to dimensions that would be better shipped in big boxes or even pallets.
Normally online shops specialise in a specific type of product or a range of products with similar sizes. This means that having a wide variety of package sizes will not always make sense.
As tempting as it can look to use only one type of box, envelope or bag, there are two main reasons why avoiding this is a good choice for your business:
- Easiness to prepare orders. This will speed up the warehouse tasks since they won’t need to think about which kind of packaging to use for every shipment. There will be only one.
- Better deals. Due to the economy of scale, ordering 10,000 units of a specific size of box or bag will always be less expensive than buying 1,000 units of 10 different types of packages (boxes, bags, envelopes…).
Undoubtedly, if you opt for using only one type of packaging, it must be useful for all your products, from the biggest item to a prototypical product mix.
However, this will transform the resources you saved by using one type of package into a larger source of expenses since the package will be sent, many times, half-full. For some (or many) orders you’ll be paying for shipping… air.
Shipping air is more expensive than using 10 different types of packaging
It’s fairly common to find online shops that sell shoes, clothing and accessories. These items, because of their nature, are perfect to be sold online.
As tempting as choosing a sole type of package can seem, shipping these items in a shoebox, while convenient at first, can be extremely expensive in the long run.
Shipments with two or more shoeboxes can be sent in their original boxes. This, at least in principle, should not have a negative impact on shipping costs. As a general rule, couriers use the sum of both weights (real or dimensional) of all the boxes, envelopes or bags within an order. Sending two boxes that are 30x40x20 should cost exactly the same as sending a box twice as big (30x40x40).
The problem really reveals itself when the order is, for example, two shirts and a pair of socks.
Using a box for items with an estimated volume between 6,000 and 9,000 cm³ would mean increasing its volume to 24,000 cm³, three or four times higher than needed! Going back to dimensional weight, the difference will be to pay for 1 kg, 2 kg maximum (depending on how the product is prepared for the shipment) with optimised packaging versus paying for a box with a volumetric weight of 4 or 5 kg when the box is used.
For international shipping, the disparity in volume can either mean saving substantial quantities or unnecessary charges for shipping, as well as the possibility to offer free shipping methods while making profits or to lose money with that same shipment.
The main problem is, on the one hand, the initial costs of these tools. On the other hand, the data tells us that most online shops sell items with similar dimensions. With half a dozen packaging systems like boxes, envelopes, bags of different sizes, you’ll be able to reduce the volume of shipments of items with larger and smaller dimensions to achieve a level of optimisation similar to what Packsize or Slimbox offer.
This is why using various types of packaging is a frequently used and recommended practice to accommodate the needs of every order, because of the quantities and products or because of the nature of them.
The additional costs of using many types of packages, compared to using only one, as well as the extra time needed for selecting the correct type of packaging for every order cannot be overlooked if you consider the monetary resources that you’ll gain from optimising your orders by reducing the amount of empty space that you’re currently shipping.
The potential problem behind choosing the correct package size for every shipment is automatically solved by working with a tool like Outvio, which allows the person in charge of order preparation to select, in a single click, the ideal box or envelope for every shipment.
Something as logical as what we have just explained may not seem as obvious when dealing with products that take up more space but are relatively light in weight.
In these cases, relying on “the little grey cells” is all you need to efficiently sell online, worldwide, with the cheapest shipping methods and good margins for all your orders.
4. Squeeze out the juice (and the air) from your shipments!
There are many online shops, from the newest to the ones established in the offline market (brick-and-mortar shops), that rush into online retail without considering aspects like shipping costs optimisation, obtaining the cheapest shipping methods for each and every one of the shipments. They forget that these are just as important as keeping other areas of the supply chain, like production, as low as possible.
In fact, it’s even more important. If your product portfolio includes items like cushions, pillows, lamps or linens, among others, this section is for you.
Yours is the perfect example of the importance of dimensional weight for businesses that want to reduce shipping costs. To do this, you’ll need to plan which products you are going to offer in your online shop and how you can efficiently prepare them for delivery.
Many online shops, those that haven’t read this article and don’t know about dimensional weight, are surprised when they receive a rate of 12 or even 15 kg to ship a pillow. They can be surprised for two reasons: 1) they don’t know or understand the concept behind dimensional or volumetric weight and 2) they haven’t searched for strategies to send the same item, for less.
With industrial solutions, you can introduce the products in a plastic bag to press them and extract the air from them, leaving the items reduced to their minimum. Rolling, pressing or extracting the air with a vacuum machine, possibilities are endless but the goal is the same: to reduce the space they take and, therefore, reduce shipping costs.
Although industrial solutions are certainly very beneficial for some items, rolling or pressing the products can make the volume go down by 50 to 80%. For a pillow that is 80x40x25 (13.3 kg), the shipping can be easily optimised by reducing its measurements to 40x20x20 (2.7 kg dimensional weight).
At the end of the day, you can always get inspiration from the professionals of eCommerce that sell similar products to yours.
For instance, Ikea. The Swedish furniture company was a pioneer in optimisation for transportation and shipping. They applied it to all products: furniture, home accessories, mattresses and everything in between. This allowed them to maximise the number of products that customers could take home in their own car, on the same trip.
Items with high volume but light in weight are rarely delivered ready-to-use. Instead, they are packaged with dimensional weight in mind, p.e. Knavel pillows (90x40x20) can have their dimensional weight transformed from 12 kg to 1.5 kg (40x15x15). This is a reduction of almost 90%!
For items like lamps, we recommend working alongside the suppliers and manufacturers to create a design that is compact, cheap to ship and easy to assemble for your buyers once the order arrives. This trick is also used by Ikea. Most of the time, the packaged product takes up less space than the finished product.
Obtaining the cheapest shipping methods for online shops involves more than negotiating rates and conditions with couriers —unless you use Outvio’s preset couriers and rates. It also includes the thinking process of finding a shipping strategy for the type of packaging that you are going to use or which products need to go through a preparation process before they are packed in order to reduce their volume and reduce the shipping costs.