Two women stand across from each other at a wooden desk in a clothing shop. One woman, who wears thick-framed glasses and a dark blue sleeveless blouse, hands a brown paper bag to the other woman, who wears tortoiseshell glasses and a white shirt. In the background are wooden cubbyholes holding folded shirts and clothing racks from which are hanging light gray hoodies.
One way to cut shipping costs is to offer in-store pickup and give your customers the opportunity to pick up their orders instead of having them delivered. — Getty Images/Csondy

Every business has to deal with shipping costs, regardless of the size and industry. If shipping is eating away at your profits, here are 10 ways you can reduce costs.

[Read more: How Shipping Can Be Used as a Small Business Growth Strategy]

Reduce the shipping distance

In part, your shipping costs are determined by shipping zones — these are the geographical areas that carriers ship to. The farther away the shipping destination is, the more you can expect to pay. If you stop shipping to areas with higher-cost zones, you can save a lot of money on shipping costs over time.

Offer in-store pickup

If you have a “brick-and-click” business model, you could offer in-store pickup to local customers. If given the option, many customers would prefer to order ahead and pick up their items in the store.

Your customers can save on shipping costs and receive their orders faster, and you’ll save money on the packing materials and shipping costs.

Incentivize free shipping

According to the National Retail Foundation (NRF), 75% of customers expect free shipping on orders under $50. Of course, this may not make financial sense for your small business. But you can set an order threshold to incentivize customers to receive free shipping.

For instance, you could give your customers the option to earn free shipping on orders of $150 or more. Research shows that 52% of customers will pay more to receive free shipping on their orders.

Negotiate for discounted shipping rates

Even if you run a small business, you can negotiate with carriers for discounted shipping rates. Talk to several different carriers to see what kinds of offers you receive. If one carrier offers you a discounted rate, you can leverage that offer with their competitor to possibly save even more.

Use recycled packaging materials

The cost of packaging materials can quickly add up, so using recycled materials is a good way to cut costs. Look for recycled materials like cardboard boxes or shredded paper to avoid buying new packing supplies. You can also reuse the materials from orders your business receives.

[Read more: 5 Small Business Owners' Best Advice for Managing Supply Chain Challenges]

The right shipping software allows you to manage your inventory, calculate shipping costs, and print labels right from your computer.

Print your own labels

If you’re in the early stages of building your e-commerce business, you may not have the money to invest in software and e-commerce tools. So you can reduce costs by printing off your own shipping labels. You can do this using most inkjet or laser printers.

Build shipping into your pricing

Another option is to build the shipping costs into the price of your product. When customers check out, they won’t see any shipping costs added to the final amount.

This is a way to advertise free shipping without having to foot the bill for it. Of course, this does mean your products will cost more, so you should weigh the pros and cons of that decision.

Invest in shipping insurance

If you ship items worth more than $100, it may be worth it to invest in shipping insurance. Shipping insurance will cover any business losses incurred if an item is lost, stolen, or damaged in transit.

[Read more: Ready for Returns? Best Practices for Handling Customer Refunds]

Work with hybrid services

Using a hybrid service like UPS SurePost or FedEx SmartPost can significantly reduce your shipping costs. These services pick up your packages and transfer them to major carriers like UPS. However, this shipping method can be slower, so it won’t be a great option for businesses that promise fast shipping.

Use shipping software

One of the best ways to save money on shipping costs is to invest in shipping software. Yes, you’ll have to pay the monthly or annual fee, but it will save you valuable time and money in the long run.

The right shipping software allows you to manage your inventory, calculate shipping costs, and print labels right from your computer. Look for software that integrates with the e-commerce solution you’re currently using.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published April 14, 2022