The pandemic has brought many changes to the shipping industry, but one of the biggest is the shift toward B2C shipping that has caught some retailers, wholesalers and manufacturers by surprise.
With everyone at home for an extended period, suddenly shipments that used to head out on pallets to a warehouse or store need to be packaged individually and sent directly to a customer instead. It’s changed packaging needs, shipping methods, and much more.
Now that your world has been turned upside down, how are you keeping shipping costs in check? You’ve likely received some shocking invoices in the last few months — it’s time to figure out how to reduce shipping charges in this new environment.
How to reduce B2C shipping costs
- Stay informed about your shipment trends.
If you don’t have good data about your shipping costs, you’ll never be able to get them under control. You need to know how your distribution center locations, your service types and your package dimensions and weights affect your spend.
All this information is called your shipping profile and it’s the key to reducing your shipping spend. Your carrier knows everything about what and how you ship, and you should too if you want to lower costs. Once you understand your shipping profile, you can track the trends and target the fees and surcharges that affect you most often. There’s no one-size-fits-all approach, though. What matters is your profile.
- Stay in communication with your carrier rep.
Those pandemic-related peak surcharges might not go away anytime soon, but you’ll never know until you ask. Both carriers are imposing an extra fee on packages to residential locations, which is a common destination for B2C shipments, of course. Contact your rep and find out when they expect these surcharges to lift.
Staying in regular touch with your carrier rep is a good practice anyway, especially once you have a handle on the trends that have an impact on your shipping. When trends are affecting you negatively, talk with your rep about changes you can make in your shipping operations or in your contract. Speaking of…
- Renegotiate your contract.
Too many shippers let years go by before they revisit their carrier contracts. (Fifty-six percent of shippers in our recent survey hadn’t done it in at least a year. Even if you’ve negotiated fairly recently, the pandemic has probably undone some of what you worked on with your rep. Get to know your data because there are more than 600 negotiable components in a carrier contract. You have to know which ones are hurting your spend the most right now to properly negotiate.
- Stay in contact with your vendors.
How’s your supply chain looking? If you aren’t in close contact with your vendors, you might not have to worry about shipping because you won’t have the products you need in the first place! Contact your vendors and find out what plans they have in place to keep things moving — especially as the holiday season approaches. Ask if they anticipate any changes that will affect your particular business.
- Should you still be offering expedited shipping or will standard services work?
The shipping speed options you offer customers have grown more complex since the pandemic began. With carriers still prioritizing food and health shipments, shippers of non-essential items need to think strategically. UPS recently said it would be “selective in terms of what goes through the network” — making maintaining contact with your carrier rep even more important.
Think through the shipping options you offer your customers. What will they tolerate? What can you reasonably offer? What will help you manage costs best? Whatever you decide, make clearly communicating with your customers about shipping options a top priority.
- Rethink your free shipping minimum.
Along with shipping speed, consider your free shipping minimum. How do the common surcharges involved with B2C shipping — like Residential Delivery, Delivery Area Additional Handling and Oversize/Large Package — change the Cost of Goods Sold for your items from what they were before? It’s important to thoroughly understand your own costs before you can draw the line for free shipping.
- Seek to expand your carrier base leveraging DHL, USPS or regional carriers.
Given everything that’s changed, it might be time to crunch your numbers and look at leveraging DHL, USPS, regional carriers, or other last-mile delivery providers to supplement your UPS or FedEx volume. It’s also never a bad idea to have this information in your back pocket if you need to suddenly shift volumes because your carrier isn’t meeting your needs.
- Eliminate controllable accessorial charges.
There are many accessorial charges that are within your control — you just might not realize it. My colleague Morgan covered several in her recent post, in fact. Once again, the key to controlling these is knowing your own data inside and out.
Dig deep to find B2C shipping savings
So how do you get a handle on your data, its trends, and what you should negotiate in your contract? You likely have almost all that information already, but it probably isn’t easy to gather, analyze and understand.
You can scoop up the last few months of carrier reports and dig into the data yourself, or you can seek out a tool that helps you get the visibility you need to make smart B2C shipping decisions. No matter what, the only way to control these costs is to understand them first.
Surcharge costs creeping up? Find out why with the help of our ebook, 5 Budget-Busting Surcharges & How to Lower Them.