How to reduce shipping costs: 12 ways to save with automation

The cost of shipping can significantly impact your bottom line, and with global shipping costs at an 18-month high – every dollar counts. According to Deloitte’s Global Retail Outlook 2024, managing inflationary pressures and reducing costs is a top priority for 30% of surveyed retailers.

In the face of these challenges, retailers must adopt new technologies to enhance efficiency and keep costs down. As Deloitte highlights in their report,

"Retailers can make decisions today that will likely stand them in good stead for the decade to come. The opportunities for growth mean that in 10-, 20-, or 30-years’ time, we could look back at 2024 as a transformational year for retail, but another year of stagnation and a short-term focus on the challenging economic environment could leave retailers behind the curve for years to come."

To help you stay ahead of the curve and prepare for the future, it is crucial to start scrutinising your shipping costs now. We’ve outlined a comprehensive approach to reducing shipping costs through the different stages of the delivery process – from before the checkout to post-purchase and beyond. Here are 5 areas that you could optimise and save on costs using automation.

Starshipit tip: In the context of shipping, "automation" refers to using technology to streamline and simplify the various stages of the fulfilment process, saving time on manual and repetitive tasks, and reducing the need to hire more staff.

This includes logging into multiple carrier platforms to compare rates, manually selecting carriers for each shipment, and individually printing labels. These tasks are not only time-consuming but also prone to human error, leading to increased costs from operational inefficiencies.

What’s more, decisions made here can have a big impact on the customer experience. Beyond just getting orders out in a timely fashion, it’s vital to ensure those orders make it to the right destination.

So how do we turn these inefficiencies into opportunities for growth?

1. Negotiate your own rates

Negotiating your own shipping rates with carriers can significantly reduce your shipping costs. As your volume grows, you can leverage this to negotiate better rates by establishing a direct relationship with your carriers. This proactive approach ensures you’re not overpaying and can lead to substantial savings over time.

However, the shipping platform you choose here will dictate just how much control you've got. Avoid shipping aggregators that lock you into their negotiated rates or charge per-label fees when you use your own rates. This lack of flexibility can constrain your ability to switch carriers or adjust costs as needed.

Being a shipping enabler, Starshipit allows you to bring your own rates without additional per-label fees, giving you full control over your shipping strategy and costs. By negotiating directly with carriers and using a flexible platform, you can maximise your savings and maintain control over your shipping operations.

Using fulfilment automation to assign rules to select the cheapest carrier saves time and simplifies decision-making. By setting pre-defined rules based on criteria like destination, weight, and shipping service, you ensure that every order is mapped to the right carrier and then shipped cost-effectively, without the need to manually intervene.

The big decision to offer free shipping is not taken lightly by any retailer. However, by relying on shipping rules to select the cheapest courier every time, YourPetPa made this decision with greater confidence. Now, they can rest assured knowing they’re using the most economical option available for every shipment that qualifies for free shipping.

3. Set up live rates for customers at checkout

The checkout stage is crucial for both customer satisfaction and cost management. At this critical stage of the customer journey, it’s important to strike a balance between providing a variety of shipping options and maintaining control over your shipping costs.

Displaying live shipping rates at checkout is one useful tool here. This involves automatically pulling and displaying live rates from your integrated carriers, and then showing them in the checkout.

Here’s why this is such a useful tool:

• Customers receive accurate, live shipping rates based on their delivery location and the contents of their cart. This helps customers make informed decisions and reduces surprises at checkout.
• Offering multiple shipping options with live rates means customers can choose a delivery method that best suits their time and budget requirements.

Using automation rules with live rates gives you another level of control. For example, you could set up rules to automatically cover your shipping surcharges or even set up a rule to apply free shipping.

4. Add margins to your shipping rates

Adding margins to your shipping rates is essential for protecting your bottom line by covering unforeseen costs. Manually adjusting each shipping rate can be cumbersome and leaves room for discrepancies.

Automating this process allows you to easily add or subtract margins within your shipping platform. This helps you control costs displayed at the checkout and ensures you’re not losing money on shipping. Let’s say one of your carriers applies a surcharge to overweight items – you could automatically add a 10% margin to all heavy items to recover the cost of the surcharge and maintain healthy profit margins.

Embracing technology can turn your warehouse into a well-oiled machine, and your staff into pick & pack superstars. Instead of chaos, think minimising errors, slashing labour costs and speeding up processes.

Let’s look at how you can transform these chaotic moments into smooth, cost-effective operations with automation.

5. Compare shipping rates

It’s important to compare shipping rates across multiple carriers to ensure you’re getting the best deal. This traditionally involves logging into several carrier platforms, which cuts into your precious time and is prone to errors, which can lead to missed opportunities for cost savings.

Using a shipping platform allows you to compare accurate rates from multiple carriers within a single platform. This means you can instantly compare the best shipping options and prices for each order, without the hassle of logging into multiple accounts.

For example, family-owned business Bulkpantry, had very specific needs as their business started to gain momentum – Alex Robinson from Bulkpantry says,

“We wanted a portal that could show us which courier had the sharpest price out of all the couriers we use.”

With the ability to compare accurate shipping rates from different carriers, Starshipit helped Alex and his team choose the most cost-effective carrier for each order, which saved Bulkpantry both money and time during fulfilment.

