Optimizing Shipping Rates For Ecommerce Businesses

Imagine Barry's frustration as 40% of his e-commerce margins vanished into shipping costs. 📦💸 His business was growing, but profitability felt like an endless battle against logistics expenses. Ever faced a similar challenge? Barry's situation was all too common in our industry. Expensive carriers for every shipment, oversized packaging driving up costs, and zero visibility into supply chain operations were creating the perfect storm. Here's how we streamlined operations at our state-of-the-art facilities and achieved a remarkable 60% cost reduction: 🚀 Optimized carrier selection: We analyzed shipping patterns and matched each order type with the most cost-effective solution, reducing average shipping costs by 35% 📦 Right-sized packaging solutions: Implemented automated packaging optimization that eliminated dimensional weight charges and cut material costs by another 15% 🏢 Strategic 3PL partnerships: Connected Barry with facilities in optimal locations, cutting warehousing costs by 25% while improving delivery times 📊 Enhanced real-time visibility: Integrated inventory management systems that prevented costly stock discrepancies and boosted customer satisfaction scores by 40% The results went far beyond cost savings. Barry's delivery times improved from 5-7 days to 2-3 days for 97% of his customers. Through white label fulfillment solutions, his brand maintained its identity while customer complaints dropped by 70%. Most importantly? Barry shifted from wrestling with daily logistics fires to focusing on business growth and scaling his operations. The key insight: Complex supply chain challenges require strategic, data-driven approaches rather than quick fixes. What logistics challenge is currently holding your business back? 🤔 #EcommerceSolutions #LogisticsExcellence

“I got 90% off base shipping rates. I know a guy, I can connect you.” RUN. 🚩 When merchants ask for advice on how to optimize costs, there is always someone who “knows a guy” or someone who claims to be an amazing negotiator who can grind down your carrier. If you hear that, you should run. This isn’t exhaustive, but here are the real ways to save on shipping costs: 1) Is your inventory in the right place? Understanding where your demand comes from will dictate where to locate your inventory.  Placing your inventory in the right place drives down the distance that a package travels, and therefore drives down your cost.  If you aren’t doing a network analysis before you start, you are already off on the wrong foot. 2) Can you leverage scale? One reason 3PL’s exist is that they are points of aggregation. Labor can be shared across multiple accounts for order processing, and a carrier can pick up packages from multiple brands at one location, reducing the total cost. 3) Can you utilize multiple carriers? Different carriers focus on different weight bands and locales.  There are great carriers for lightweight packages and better ones for heavier products.  Regional carriers might serve one region really well, but not be nationally focused. 4) Do you have the technology in place to realize these gains? It’s a non-negotiable to have a system that can dynamically route orders to the correct fulfillment location.  Ask if your provider uses "rateshopping." This should not be hardcoded based on zip code. It should be dynamic based on your inventory levels and the location of the buyer.  Second, if you are utilizing multiple carriers, you want to ensure you have software that can shop for rates in real-time, looking at packages, destinations, and rates from the carrier. 5) Can you optimize your packaging materials? It is expensive to ship air.  Making sure you have the right boxes and are creating denser packages drives better returns. If someone’s “advice” for better rates is to talk to “their guy,” they are full of it. Run. There are concrete ways to optimize costs.   It takes great software and a plan to make it happen. There are also so many talented consultants who can help you with this (a few come to mind below). Nate Skiver, Kathleen Sullivan Garman , Robert Clemons, Timur Eligulashvili, John McClymont, Aaron Alpeter

Shipping costs can drain your margins. But most businesses make the same 3 mistakes. They don't negotiate. They don’t optimize packaging. And they don’t plan for zones. Here’s a quick checklist to get your shipping expenses under control: → Negotiate carrier rates. Most carriers are flexible, especially if you're shipping in bulk. Even small discounts compound over time. → Downsize your packaging. Shipping a 5 lb. product in a 15 lb. box? You’re wasting money on dimensional weight fees. Right-size your packaging to reduce costs. → Leverage regional carriers. Big names aren't always the cheapest. Regional carriers often offer lower rates for short-distance zones. → Optimize your shipping zones. Distribution centers close to your key markets save time and reduce costs. Every mile adds up. → Invest in automation tools. Platforms that compare rates and manage shipments in real-time pay for themselves quickly. Shipping isn’t just a cost—it’s a controllable variable. Small adjustments here = big savings later. Where do you see the biggest gaps in your shipping strategy?

"How do I get the best rates on parcel delivery?" ^We get this question a lot, esp from the younger, growing brands in our pipeline. My 2c > depends on which stage you're in. 1️⃣ <$1m/yr GMV (@ $100/order: ~10k orders/yr, ~40 orders/weekday): >> Operate your own fulfillment. At this stage, your biggest challenge is finding the large audience that will buy and driving retention from the folks that have already purchased. No better way to accomplish both than to touch every order before your customers do. >> get shipping rates from platforms like ShipStation, Shippo, or Shopify. All of these platforms give strong discounts from the big carriers and have wide integration libraries. Each allows you to easily connect to your shopping cart + other store apps. The rates are good, not great -- but good is fine. >> [a little secret] all these platforms have the same discounted rates. The Big 3 Carriers (UPS, USPS, FedEx) have standard discount programs. What's not standard is the rev share that each platform makes on the back-end off each parcel 🤐 2️⃣ Between $1m - $5m/yr GMV (up to 50k orders/yr, 200/weekday): >> consider a 3PL (+ using the 3PL's in-house shipping rates) >> Core q: is the pick/pack process drowning me/my team? If "yes", and throwing labor in wouldn't solve, then move towards a 3PL. *Remember* the longer you can keep fulfillment in-house, the more you'll learn, better inventory control, faster resolutions on customer issues. >> Use an expert like Matthew Hertz at Third Person, Joe Spisak @ Fulfill (Fulfill.com) | 3PL Finder, or Scott Glassman. They live/breathe 3PL <> brand matching, will secure a better 3PL than you can solo. >> if you go with a 3PL, I recommend going with the 3PL's shipping rates. They're likely to have better rates, even after they add a mark-up. This is good for both parties -- give you better last mile rates, and gives the 3PL a rev source that's not you paying more for pick/pack or storage. It's fair. 3️⃣ >$5m/yr GMV, esp > $10m/yr GMV >> You could go direct to the carriers on shipping rates. Begin negotiations to size your discounts -- but acknowledge that this is a project and plan accordingly. >> I recommend using experts in the small parcel negotiating space to unlock the max discounts -- folks like Nate Skiver, Timur Eligulashvili, Nicholas F., Aaron Dones, Deyman Doolittle. >> If the carriers offer strong rates on your volume >> if still self-fulfilling, begin using your bespoke rates + reap the savings right away. If you're using a 3PL, start conversations with the 3PL on either using your rates or staying with their rate (but w a deeper discount on each parcel for you). Stay flexible with your 3PL, if they're legit they'll play ball. This is bare bones advice. There are many other items to consider -- your assortment, balance sheet, appetite for Ops + Cost headaches. Jump in the comments w questions or your advice! #shippersfirst #volumefollowsvalue