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1. Understanding the basics of shipping costs

How to reduce shipping costs: 11 tips for small businesses

Shipping costs can be a significant expense for online businesses. Whether shipping products to customers or receiving supplies from suppliers, finding ways to reduce these costs can significantly impact your bottom line. This article explores tips and strategies to help you cut shipping expenses and improve your overall business efficiency.

Main takeaways from this article:

  • Shipping costs include packing materials, transportation, customs fees, and insurance.

  • Reducing shipping costs can increase profit margins, provide a competitive market advantage, and improve brand reputation.

  • Optimize packaging dimensions to cut costs. Leverage print on demand services like Gelato for localized production and reduced shipping times.

  • Use hybrid shipping services and calculators to find cost-effective options. Implement efficient return policies to minimize expenses.

  • Stay updated on promotions, recycle materials, educate customers, negotiate with the shipping carrier, use 3PLs, and adopt centralized shipping systems.

  • Utilize shipping software, ecommerce business platforms with shipping discounts, and platforms like Gelato's print on demand model for global reach and localized production.

Understanding the basics of shipping costs

Before diving into the tips, let's start by understanding shipping costs. Shipping costs include various expenses associated with transporting goods, such as packaging materials, transportation fees, customs fees, and insurance. These costs can add up quickly, especially if you're shipping large or heavy items.

What are the shipping costs?

Shipping costs refer to the fees incurred when sending goods from one location to another. They can include packaging, handling, transportation, and insurance charges. Understanding the components of shipping costs is essential to identify areas where you can save money.

Regarding packaging, choosing the right materials that offer adequate protection without adding unnecessary weight or bulk is essential. Finding the balance between safety and cost-effectiveness can help reduce packaging expenses.

The importance of reducing shipping costs for online businesses

Shipping cost savings are crucial for online businesses for several reasons.

Online businesses face unique challenges when it comes to managing their finances. Every dollar saved can significantly impact their overall success and growth. One area where online businesses can make a substantial difference is in reducing shipping costs.

Impact on profit margins

Shipping costs directly affect your profit margins. When you operate an online business, every expense matters. Minimizing these costs can increase your overall profitability, allowing you to invest in other business areas or pass on savings to your customers.

Competitive advantage in the market

Offering competitive shipping rates and timely delivery can give your online business a significant advantage in the market. In today's fast-paced world, customers value convenience and efficiency. By providing affordable and reliable shipping options, you can attract more customers and help you build a positive reputation for your brand.

Tips for reducing shipping costs for your online business

Now that we understand the importance of reducing shipping costs, let's explore some practical tips to help you achieve this goal.

Shipping costs can be a significant expense for small businesses, especially those that rely heavily on ecommerce. However, careful planning and strategic decision-making can minimize these costs and improve your bottom line.

Optimize package dimensions

Optimizing your package dimensions is crucial for efficient and cost-effective shipping companies for small businesses. Major carriers have adopted dimensional weight (dim weight) pricing, calculating shipping costs based on package weight and size. Using a larger box than necessary can inflate your expenses, even if the item inside is light. Moreover, appropriately-sized packaging ensures better space utilization, requiring less material and offering enhanced protection for your products during transit.

Businesses must regularly evaluate and adjust their packaging sizes, especially when introducing new products. Investing in adjustable boxes, judiciously using fillers, considering alternatives like poly mailers for non-fragile items, and employing shipping calculators can significantly impact the bottom line. Smaller, optimized packages are cost-effective and environmentally friendly, aligning with sustainable business practices and attracting eco-conscious consumers.

Leverage print on demand

print on demand

One of the most innovative ways to drastically cut small businesses' shipping costs is through print on demand (POD) services. Instead of stocking up on large inventories and managing warehouse spaces which often leads to additional expenses, POD allows businesses only to produce items when ordered. The print on demand model minimizes storage and upfront production costs and optimizes shipping. Since products are often printed closer to the end customer, shipping distances and times can be reduced, leading to savings in shipping fees.

