Shipping orders to customers is a common challenge every e-commerce business faces, regardless of their experience, size, or products. E-commerce business owners thrive on getting their products to their customers on time while reducing costs. Research shows that if shipping costs are too high, customers will abandon their carts.
However, on the vendor's end, 70% of the average order makes up the fulfillment cost. It is essential to find ways to reduce shipping and fulfillment costs if you want to compete with larger e-commerce businesses. This guide will introduce five ways to reduce the cost of shipping and fulfillment in your dropshipping business.
Packaging is an essential factor that increases shipping and fulfillment costs indirectly. Improper packaging can result in products being discarded, returned, stolen, or damaged. It can also affect the brand experience and ruin customers' shopping experiences. So, adopting the proper packaging techniques can help to reduce shipping and fulfillment costs.
Packaging accounts for one-third of all domestic waste. Plastic packaging waste is mainly responsible for harming the ecosystem. As a result, the company should avoid plastic to reduce or recycle it and reduce the expenses involved in the process.
2. Optimize Shipping Costs
When it lost about 7.2 billion dollars to shipping in 2016, Amazon was forced to optimize its shipping costs. E-commerce shipping considers several factors like the criticality of the product, type, weight, size, and quantity. All these factors have a role to play in shipping and fulfillment costs.
The best thing is to collaborate with a shipping agency that offers different carrier options. Additionally, striking the correct balance between delivery times and prices might help reduce costs.
3. Strategize Order Returns
The best way to prevent order returns is to avoid them from happening. It starts by providing detailed product descriptions and the correct pictures on your e-commerce website. In fulfillment centers, it is achieved by efficient packaging tracking of products, timely shipping, and error-free delivery.
Even when an order is returned, it should have a clearly defined operational channel to accept the order. The channel should also approve in accordance with a quality check, and discard or put away in the inventory following each product's stated criteria. Limiting order returns lowers the cost of shipping and fulfillment procedures.
4. Smart Automation
Integrating smart automation replaces standard and repetitive tasks vulnerable to data distortion, errors, product damage, and human safety. Every fulfillment center needs automation, depending on the range of SKUs and products.
Hardware integration like order sorting channels or robotic arms reduces human effort and ensures safety. Software automation helps with inventory tracking and provides a consolidated omnichannel. You should invest in automation because it is accurate and fast. It also saves time, money, and effort.
5. Employee Count & Training
This is the most underrated factor in reducing shipping and fulfillment costs. A well-informed and well-trained staff can make the necessary adjustments to their code of conduct as needed. This helps to spread the results of their knowledge and abilities.
Training will increase the ability of the workforce to adapt to different jobs and complete them faster and more effectively. Tracking the number of workers needed at a specific facility aids in reducing shipping and fulfillment costs.
The e-commerce industry is growing rapidly, but not everyone can make a profit. One of the ways to increase your chances of becoming a top earner is to reduce shipping and fulfillment costs.
(Contributed by Ayotomiwa Omotosho & Hermes Fang)