Inside this article
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 of a parcel. Dimensional weight, on the other hand, refers only to the volume since this will allow for more or fewer packages to be sent in the same van, truck, plane or container.
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. These formulas may vary from courier to courier.
2. 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. This can hold you back in the process of getting cheaper shipping rates.
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. Optimize 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.
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 smart move towards cheaper shipping rates:
- 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.
4. Squeeze out the juice (or the air) from your shipments
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.
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).
For items like lamps, we recommend working alongside the suppliers and manufacturers to create a design that is compact, makes getting cheaper shipping rates easier and can be assembled by buyers once the order arrives. Ikea uses this trick. This is why, most of the time, the packaged product takes up less space than the finished product.
5. Buy supplies in bulk
The next logical step to reduce shipping costs is to buy those materials needed for the preparation of the parcels and the shipping in bulk: boxes, bubble wrap, tape...
Having one type of package saves resources. However, you need to also consider that, if you are sending many parcels half-full, you’ll be paying for shipping… air.
Shipping air is more expensive than using 10 different types of packaging
The problem for your online store will only reveal 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.
If it makes sense for your business, having only one type of packaging could be indeed profitable. If, on the contrary, the size and weight of the orders fluctuates considerably, we'll suggest creating a selection of as few types of packaging as possible.
Then, working with an automation platform like Outvio allows to automatically select a certain type of packaging for specific SKUs, courier or destination (among other things) or to enable the person in charge of order processing to select, in a single click and from the packing station, the ideal box or envelope for every shipment.
6. Use rates from different couriers
If you’re operating an online store of a considerable size, you already have the power to negotiate your own shipping rates with couriers.
Instead of sticking to only one company, our advice is to build a network of couriers — doing so will allow you to choose the most profitable option for each shipment. Depending on the size of the parcel, its weight and/or its destination, you’ll be able to offer the best delivery service to your customers, without putting your margins at risk.
Connect all your couriers in a single platform and process all orders, regardless of their destination or shipping method, from the same page for optimal operations. Sign up now!
Wrapping up
If you want to reduce shipping costs, you'll need to do more than simply negotiating rates and conditions with couriers. To get lower shipping costs, the first step is to optimize the packaging stage to make the most out of the space for each order to have a dimensional weight as small as possible.
To do so, prepare the products in a way that minimizes their volume and partner with the right software solutions, such as Outvio, to automatically obtain the lowest shipping rate for every order and reduce overall logistics costs.
Outvio connects all your couriers in a single platform and, through its shipping rules, you can automate the process of selecting the best rate for every destination.