Furthermore, print on demand can be a game-changer regarding sustainability and efficiency. By producing items only when there's a demand, businesses can minimize wastage resulting from unsold stock. Many POD providers also offer dropshipping services, meaning they handle packaging and shipping on your behalf. This streamlines the logistics process, ensuring products are shipped cost-effectively without you intervening. Using the print on demand model, ecommerce businesses can expand their offerings to new countries without incurring additional shipping fees.

Consider hybrid shipping services

centralized shipping

In the evolving ecommerce landscape, hybrid shipping services have become an intelligent solution for small businesses looking to trim average shipping costs and get the cheapest shipping method. Hybrid shipping combines national postal carriers' services with private courier companies. The process usually involves a private courier picking up the package from the sender and handing it to a local postal service for final delivery. By utilizing the strengths of both services, businesses can often find a balance between speed, reliability, and cost.

Opting for hybrid shipping can be particularly advantageous for small businesses that frequently ship to varied locations, including residential addresses. These services often offer discounted rates, especially for businesses that ship in volume. Moreover, they often come with tracking and insurance options like traditional couriers, ensuring peace of mind for both the seller and the buyer. By integrating hybrid shipping into their distribution strategy, small business owners can optimize their shipping processes, ensuring timely deliveries while significantly reducing expenses.

Implement efficient return policies

Create a clear refund and return policy

Effective return policies aren't just essential for customer satisfaction; they also play a crucial role in managing and potentially reducing shipping costs for small businesses. A well-structured return policy can minimize the return frequency, decreasing shipping costs and eliminating the need to respond to bad reviews. By clearly outlining conditions for returns, specifying return time frames, and providing accurate product descriptions and images, businesses can significantly reduce the number of returned items, thereby avoiding the double shipping costs associated with returns.

Moreover, consider leveraging a consolidated return system. Instead of handling individual returns, businesses can collaborate with shipping partners to consolidate returned items at specific collection points, saving time and money. Investing in quality packaging that can be reused for returns is also worthwhile, thus further minimizing costs. Offering store credit instead of refunds can also deter unnecessary returns while maintaining customer trust. The key is to balance being customer-centric and cost-effective, ensuring that while customers feel valued, the business isn't shouldering exorbitant shipping costs due to inefficient return processes.

Invest in package insurance


While it might seem counterintuitive, investing in package insurance can be a strategic move for reducing long-term shipping costs. Mishaps during transit, like damages or losses, are an unfortunate reality of the shipping world. Without insurance, small businesses bear the brunt of these unexpected costs, both in terms of replacing the product and reshipping it. By securing package insurance, businesses can have peace of mind, knowing they're protected from these unforeseen expenses. The minimal upfront cost of insurance often pales compared to the potential financial burden of rectifying damaged or lost shipments.

Additionally, having package insurance can boost your company's reputation. Customers often appreciate the added assurance that their orders are protected, leading to increased trust and loyalty. This can translate into repeat business and positive word-of-mouth marketing. By viewing package insurance as a proactive measure, small businesses can save substantially in potential replacement and reshipping costs while enhancing customer relations.

Stay updated on shipping promotions

04_Shipping and fulfillment comparison

Many courier and postal services regularly run promotional campaigns, offering discounts for bulk shipments, seasonal discounts, or incentives for using particular services. Subscribing to newsletters, joining loyalty programs, or maintaining an active relationship with your shipping partners can ensure you know about such cost-saving opportunities.

Moreover, make it a practice to review and renegotiate your shipping contracts periodically. As your business grows and shipping volumes increase, there might be room for better rates and terms. Staying proactive and seeking out these promotions or negotiating opportunities can lead to substantial savings in the long run. Remember, even small reductions in shipping rates can accumulate over time, leading to significant cost savings for your business.

Recycle and reuse shipping materials

01_Hero Image_Worldwide dropshipping Beginner_s guide [2023]

Adopting a green approach to your shipping process can be both environmentally friendly and economically beneficial. Recycling and reusing shipping materials like boxes, bubble wrap, and packing peanuts can significantly reduce packaging expenses. Materials from shipments received can often be reused for outgoing packages, provided they're still in good condition. This approach helps cut costs and demonstrates a commitment to sustainability, which can be a positive selling point for eco-conscious customers.

