How to reduce shipping charges

By Anoop Nair on October 9, 2014 10 Comments / 3868 views

Dear Rodinhood community

Recently I asked whether to add shipping rates or to provide free shipping and include the shipping rates within the product price here.

Here is another related question to all the fellow rodinhooders.

Situation : Customer placed an order that weighs 1kg and I charged him for the product and the shipping charges for 1 Kg. Now when I packed the product, the wieght comes out to be approx 1300 gms. My courier company charges me for every Kg and if the shipment weighs more than 1 Kg, I will be charged for 2 Kg. So, In this case, I had to pay for 2 Kgs whereas I just charged my customer for 1 Kg shipment.

How can I overcome this additional cost? Is it a good idea to reduce the content and make the whole packet weigh approx 990 gm? That means the product is approx 750-800 gm and rest is the packing. Which doesn’t sounds good to me. Or should I charge the customer for additional 1 Kg shipping? Or is there any other better alternative to this problem?

Feedback and suggestions appreciated.

Comments

Anoop Nair

10 Comments

Kamal Kalra October 9, 2014, 12:47 pm

Hi Anoop,

You have a very valid question. Let me try to answer it for you. There are two parts to it.

1. Rate Negotiation with Courier – When you choose a courier partner for your company, you need keep a few things in mind. a) Serviceablity – Wether the courier has enough serviceable locations as per your requirements. b) Rates and Slabs : Ofcourse the rates should be competitive but another important aspect which we tend to ignore is the Slabs. Like you said your company charges you on 1kg slab, which is very high. Average slabs with courier companies are 500 Kg and sometimes they even give 250 gms slabs. This helps in overcoming these kind of issues to a certain extent. Solution : Re-negotiate the slabs with your courier company, and tell them, you will move the business somewhere else otherwise.

2. Customer Charges : As a rule of thumb, you don’t charge customers only as per your fixed courier charges. There are other things involved as well like taxes ( on courier payments ), COD charges extra , Air or surface and ofcourse , like it happened in your case, volumetric weight issues. You can’t predict the volumetric weight until you have packed the items. To overcome this challenge, you can do a few things. a) Start charging a lumsum shipping cost, which should adjusts these issues, + or – 15% should do. b) If possible, have fixed packaging for the items, so that you know how much you will have to pay for each packet. And this will save your reconciliation and management issues as well. For ex, I work for a company called http://www.donebynone.com. We are into women apparel, Handbag and Footwear. We have 5 sizes of the boxes fixed and they have fixed volumetric weight. We have given numbers to each box and we know how much would that box will weigh volumetrically. We have boxes ranging from 250 gms to 2.4 Kg, which takes care of packing as well as courier reconciliations.

So in order to reduce your shipping costs, negotiate well with the courier companies, not just on rates and serviceability but on slabs as well. Try to have fixed packaging and charge the customers in lumsum, not exact.
Anoop Nair October 10, 2014, 2:40 am

Hi Kamal

Thank you so much for your detailed comment. I am liaising with a new courier company gojavas as they specialize in eCommerce shipments. Their slab and rates looks good to me. My existing courier companies DTDC, First flight are not going to customize it for me.

Thanks!
Sai Rodinhood Pothuri October 10, 2014, 11:55 am

Hi Anoop Nair,

Dont sit with single courier operator, Get Delhivery Account too. New Entry Ecom Express doing very well. Try to get Ecom Account also.. So you will have 3 operators in hand who will give you 3 different rates according to weight slabs. so according to area, you can ship with one who charge you less. By the way they all give you prepaid and cod awb numbers. so nothing to worry.

Thanks & Regards

Sai Pothuri

http://www.beautona.com
Amit Shroff October 10, 2014, 6:32 pm

Anoop, before we give you any advice would like to know and understand what are you shipping and how. Since it would be a major factor to throw suggestions and options.
Anoop Nair October 11, 2014, 10:43 am

Hi Amit

I am shipping snacks – basically South Indian snacks. I will be sharing my venture details here in TRH soon.

Thanks!
Alok Rodinhood Kejriwal October 11, 2014, 12:20 pm

I think you should mention bracket pricing:

Weight: 1-1.5 kgs = X
1.5 – 2.5 = Y

Try and UPSELLL the problem – which means that by looking at the courier cost, can you incentivize your consumer to actually BUY MORE?
Anoop Nair October 11, 2014, 12:28 pm

Yes Alok But it gets messed up when you offer free shipping above a certain
Samir Dahotre November 12, 2014, 11:41 am

Great Discussion! Valuable tips I got from all! Few other suggestions:-

1. Packaging cannot be compromised for an early brand. Courier charges as per its slabs which u are well familiar of with gojavas. I work with Delhivery. Hence don’t compromise on packaging

2. Delhivery has a complex Rate Card for Express Services (Only COurier) and Fulfilment (Courier & Packaging). I have various goods at my art portal http://www.artbugs.in from INR 5K to INR 5L. Weights vary from 300gm upto 5-10 kilos. beyond 5-10kg delhivery does not address hence tie up with gati or someone for the same.

3. My site has free shipping for all products irrespective of price. Hence I need to load the shipping cost for each product. Based on Delhivery Rate card I have built a detailed excel calculator. Drop me a mail and I will send u the same Samir@perspective.net.in The Excel can be modified as per your provider rate card… Its very detailed… it also helps convert inches to cms, calculates volumetric v/s actual weight as courier charges apply on whichever is higher.

4. Especially for small tickets of INR 3-5K Courier cost is a major factor. I am working on minimum margins to maximize sales. Hence this precision calculator is important for low cost items

5. Alok’s suggestion is great of incentivising customer “buy more to reach 1,2,3 Kg shipment”… but it will involve app logic hence is a great idea for future during site dev. revamp

Once again… startups should ensure robust packaging in its early years… we have learnt from our earlier packaging and have improved over time.

As we are a niche “Arty” company – recall is high and satisfied customers (from our other business of corporate and wedding gifting) always remember to call us for anything “artistic” or “different”
Anoop Nair November 13, 2014, 4:40 am

Hi Samir

Thanks for the insight.. Please share the excel sheet that you have mentioned above. It would be of great help.

Thanks!
Anoop Nair November 14, 2014, 1:58 am

Went through your website – Artbugs today. Awesome collection of artworks. Though looks like its meant for high end buyers. I also saw few items having name as Untitled. Is that a bug or you missed the name. I would like to hear about your stats (Number of visitors you get) if you could share and which strategy worked the best for you.

Thanks!