Many people think that managing an e-commerce business is easy, where one simply lists products online and waits for sales. Of course, the reality is far more intricate. It involves not just listing products online, but also developing effective marketing strategies, ensuring robust supply chain management, and especially dealing with logistics. Logistics in e-commerce is very complex because, in the first place, coordinating various orders can be highly demanding: each order has its own set of requirements and delivery dates, necessitating meticulous organisation and management to ensure a timely and accurate service. Secondly, balancing sales and shipping expenses is a very tough task and not everyone can keep up. In this article we will examine strategies to reduce ecommerce logistics costs, an aspect that is essential to create more room for profit.
Hidden expenses
Multiple factors influence shipping costs, and unforeseen expenses can significantly burden retailers, particularly when they manage fulfillment in-house, thereby impacting profitability. Hidden expenses can be fuel surcharges, packaging costs, address correction fees, return shipping costs, custom duties, and so on.
Tips to reduce ecommerce logistics costs
To reduce the average cost of shipping, consider these elements.
Shipping zones
Zones are defined based on the distance a package travels from the point of origin. Shipping to farther zones typically costs more. If you manage shipping internally, you can focus on shipping to destinations closer to your point of origin.
Offer local pickup options
Providing local pickup options to your customers is an effective way to reduce ecommerce logistics costs. Moreover, it can also appeal to local customers who will benefit from the flexibility of retrieving packages in their own time, without having to wait at home for delivery.
Optimise packaging
Carriers usually apply shipping charges based on size and weight. Using packaging that fits every product perfectly, without too much extra, thereby preventing unexpected charges due to dimensional weight.
Negotiate with carriers
If you ship medium/large volumes of orders regularly, you should try and negotiate favourable rates with the carriers you collaborate with.
Use hybrid shipping services
Collaborating with multiple carriers rather than just a few can help to find better cost-effective solutions. For example, you could use one carrier for the long distance and another for the last-mile.
Invest in shipping software
Implementing an advanced shipping software can greatly help businesses. In this way, they can easily find the most cost-effective shipping methods while automating parts of the fulfillment process, thereby enhancing their overall operational efficiency.
Monitor shipping pricing
Shipping costs are subject to frequent changes and carriers often introduce surcharges for peak periods, holiday seasons or during unexpected events.
If you own an e-commerce business, it’s very important to keep up to date about these changes by regularly checking for updates on rates and adjusting pricing strategies accordingly. Remember to always be transparent with customers regarding shipping costs and shipping fees.
Encourage early orders during high demand periods
Why risk delays and disruptions during peak periods? Try and prevent such situations from occurring by encouraging customers to place orders early. You can do so either by informing your customers about the cutoff dates for placing orders to ensure on-time delivery or offer special deals for whoever places an order before a certain deadline.
Outsource your logistics
You can have all these and more solutions in one move by partnering with a 3PL. Not only will you achieve greater fulfillment efficiency to gain a competitive edge but you can significantly reduce ecommerce logistics costs, obtaining healthier profit margins. In particular, a provider like eLogy operates several fulfillment centers, allowing you to ship internationally from locations closer to your customers, reducing travelling distances and lowering shipping costs. Moreover, its advanced WMS platform and technology will help you optimise inventory, shipping and fulfillment operations, as well as routes and carrier selection, by automatically assigning the best carrier at the lowest price for each shipment.
