How to reduce shipping costs for your e-commerce store - and is that what your customers want?

January 2020


Whistl explains ways to reduce shipping costs for e-commerce retailers, brands or wholesalers, and asks - do you need to?

As the UK’s leading international business courier and e-commerce shipping specialist, Whistl is familiar with the challenges that retailers, brands and e-commerce businesses face when it comes to growth strategy. 

Operating in a turbulent and unpredictable economy where consumer expectations are overtaking carrier standards, businesses are under increasing pressure to stand out from the crowd. 
Sellers must consider ‘what is important to my customers?’, and ‘am I providing these things?’

How can I ensure my delivery strategy will support my business long term?

To ensure that a business is profitable, scalable and sustainable, there must be a balance between the following three variables: 

  1. Offering the most effective delivery options
  2. Endeavouring to meet or exceed customers' expectations with sufficient choice at the point of checkout and beyond
  3. Accessing competitive delivery rates

Whistl has outlined some of the methods a business could employ right now to ensure maximum delivery performance and a more profitable logistics chain.

The following elements take into account customer needs, psychological factors influencing buying decisions and ways to incentivise loyal returning customers by meeting their expectations. 

How to reduce shipping fees for online retailers:

  • Leverage buying power and achieve economies of scale

One way for reducing the management and delivery cost of customer orders is to work with a courier consolidator. By outsourcing delivery management you can access discounted ‘pooled volume’ shipping rates. 

When growing from a couple of dozen parcels a day, online merchants can struggle to leverage economies of scale. This is why it makes sense to collaborate with a third-party shipping company. By combining your shipping volumes with hundreds, if not thousands of other merchants, you can leverage the courier aggregator's buying power.

  • Offer plenty of shipping options, but not too many

A study of 3000 consumers found that 66% have bought goods from one retailer in preference to another because the delivery options on offer were more appealing. Many third-party logistics providers (3PLs) work with a single or a couple of carriers only, so it makes sense to ensure you are working with one that integrates with a wide range of delivery providers, such as Whistl.  

Allowing your customers to pick their own shipping service, enables your business to gain insight into your customer base. Knowing their delivery preferences based on product and even their customer information (but remember GDPR!) will allow you to refine your entire logistics process, informing you where it is ok to cut the costs.

  • Tailor your shipping options to your product range

Whether you are operating a B2C or B2B e-commerce business model, consider how quickly your audience needs their items. This will enable you to offer tailored shipping solutions that will bring value to your audience, maximising ROI.

  • Mitigate risk by using a multi-carrier logistics provider

Relying on single-carrier networks is a risky business. If your chosen lone delivery provider suffers from service degradation, your business deliveries could suffer. 

Automated carrier switching during such circumstances, minimising the impact on your bottom line and maximise punctual delivery rates.

  • Optimise your packaging to reduce your shipping costs

In 2019 Whistl carried out a consumer-based study and found that 75% of consumers feel that minimising the amount of packaging is important when making a purchase decision.

Delivery couriers now incentivise packaging reduction with myriad pricing methods, which can be influential on a business’s chosen delivery operation. 

The packaging is easy to implement and cost-effective way to minimise costs and drive profitability sustainably. Some businesses, such as UK business Garçon Wines, makes eco-packaging one of their key USPs. 

With customers increasingly interested in the impact they have on the environment, having a solid CSR policy may help you in building a loyal customer base. 

  • Reducing your packaging to reduce courier fees

Another way to lower delivery fees is to reduce your items’ packaging weight and dimensions, which have an impact on how couriers price their services. Whichever way you cut it, and whether your customers are eco-conscious or not, minimising your packaging will improve your customers’ experience and current environmental expectations.

An easy way to minimise your packaging is to ensure you are not using oversized boxes for deliveries of non-fragile items. By working with a packaging supplier and creating tailor-made packaging, you can achieve packaging that is optimal for your product line. 


Do my customers want me to reduce my shipping costs?

Whistl’s white paper into online consumer behaviour finds that consumers’ attitudes vary wildly depending on age, location, income levels and what they are buying.

Before deciding whether you should make changes to your shipping processes, you must analyse your existing customer base, and consider what the most important factors are influencing consumer buying behaviour. 

Whistl’s research into the importance of packaging in the purchase decision has uncovered customer preferences based on the consumer industry. Download our white paper today to see what customers look for from a business like yours.
 

Research Insight: What is important to consumers when purchasing products online

Importance of purchasing factors.png

Download our white paper today to see what customers look for from a business like yours.

DOWNLOAD REPORT

Offsetting business item shipping cost for your e-commerce customers

Free delivery is rated as the most important consideration for shoppers when making an online purchase, with 95% of Brits more likely to make a purchase if delivery is free

Our research finds that consumers are willing to increase their shopping basket value to qualify for free shipping, with a third of Brits admitting to overbuying to meet the minimum spend thresholds. 

Moreover, a study from comScore and UPS found 52% of shoppers have added items to their e-commerce shopping cart to qualify for free shipping. As a result, retailers are increasingly making their delivery offering a core component of their demand generation strategy. 

The traditional approach is to simply increase the price of your products to cover the cost of shipping, but many retailers try to build the shipping cost into their existing pricing. 

Some retailers offer points systems whereby customers can qualify for free shipping, and premium options like Amazon Prime give customers access to free and next day delivery on items that would otherwise incur a delivery charge. 

Before committing to such methods retailers should first carefully consider their shipping cost, customer location, delivery speed, and type of items that are likely to sell in greater abundance with such a promotion. Offering free shipping places further pressure on retailers to reduce packaging costs. When cost-saving is the top priority, minimising your environmental impact often moves down the list. 

Are shipping options more important than the cost, for customers?

Whistl's white paper research found that consumers consider the speed of delivery and in-flight options such as the ability to specify delivery to somewhere other than your home, of great importance.  

We found that the cost of delivery and the safe delivery of an item are key purchase factors influencing consumer behaviour across all industries and the cost of delivery is very important to 93% of those surveyed, whereas only 42% of consumers feel that delivery speed is important. Furthermore, men do not consider the convenience of delivery to be as important as women do. Retailers must carefully balance consumer demands with carrier and marketplace demands to minimise any expectation gap.

While the cost of delivery is of great importance to all ages, our study found that more frequent online shoppers are more willing than non-frequent shoppers to pay for an eco-friendly option. 

Whistl provides a broad spectrum of other delivery management services including:

Fulfilment Management ServicesAdvertising ServicesUK and International Business Mail UK Contact Centre ServicesUK and International Business Courier Services

Consolidating all of these processes with Whistl will help you close the expectation gap and maximise your current and future customers’ lifetime value.

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