Furthermore, businesses can consider buying bulk packaging materials or sourcing recycled materials at discounted rates. In the long run, these practices can lead to substantial savings. While ensuring the integrity and appearance of the packaging aren't compromised, reusing and recycling materials can be a win-win for both the environment and the bottom line.

Educate customers on shipping choices

educate customers

Empowering customers with information about various shipping options can positively impact costs. Offering multiple shipping choices, from express deliveries to more economical, slower options, allows customers to select based on urgency and budget. Communicating the prices and delivery times associated with each option can reduce the likelihood of customers opting for expedited shipping when it's not truly needed.

Additionally, consider offering real-time shipping rate calculators on your checkout page. This tool can give customers accurate costs based on package weight, dimensions, and destination, ensuring they're fully informed before finalizing their purchase. By educating customers about their shipping choices, businesses can potentially reduce the number of costly last-minute shipping upgrades and manage customer expectations effectively.

Negotiating with multiple carriers

Never underestimate the power of negotiation. You can often secure discounted rates or special deals by contacting various shipping carriers and discussing your business's specific needs and shipping volume. Understanding your shipment data, including the frequency, destinations, and package sizes, is essential, as this information can provide leverage during negotiations.

Having multiple carriers at your disposal also ensures flexibility. If one carrier increases rates or faces delivery issues, establishing relationships with other carriers means you can seamlessly shift your shipping needs. Regularly reviewing your low-cost shipping contracts and renegotiating terms based on current business needs can lead to consistent savings and enhanced service levels.

Use a third-party logistics provider

Third-party logistics (3PL) providers can be a boon for small businesses aiming to reduce shipping costs. These providers have established relationships with multiple carriers and can offer discounted rates due to their bulk shipping volumes. By leveraging their expertise and infrastructure, businesses can save on shipping costs and warehousing and benefit from the technology integrations that 3PLs offer.

Beyond just cost savings, 3PLs can provide valuable insights into optimizing your shipping strategy, offer faster delivery times, and even handle returns efficiently. Entrusting shipping logistics to a specialized provider allows businesses to focus on their core operations, ensuring that the company and its customers benefit from streamlined, cost-effective shipping solutions.

Implement a centralized shipping system

A centralized shipping system refers to having a unified platform or process that handles all shipping-related activities. This includes tracking shipments, calculating rates, printing labels, and managing inventory. Implementing such a system can significantly improve efficiency, reduce manual errors, and offer better visibility into shipping expenses.

By integrating various carriers and shipping options into one platform, businesses can easily compare rates, track shipments in real time, and automate many repetitive shipping tasks. Centralization also aids in collecting valuable data, which can be analyzed to refine further and optimize the shipping strategy. Over time, this streamlined approach can lead to significant cost reductions, improved customer satisfaction, and a more organized approach to managing shipments.

How Gelato's print on demand platform helps you reduce shipping costs

Gelato's print on demand model enables businesses to offer custom products on a global scale. Here's how this model, particularly with Gelato's vast production network across 34 countries, facilitates worldwide sales.

Gelato's presence in 34 countries means that products are produced close to customers' locations, reducing shipping costs and time. Plus, localized production often translates to lower shipping costs since the products do not pass through customs, making products more affordable for customers and improving sales potential.

Gelato offers an innovative solution that addresses many challenges businesses face in today's global market. Whether it's a startup looking to minimize initial costs or a well-established brand aiming to expand its global footprint efficiently, Gelato's approach to cutting down shipping times and costs while maintaining quality makes it a game-changer in the ecommerce landscape. Our global alliance of print partners facilitates localized production of various products, including t-shirts, mugs, phone cases, and wall art. This proximity-focused approach empowers ecommerce sellers to manufacture their products nearer to their customers, significantly reducing shipping costs and time.

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