Any business that ships products to customers understands the importance of reducing fulfillment costs. After all, the lower your shipping and handling costs, the more profit you can make on each sale. But high fulfillment costs continue to be a significant challenge for growing e-commerce businesses. On average, an online retailer spends almost 70% of their order value on fulfillment expenses, but there are ways to reduce this. Here are some tips to lower your fulfillment costs.
Optimizing Your Shipping Cost
When shipping products to customers, finding ways to keep your costs low is essential, and optimized shipping can be an excellent way to do that. If you work with a fulfillment company like ours, we can help you by consolidating your orders and shipping them in bulk. This can often save you money on shipping charges. In addition, we can also help you to negotiate lower rates with shipping companies.
If you’re handling your order fulfillment, make sure to shop around for the best deals on shipping services. By comparing rates, you can ensure that you’re getting the best possible deal on shipping for your business.
Incorporate Automation into Your Logistical Setup
One way to reduce fulfillment costs is to automate repetitive and time-consuming tasks. For example, if you're using a manual process to print labels and pack boxes, investing in a label printer and packing machine can help you get the job done more quickly and with fewer errors. Similarly, if you're still tracking inventory manually, investing in an automated inventory management system can help you save time and avoid costly mistakes. By automating repetitive tasks, you can free up your staff to focus on more critical tasks and reduce your fulfillment costs significantly.
Alternatively, if it’s too costly to implement automation in your current processes, you can outsource your fulfillment to Boxzooka. Our cutting-edge warehouse management software (WMS) ensures every step of your fulfillment is carried out efficiently. In addition, we have invested in the best technology to help your clients make the most out of our services.
Evaluate Your Current Fulfillment Setup
It's critical to understand what your current fulfillment costs consist of. List down every product and service you’ve used in the previous quarter and the expected service you will need in the next six months. These are some areas you should include:
Core services such as pick and pack, returns processing, and restocking.
Eliminate “Nice to Have” Services
It’s easy to overpay for unnecessary services and tools. So, the next step is eliminating all non-essential expenses associated with order processing. First, find out what are the “nice to have” services and products by assessing your current fulfillment setup and asking yourself the following:
Will removing this tool or service result in a negative customer experience?
Will your fulfillment quality be affected if you do without this service?
Is this service essential in scaling up your business?
Removing that service or tool is a good idea if you answer "no" to the above questions. However, reducing your e-commerce fulfillment costs doesn’t have to be complicated. Following these tips can save money on shipping without sacrificing quality or service.