When setting up your eCommerce business, a common thing to wonder is whether or not you can negotiate shipping rates with carriers to save money and maximize your margins. The truth is, both major and regional shipping carriers are willing to negotiate with shippers to hook them up with lower rates, but you’ll only be able to enter into those talks if you ship a high enough volume to make offering lower rates worth it for the carriers. Basically, unless you’re a huge commercial shipper, you may not have much luck. However, there are other ways to save money on shipping costs other than negotiating directly with shipping carriers…and you can access them without shipping a single package. Let’s get into it!
Table of Contents
- The Benefits of Negotiating Rates With Shipping Carriers
- Start With Determining What You’re Shipping
- Skip the Negotiation and Use Online Shipping Software to Save Money
- Why Saving Money on Shipping Costs is So Important
The Benefits of Negotiating Rates With Shipping Carriers
The main benefit of negotiating shipping rates is the potential cost savings for your business. By locking in discounted rates, you can lower your shipping expenses and boost your bottom line. This is especially important for small eCommerce businesses that sell items for relatively low amounts of money. Think about it: if you’re selling a shirt for $20 that costs $10 to produce and your shipping label costs $8, you’re only netting $2 in profit! By bringing your shipping cost down a buck or two, you’re more than doubling your profit margin…and that makes all the difference in the world.
Start With Determining What You’re Shipping
When it comes to negotiating rates with carriers, you first need to figure out what you’re shipping. Are you sending lots of smaller, lightweight packages? Or are you sending a few larger, heavy boxes here and there? Are you shipping to customers all around the United States, or are your recipients located in a specific region?
The point is, you need to do the research to figure out what you need from a shipping carrier before you ask for discounted rates. Be transparent and present that information to the carrier as clearly as possible; at the end of the day, the better the picture you paint, the easier it will be for the carrier to figure out what it can offer you. Of course, if the carrier you’re talking to doesn’t play ball, you can always walk away.
That said, keep in mind that shipping carriers want to keep your business. Chances are, they’ll be willing to work with you to find a solution that works out for everyone involved. It doesn’t hurt to be flexible, too! When asking for better rates, you may be able to receive a discount if you commit to shipping a certain volume or frequency.
Skip the Negotiation and Use Online Shipping Software to Save Money
Here’s the big point to pay attention to: if you’re not a high-volume shipper, you likely won’t be able to bring leverage to the negotiation table. Simply put, it won’t be worth it for a carrier to customize discounted rates unless you’re injecting a huge amount of packages into their network. However, you can still save money on your shipping costs by using online shipping software to purchase discounted labels.
Due to their large customer bases, shipping software companies are able to enter into economies-of-scale agreements with shipping carriers. These deals lock in the deepest possible discounts with carriers such as USPS and UPS, and they pass those savings down to their customers. In layman’s terms, these companies have already done all the negotiating for you. This makes it super easy to take advantage of those lower rates and start saving money on your shipping labels right away. All you need to do is make an account with the shipping software provider of your choice, and you’ll be off to the races—no negotiations required!
Why Saving Money on Shipping Costs is So Important
Getting access to lower shipping rates is a key strategy for small business owners looking to save money. In fact, whether or not you save money on your shipping labels can make or break your business.
If you’re a high-volume shipper directly negotiating with a shipping carrier, be sure to do the proper research, be clear about your needs, and be willing to walk away if necessary. On the other hand, if you’re just starting out, don’t hesitate to sign up for an online shipping software service that allows you to access lower shipping rates right off the bat. Both strategies are proven ways to save money on shipping costs and boost your bottom line!