If you’re an eCommerce business that frequently ships its inventory, you likely understand how quickly shipping costs can add up. Without having a firm understanding of shipping costs, it’s impossible to truly understand your bottom line. For growing eCommerce businesses that have a sudden increase in orders, shipping logistics need to be ironed out effectively to save money. Lucky for them, It’s possible to save a ton of money by simply negotiating shipping rates with your local shipping courier. But where do you begin?
In this article, ShipCalm will explore what impacts shipping rates, how to prepare for shipping rates negotiations, as well as some effective tips for negotiating shipping rates with the top three shipping couriers. With ShipCalm’s help, you can optimize your shipping logistics and drastically improve your profits with the power of negotiation.
How to Prepare to Negotiate Shipping Rates
It should go without saying that to properly negotiate shipping rates with a shipping service you need to organize a few matters before. It’s important to establish a relationship with your shipping service accountant to securely share business data with them to leverage a price drop for shipping. If they understand where the data comes from, they’re much more likely to consider a price adjustment.
Merchants also need to collect the appropriate data on shipping sales, speak with their own financial manager, and identify areas where a negotiation can be made most effectively. It’s also suggested to research the different discounts available through FedEx, UPS, and USPS to compare and contrast deals based on your business’s current needs. While every business and shipping courier is unique, having strong bonds with business partners and a firm understanding of shipping data will only help with the negotiation.
What Impacts Shipping Rates?
When first learning how to negotiate shipping rates, begin by first learning more about what impacts the rate of shipping. The answer is a complex one, as numerous factors affect shipping prices. From distance to shipping needs, these are the factors that influence the price of shipping most dramatically:
- Shipping Zones and Distance: Shipping zones are used by shipping carriers to track and measure the distances that packages travel from one end to the other. The larger the difference, the heftier the price of shipping.
- DIM Weights: DIM weights, or dimensional weights, are when packages are priced based on freight transport requirements, using an estimated weight based on the item’s length, width, and height. Basically, if the item takes up a ton of space in the loading-trucks, you can add a few dollars to the shipping cost.
- Shipping Methods and Time: We’ve all seen it in the checkout window: air or ground shipping options. Naturally, air shipping is a much more expensive option compared to ground, but some products require this shipping type.
- Additional Fees or Surcharges: Additional fees and surcharges will vary based on the shipping carrier, but you can anticipate additional charges for shipping insurance, express shipping, and any custom fees needed for international deliveries.
- Handling and Labor: Unless you’re running a merchant personally preparing and shipping products to their consumers, you likely need to factor in the cost of labor for any shipping and inventory fulfillment needs.
How to Negotiate Shipping Rates
While we now understand what impacts shipping costs and have prepared the data, it’s time to consider the most important factor of all: the shipping carrier of choice. Every merchant is different, but before choosing any shipping service, you should make sure that you’re entering the relationship and gaining the best possible deal possible. Many shipping companies are willing to negotiate their rates for businesses that are bound to provide consistent service, with many major shipping carriers even offering discounts to those that want to learn more. Here are some of our tips for negotiating shipping rates with the top shipping carriers.
Negotiated Rates with UPS
Negotiating shipping rates is a fairly practical process of forging a solid relationship with the shipping carrier account manager and asking to learn more about discounted shipping options for the account. UPS does not publish threshold rates, so each negotiation with be on a case-by-case basis. If you’re a still new business but project positive sales growth, they may even be willing to provide a three-month grace period to see if the accommodation works on their end. This is a huge reason we suggest having comprehensive business analytics before proceeding.
Negotiated Rates with FedEx
FedEx works very similarly to UPS, both shipping carriers do not publish their thresholds and instead embrace looking at each account individually. Similar to UPS, you want to make sure you’ve collected your business data and established a trustworthy relationship with the FedEx account manager. That will make it much easier to negotiate shipping rates in the future, plus, staying in touch with your account manager never hurts for those times of the year when business is especially booming.
Negotiated Rates with USPS
USPS allows merchants to adjust their shipping rate pricing by offering Commercial Plus Pricing (CPP), effectively providing deeply discounted shipping based on shipping volume. This is an especially welcomed option for eCommerce businesses that can’t seem to hold on to their inventory because the only way to qualify is by having enough shipments per year.
ShipCalm Can Help with Negotiating Shipping Rates!
When considering how to negotiate shipping rates, it really comes down to properly preparing before the big talk. Choose a shipping carrier that you know will offer pricing that fits your budget and current business flow and don’t be afraid to establish a reliable relationship with your shipping account manager. Gather any necessary data you need to leverage a shipping discount for your sales growth, and you’ll be one step closer to optimizing your shipping logistics overall.
Lucky for eCommerce merchants that might need to negotiate their shipping rates, hiring a 3PL company like ShipCalm makes optimizing shipping simple. Beyond the convenience, ShipCalm also has pre-negotiated rates with major logistics services companies. These rates get passed down to our merchant customers and they are likely lower due to ShipCalm’s scale than those that individual merchants are able to negotiate.
Whether or not your business has been booming for years or you’re just now getting started, ShipCalm seeks to simplify shipping logistics to support long-term growth. With ShipCalm’s affordable services, we’re able to identify areas where you can cut down on shipping costs, manage inventory and handle order fulfillment, and even touch base with your customers to make sure everything arrives as intended. Spend less time worrying about shipping and more time running your business by contacting ShipCalm today!
