For ecommerce brands, 2024 has been a year of rising costs across the board, and shipping is no exception. But while fuel prices, labor shortages, and inflation make shipping more expensive, customer expectations for fast delivery haven’t changed. This leaves ecommerce brands with a dilemma: how to manage rising shipping costs without compromising on speed and customer satisfaction.

If you’re feeling the pinch, you’re not alone. Here’s a look at the top strategies to keep shipping costs under control while meeting the demands of a speed-driven market.

1. Negotiate Better Rates with Carriers

Shipping rates are variable, and with enough leverage, brands can negotiate discounts that significantly reduce costs. The key is understanding your shipping volume, routes, and timelines. Many carriers offer discounts based on volume, so if your shipping needs are high, you’re in a good position to negotiate.

Tip: Build relationships with multiple carriers to maintain flexibility and leverage competitive rates. Major carriers like UPS and FedEx often provide volume discounts, especially for brands that commit to a specific volume or route over time. Smaller regional carriers may also offer competitive rates for short-haul deliveries, providing a cost-effective alternative for certain zones.

2. Optimize Packaging to Reduce Dimensional Weight

Shipping costs are often calculated based on dimensional weight (DIM), which considers both the size and weight of a package. Oversized or poorly packed items can lead to inflated costs. By optimizing packaging to use as little space as possible without compromising product safety, brands can reduce DIM costs significantly.

Tip: Invest in customizable packaging that adjusts to different product sizes. For example, adjustable boxes or envelopes that reduce unused space help lower DIM fees. In addition, using eco-friendly and lightweight materials can further cut costs while enhancing your brand’s sustainability image.

3. Use Regional Fulfillment Centers

One of the most effective ways to reduce shipping costs and improve delivery speed is to use multiple fulfillment centers located closer to key customer zones. By reducing the distance packages need to travel, brands save on shipping costs and can offer faster delivery times.

Tip: Working with a 3PL provider that has a network of regional warehouses can make this strategy easier to implement. Fulfillment centers located strategically across major regions allow brands to store products closer to demand hubs, which helps reduce both costs and transit times.

4. Choose a 3PL That Offloads Direct Label Costs

Some 3PLs inflate shipping label costs by charging higher rates than they’re receiving from carriers, adding unnecessary expenses to your logistics budget. Partnering with a 3PL that passes on direct carrier rates can make a significant difference, keeping costs transparent and more manageable.

Tip: When evaluating 3PLs, ask about their policy on label costs and ensure they’re passing on direct rates without markups. This transparency allows you to maximize your budget and avoid inflated shipping expenses.

5. Offer Free Shipping Selectively

Free shipping is a great customer incentive, but it can quickly eat into profit margins if offered indiscriminately. Many brands are finding success with conditional free shipping—only offering it on certain items, at specific price points, or during promotional periods.

Tip: Set a minimum order threshold for free shipping to encourage larger orders, which offsets the shipping cost. Alternatively, offer free shipping only for members of a loyalty program or for repeat customers. This helps ensure that free shipping is reserved for the most valuable customers or larger order values.

6. Leverage Technology for Real-Time Rate Comparison

With shipping rates fluctuating based on distance, demand, and other factors, staying agile with technology that provides real-time rate comparisons can help brands choose the most cost-effective shipping option. Many ecommerce platforms now offer plugins that integrate rate-shopping tools, allowing brands to find the lowest rate on every order.

Tip: Consider rate-shopping software like Shippo or Easyship that aggregates carrier options, calculates shipping costs in real-time, and recommends the best rates. This can be especially valuable when dealing with high order volumes and varying shipping destinations.

7. Streamline Returns with a Cost-Effective Policy

Returns are often an overlooked factor in shipping costs, yet they can be a major expense if not managed efficiently. By creating a clear, customer-friendly returns policy that minimizes the need for return shipping, brands can reduce unnecessary expenses.

Tip: Offer options like return drop-off points or partner with a returns solution provider. Having clear guidelines for returnable items, restocking fees, or even offering store credit in place of refunds can help offset the cost of reverse logistics.

Thoughts: As ecommerce brands continue to navigate the complexities of 2024, managing shipping costs without sacrificing speed has become a key priority. By negotiating better carrier rates, optimizing packaging, using regional fulfillment centers, and choosing a 3PL that offers direct label costs, brands can keep shipping affordable while meeting customer expectations. Remember, a cost-efficient shipping strategy isn’t just about saving money; it’s about creating a sustainable model that supports growth in a challenging market.