6. Reduce errors with autocorrected addresses

One of the most frustrating issues for retailers is dealing with incorrect shipping addresses. Every incorrect address leads to undeliverable packages, returned shipments, and unhappy customers. Typically, this requires double-checking every address manually to ensure all details are correct – another tedious and error-prone process that’s just not scalable.

By implementing address validation technology, you can instead use automation to automatically correct and validate addresses, either individually or in bulk, at the point they’re imported from your sales channel. This ensures that packages are always shipped to the correct destinations, reducing costly return shipments and meaning you’re left with happy customers, not “Where’s my order” queries!

With the help of Starshipit’s address validation feature, Professional Beauty Solutions significantly reduced the number of incorrect delivery addresses. This led to huge cost savings by avoiding penalties for non-deliveries and improved customer satisfaction with better first-time delivery success rates.

Without the right tools to identify and merge these orders, you’re likely to incur higher shipping expenses and more packaging waste. With automation, you can implement suggested merges that identify multiple orders going to the same address and combine them into a single shipment. This reduces the cost of shipping, minimises packaging and enhances operational efficiency.

If you’re keen to see this feature in more detail, check out the video to learn more.

8. Save time with bulk label printing

Printing shipping labels one by one can be a tedious process that uses up valuable time and resources. If you’re handling a high volume of orders, this manual task can quickly become a bottleneck, leading to delayed shipments and excess operational costs.

By bulk printing your shipping labels, you streamline this process and avoid unnecessary delays, especially during peak sales periods.

Online jewellery store, La Mood, integrated Starshipit with their eCommerce platform, which meant they were able to bulk print shipping labels and packing slips. This implementation contributed to La Mood saving a massive 60% in handling time.

9. Use the right packaging for each shipment

During the pick & pack process, choosing the best packaging for each shipment is crucial to keep a handle on shipping costs. For one reason or another, some retailers often often end up using inefficient one-size-fits-all packaging, leading to wasted space and higher shipping costs due to unnecessary weight and volume.

In our webinar with the Print Bar, Jessica Turnbull from Sendle emphasised the importance of proper packaging, saying,

“The size and weight of your package is the largest determining factor in the cost of your delivery. Ensure your box size fits snugly around your product, as empty space is a waste of money.”

Automating the packaging process with technology ensures that each order is matched with the most efficient packaging based on item dimensions and weight.

Professional Beauty Solutions leveraged Starshipit’s pre-defined packages feature, saving time and reducing costs. By configuring over 35 packages, they ensured each order is automatically assigned to the correct size box, eliminating manual entry and speeding up the dispatch process.

10. Reduce “where’s my parcel” queries with automated tracking notifications

One common pain point for retailers is the barrage of “Where’s my parcel” queries from customers. This not only puts a strain on your customer service and support teams but also diminishes the customer experience.

By implementing automated tracking notifications, you can keep your customers informed at every stage of their parcel’s journey. This proactive approach reduces the need for customers to reach out, saving time and resources.

A great example of this is by online boutique, Bhumi Organic Cotton. The Bhumi team needed a platform that had the ability to customise and send notifications to customers at every step of the sales and fulfilment journey. Starshipit gave them the ability to send customers automated shipping notifications at every stage of the parcel’s journey and reduced the amount of customer enquiries Bhumi received by about 50%.

11. Streamline the returns process

Handling returns can be a major time-sink for retailers. The constant back and forth communication with customers, printing and sending return labels, and extra administrative work for the support team can really take a toll on resources.

With automation, retailers have a few options when it comes to returns. By setting up an automated self-service returns process, retailers can completely streamline the returns process and take the pressure off their teams. Or, they can send out returns labels automatically with each order, providing a great customer experience and minimising admin for customer service staff.

Icewear, an apparel brand known for innovation, now saves hours every week with Starshipit’s branded returns portal. They embedded a self-service branded returns portal directly on their website, allowing customers to process their own returns. Now, instead of sending emails back and forth and printing and sending return shipping labels, Icewear now gets up to 70% of their time back per return.

12. Track carrier performance

Many retailers sit on a multitude of operational procedures and partner agreements built up over the years. One way to reduce costs can be to review these, uncovering any performance issues or overpayments in the process.

For example, brands can use shipping data to ensure their carriers are performing to the agreed standard. Larissa McGovern, Logistics Manager at leading retailer MESHKI says,

”We can use Starshipit for in-transit reports and to track our carrier’s on-time delivery, keeping that metric at around 96%. We can then cross check this against carrier invoices to make sure we aren’t overpaying.”

Ready to reduce your own shipping costs? Here’s how to get started

Reducing your shipping costs is more critical than ever for retailers facing rising operational expenses. By leveraging powerful automation throughout the fulfilment, checkout, and post-purchase stages, you can significantly cut costs and boost operational efficiency, while maintaining a lean headcount.

Whether it’s comparing carrier rates, automating label printing, or using real-time shipping rates at checkout, each implementation is an opportunity to save. With detailed analytics and streamlined returns, these strategies not only reduce costs, but also enhance the experience for your loyal customers. Embrace automation today and start turning these insights into tangible savings.

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