How to Reduce Transportation Costs as an E-Commerce Business

Running an e-commerce business requires transportation. Transportation is one of the largest expenses to consider. This is due to the continuous rising of shipping rates. A big difference to your bottom line can be made by finding ways to reduce transportation costs.

There is good news, though. Fortunately, there are practical steps you can take to control these costs. The bonus is that it won’t hurt the customer experience. In this post, you will learn three proven strategies to lower your shipping and transportation expenses.

Optimize Packaging for Size and/or Weight

One of the simplest ways to do this is by optimizing your packaging. Most carriers will calculate shipping costs based on either the package’s actual weight or its dimensional weight (DIM). The choice is made by whichever is greater.

Dimensional weight is based on the package’s size, not just how heavy it is. Remember, oversized boxes could cost you more, even if the item inside is light.

Reducing these costs is easier than you’d imagine. Consider using right-sized boxes instead of one-size-fits-all packaging and removing unnecessary fillers and excess materials. You must regularly review your packaging options, particularly if your product mix is changing. Not only are lighter, smaller packages cheaper to ship, but they are also easier to handle and store. A bonus for any business!

Use 3PLs for Discounted Rates

Overpaying for shipping is a common issue. Many e-commerce businesses do this because they can’t access discounted carrier rates. This is where third-party logistics providers (3PLs) come in handy. These companies ship high volumes of goods across multiple clients, enabling them to negotiate lower rates with popular carriers.

By partnering with a 3PL, you access discounted rates all without needing massive order volume yourself. However, this isn’t the only benefit. A strong omnichannel 3PL streamlines order fulfillment across multiple sales channels and reduce operational complexity. You should even find improvements in delivery speed and reliability.

Instead of managing carrier relationships and shipping logistics in-house, which could eat into your time and efforts, you’ll benefit from the scale and expertise of a specialized 3PL partner.

Place Inventory with Multi-Warehousing

Placing inventory closer to your customers through multi-warehousing is another way to reduce transportation costs. If inventory is stored in a single location, issues might occur. Orders need to travel longer distances, and this results in increased shipping fees and delivery times. With multiple warehouses in different regions, orders are shipped from the closest location.

Multi-warehousing is incredibly beneficial. Not only do you see lower shipping zones and reduced carrier costs, but delivery times are faster, customer satisfaction improves, and so on. There is even reduced risk from regional disruptions. Splitting inventory across even two or three strategic locations would be enough!

To conclude, cutting corners isn’t a requirement of reducing transportation costs – you just need smarter planning. Following the tips outlined in this post allows you to make big financial wins over time as an e-commerce business.