For online businesses, one of the biggest overhead expenses is logistics. The cost to pack an item, ship it to the buyer, and take it back if it’s returned, can quickly stack up against you. That is if you don’t take measures to keep logistics costs down.
As an e-commerce business owner, here’s how you can save money on logistics aside from using Reverse Logistics software technology:
1. Buy packaging in bulk
Buying almost anything in bulk can save money, and that principle remains true for packaging materials. Buy packaging materials, labels, stamps, envelopes, and other shipping materials in large quantities, ideally from a seller that can give you a hefty discount. Moreover, you can strike a deal with a packaging supplier to provide you with discounts as long as you buy in bulk from them.
Not only does recycling packaging materials help reduce your carbon footprint; it’s also a great way to slash your packaging costs. If you have extra boxes and parcels that are clean and undamaged, use them for new shipments. Similarly, use recycled newspaper, scrap paper, bubble wrap, and other reusable packing materials to avoid having to buy a fresh supply.
3. Increase the average order value (AOV)
A lot of online sellers offer free shipping for customers who spend a certain amount of money on a purchase. This strategy is so widely used because it works, and it works well. Crunch the numbers to have a minimum spend that can cover shipping costs while giving you extra sales.
4. Reevaluate carrier options
Be sure to review your carrier’s current prices against other carriers’. A lot of carriers change their prices every year, so it can help save you money if you find a carrier that fits your needs and offers a lower price.
5. Split inventory
When you only have one warehouse to ship from, you are bound to spend more on shipping costs for customers who are far away. Therefore, it’s a smart move to have other warehouses in different parts of the country to split your inventory.
Review your customers’ locations and find out which zones of the country have the most volume of orders, and base your warehouses in those areas.
6. Consider a 3PL
A 3PL or a third-party logistics company helps online sellers save money and time by carrying the sellers’ products in multiple warehouses across the country. For many e-commerce businesses, this option is the most cost-effective since it saves money on rent, labor, shipping, and equipment.
7. Pack smart
Don’t overload every package with packing peanuts or use boxes that are too large for the product inside. Smart packing often gets overlooked, but it’s one of the best ways that e-commerce businesses can save money in supplies and shipping (lighter packages mean lower rates).
The cost of logistics can be too costly if you don’t learn how to control them. Fortunately, you now know the best ways to save money on logistics, which will not only reduce costs but will also make your fulfilment process more efficient.