No, not that type of shipping! We’re talking about how you get your product to your customer.
Shipping is a huge expense for every subscription box company.
In fact, it consistently represents one of the highest expenses in subscription boxes’ cost of goods (COGS). What’s more, it can be one of the hardest costs to lower, even as your business scales up.
Because this can impact your bottom line over the life of your business, it’s important to look at it as early as possible. Even if you’ve already launched, your company can benefit from evaluating your unique shipping patterns and requirements on a regular basis. Doing so is a key exercise for any online retailer to prevent overspending on small parcel shipping.
Tip: Check out our article on the best carriers for shipping subscription boxes!
One of the simplest ways to lower shipping costs is to work with a partner who can help. Simply put: your company may not have the personnel, resources, buying power, or the capacity to handle the fulfillment and shipment of your orders. If it is not cost-effective to do it in-house, using a third party will save your company money in the long term.
Extra perk: Some fulfillment partners may have access to more competitive shipping rates than what you currently use. Ask your fulfillment partner about their carrier options, their rates, and if you’re able to purchase postage directly through them.
Do the Research
If you’re looking for leverage when negotiating rates, make sure you take the time to research all the carriers you have access to for your business. Don’t assume any service is your only choice –– there are many parcel consolidators and parcel delivery services that can compete with almost all large carriers.
Looking for a list? Check out the consolidators who work with the USPS.
Even if you’ve already committed to a carrier, you can still discuss your shipment history and see if there’s any way you can get better rates. If you’re able to make a move to a new carrier, use that data to negotiate with a new carrier. In general, doing this analysis on your shipment patterns, zones, frequency, and more will lead to better-informed conversations with carriers, and therefore, better pricing. Knowing your company’s needs and considering all the options is the only way to get the best shipping rates.
Take Advantage of USPS Cubic Shipping and “Commercial Plus” Pricing
One of the most cost-effective forms of shipping is USPS cubic shipping, also referred to as Commercial Plus. Cubic shipments are based on the volume of the box, not the weight. This makes it easy to standardize and project shipping costs accurately month-to-month.
What’s more, USPS cubic shipping offers up to 20lbs. of weight per box. If your box is heavy, switching to cubic can immediately lower shipping rates, as the weight of the box will no longer dictate the price.
(Note: If your box is under 16oz. in weight, First Class Mail will likely be a cheaper option.)
Typically, the USPS requires 5,000 First Class packages per year or 50,000 Priority Mail packages per year to qualify for Commercial Plus pricing. To ensure you’re getting base prices, you’ll need to open your own contract. Purchasing cubic postage through a reseller will almost invariably include an upcharge. However, you’ll still likely save money compared to dimensional weight-based (DIM) shipments.
Ship From a Central Location
Outside of volume or weight, postage is also impacted by the distance you’re shipping. Most providers will define “zones” or segments of the country –– these are predefined areas, usually based on your ship-from and ship-to zip codes. For example, if you use the USPS, sending a box from southern California to northern California would be classified as Zone 1 shipping. Sending that same box to New York would be classified as Zone 8 shipping (and this would likely mean many dollars more in cost).
Tip: Review the USPS’s cubic rates per zone in our review of shipping carriers.
If you’re trying to ship around the country, you’ll never strictly have Zone 1 shipping, but you can optimize your shipping distance.
For example, if you’re able to ship centrally, you can reduce the number of more expensive zones by virtue of having fulfillment partners closer to all of them. That will save serious cash. Taking your average zone from Zone 8 to Zone 4, through the USPS, could mean saving nearly $0.95/shipment.
When doing the research analysis we mentioned, take a look at your most common zones or “Ship To” states. How close or far are they from you? Is it possible to be closer to most of your subscribers?
Tip: If you’re considering moving fulfillment, it would be easier to locate and work with a third-party logistics partner (3PL) or fulfillment partner, rather than move your operation or warehouse there. Check out Subscription School’s resources page for suggestions on fulfillment partners.
Save on Packaging
Packaging for shipments can also be a large expense, particularly for smaller companies.
One way to reduce costs is to buy boxes and packing materials in bulk. When possible, recycle boxes and packing material. Not only are you helping the environment, but also your bottom line. Make sure the box size is the correct size for your items. Using boxes that are too large can mean you are paying for extra packaging and weight unnecessarily. In addition, packaging that is too large –– or too small –– can lead to expensive damages and returns. That means you’ll need to repurchase postage.
Learn More About Cratejoy’s Custom Box Program!
Check out the standard Cratejoy boxes or design your own custom boxes through the Cratejoy box program with BoxUp! We offer high-quality boxes, fast shipping, and special prices only for Cratejoy sellers!
Skip the Insurance… Maybe
Depending on the value of your subscription box, it may not be worth paying extra to insure it. If your carrier offers reliable service with few damaged or lost items, paying for the occasional damaged package might far outweigh paying insurance for every box. Keeping an eye on your rate of returned packages can help you figure out if it is worth this extra expense.
Save Money on Shipping with Subscription Boxes
From taking the time to analyze your shipping habits to optimizing your shipment location & packaging, there are a number of ways to lower your costs on shipping with subscription boxes. What’s more, these savings compound over time; by shaving a few dollars off this month, you position your business to save hundreds –– if not thousands –– of dollars over time.
This guide was collaborated on with the resident experts at Kable Packaging.
Cratejoy is an all in one subscription commerce platform that includes everything you need to start your own subscription commerce business online. Try it free for 14 days.