April 07, 2021
Posted by Jeremy Bodenhamer

8 Ways to Make Sure Your Shipping is Effective and Cost-Efficient

ShipHawk's CEO series features industry insights and ideas from ShipHawk’s very own CEO, Jeremy Bodenhamer. The following is adapted from his book, Adapt or Die.

Your idea is great. Your service rocks. Your customers love you. Your team is smart and driven. You’ve invested substantial financial resources into your business, so the last thing you want is for shipping to bring the whole operation to a screeching halt.

The competitive environment in eCommerce and shipping is difficult, but continued success is possible and well within your grasp. Here are eight ways you can start making gains in operational efficiencies and cost, so your business thrives for the next decade-plus.

1. Assess Strengths and Weaknesses of Your Shipping Process

Before making any changes to your processes, you need to know your strengths and weaknesses. By assessing your current systems, your costs, and your opportunities for scaling, you have a base from which to develop a strategy for growth. Any strategy should reflect industry best practices. For help assessing your strengths, ShipHawk’s Fulfillment Scorecard can be done in about ten minutes.

2. Hire a Professional for Carrier Contract Negotiations

Carrier fees are complex, but they can make or break a shipping business. Professional contract negotiators, many of whom are ex-FedEX and ex-UPS employees are worth the cost. Carrier fees are negotiable and typically not fully realizable without the sophisticated software of industry pros that can analyze historical billing files. 

In addition, you should always use software to manage carrier tariffs because carrier contracts are too complex to manage manually. If carrier discounts have been negotiated, software will ensure you realize the negotiated discounts.

3. Maintain Accurate and Complete Inventory Data

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There are plenty of warehouse management systems out there, both lightweight and robust. Buy one! Whatever you choose to use, make sure you maintain accurate and complete data.
 
Real item data is required to match each buyer’s unique order with optimal shipping carriers and services, which is imperative if you hope to access the lowest cost while meeting delivery promises.
 

4. Use Comprehensive, Multi-carrier Shipping Software

Use the multi-carrier rating software that is appropriate for your business stage. A $99 per month garbage-in garbage-out approach will increase your per order shipment costs. If you are only shipping fifty orders a week, the savings will be in the software, so an inexpensive product is typically the right move.

As your volume increases, shipping overspend will far outweigh the cost of the more expensive software that will take a comprehensive approach to automating carrier and service selection.

5. Expect More From Your Shipping API

Don’t skip the ship-spend analysis step if your business uses a shipping API solution. The same rules apply to shipping API vendors that apply to those with interfaces and/or integrations. Compare the providers that are appropriate for your business stage. Have them analyze your ship-spend to see if 1) you are properly/fully utilizing the APIs; and 2) if switching will reduce your costs and provide you with additional controls.

6. Stop Promising Customers Carrier Services by Name

It only helps the carrier when you name your shipping services by their names (i.e., FedEx, UPS, USPS, etc.). Stop it! Don’t promise customers specific carriers; promise delivery times. Most customers don’t care about the color of the truck that pulls up to the house. They care about when their order is scheduled to arrive. Align your promises to those needs. Use one-day, two-day, ground, and express labels and leave out specific carrier names. This gives you the leeway to meet the delivery promise at the lowest possible cost.

7. Analyze Your Returns Processes

Remember that “replacing a damaged product can cost an eCommerce vendor up to seventeen times more than the original cost to ship.” Do all items need to be returned? Does it make sense to partner with returns providers like Happy Returns, Returnly or FloorFound?

Take returns seriously, and don’t treat them as uncontrollable.

8. Optimize Packing

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Don’t assume your fulfillment workflow is the right workflow just because it’s always been done that way. Analyze automation components, picking accuracy and speed, carton and packaging selection, packing efficiency, order composition, ship-from locations, back order processes, mispicks, damage, and every component of your workflow.

Consider investing in box-making hardware. Use bin packing solutions. Use smart packing software to minimize carton sizes and carrier DIM weight charges. Use sustainable products and remind your customers that more than one billion trees are cut down each year for US shipment packaging, and you are helping to change that.

To learn more about optimizing your fulfillment operation and reduce your shipping costs, schedule a call to speak to one of our experts. 

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