Due to higher demand and price increases on fuel, shipping rates have gone up higher the past decade than ever before. As the holidays approach, FedEx and UPS are gearing up to impose more price increases on their services in anticipation for the peak season. Shipping carriers raise prices every year, and small eCommerce outfits have no choice but to accept these increases as a cost of doing business. However, as prices keep shooting up, the burden of shipping will fall more and more on one unsuspecting party: online shoppers themselves.
When Shipping Rates Increases, Online Shoppers Pay for it
When shipping carriers raise their prices, small businesses obviously pay the price. This said, the burden will fall on the online customer more and more. This happens one of two ways. First, the cost of shipping gets passed onto them instead of being offered for free. Secondly, businesses raise the prices of their products to compensate for the higher shipping costs. Either way, as shipping costs become increasingly more difficult for businesses to eat, the customer is the one who ultimately ends up paying for it.
Pro Tip: “Free” shipping isn’t ever really free! If you offer free shipping, you’re the one who ends up paying for it. Learn more about the pros and cons of offering free shipping to your customers.
How to Offset Price Increases for Your Business
Since shipping price increases are an inevitability, small business owners need to continuously pivot strategies to offset these rising costs. We’ve listed out three ways to do that below.
Use Online Shipping Software to Save the Most Money on Postage
The first (and best) strategy to combat rising shipping rates is to always take advantage of discounted rates through shipping software. When you use shipping software to buy postage online, you can access special discounts from major carriers, and regional carriers as well. One example of this “secret” level of discounts for the US Postal Service is Commercial Pricing, which USPS typically reserves for huge shippers sending more than 50,000 packages per year.
No matter which carrier you choose, taking advantage of shipping discounts is an absolute must. At the end of the day, keeping your shipping costs as low as possible could be the thing that makes or breaks your small business!
Learn more about choosing the best shipping software.
Consider Moving to USPS or Regional Carriers
If you’re relying on a single carrier like FedEx or UPS for all of your packages, it may be time to consider diversifying your options. Switching to USPS will undoubtedly allow you to ship at lower rates, especially if most of your packages are on the smaller and lighter side. Simply put, USPS offers the best mix of affordable rates and quick delivery for most handheld packages, and services nearly every single residential address in the country. This makes it the premier carrier for eCommerce shipments!
Alternatively, switching to a regional carrier is another way to save money, especially if your customers are localized in one specific area. For example, if you know you have a lot of customers in the Northeast, you could see if a regional carrier like Lasership can get your packages to them quicker…and for cheaper. Using a regional carrier for at least some of your shipments is often a good strategy to shave some expenses off the top.
When exploring different options to get your products to your customers, regional carriers can offer a slew of benefits that often get overlooked. For more information, check out our question guide: Should My Business Use a Regional Carrier?
Raise the Prices of Your Products
The final strategy to offset price increases is the simplest solution, yet the hardest pill for your customers to swallow: raise the prices of your products to factor in higher shipping costs. This is probably the “easiest” and “quickest” fix. However, this may not be the most sustainable solution in the long term, since higher prices for your products may de-incentivize customers to make a purchase.
At the end of the day, the best solution to rising shipping costs is to find the balance that works for you. Maybe it’s working with a regional carrier for certain shipments; maybe it’s raising the prices of some of your products; perhaps it’s to do nothing at all. Do you know of any any other proven strategies to combat rising shipping rates? Drop a comment and let us know!