E-commerce brands should always be asking themselves this question to avoid leaving valuable dollars on the table. But it’s especially important during the holiday season.
Shipping ranks consistently as one of the biggest costs for businesses during the holidays, as peak season surcharges and the desire for rapid home delivery inflate spending on shipping services. So, what can brands do to keep their holiday shipping costs under control?
While it isn’t possible to control shipping rates, there are steps that brands can take to minimize what it’s costing to ship packages during the busiest mailing period of the year. From managing shipping deadlines to rate shopping for the cheapest option for every order, we’re going to cover our top 8 tips for more affordable holiday shipping in 2022.
All major carriers use Christmas shipping deadlines during the holiday season as a way to manage customer expectations and minimize shipping delays. Cut-off dates for holiday shipping services will vary depending on the postal service and delivery speed. For example, an economy ground shipping method typically sees the earliest cut-off dates during peak season, with international shipping and priority mail service like overnight shipping typically experiencing later cut-offs.
It’s the responsibility of online sellers to let their customers know about holiday shipping deadlines and what holiday shipping options are on offer, so they don’t miss out on receiving parcels in time for the holidays. If you’re relying on the cheapest option for shipping during the holidays, bear in mind that your Christmas shipping deadline is going to be a lot earlier than priority mail services.
When you start shipping packages close to the deadline, it’s a good idea to add a banner to the home page of your website or a social media post letting shoppers know that there are ‘X days to guarantee packages before Christmas Eve!”
You can check out the 2022 holiday shipping deadlines here.
Moreover, there are some ways e-commerce stores can use shipping cut-off dates to their advantage. Consider incentivizing shoppers to place orders earlier in exchange for free holiday shipping or generous discounts. This helps you to avoid the worst of peak season surcharges with shipping carriers that take effect in late November – early December.
Using multiple fulfillment centers as part of your holiday shipping strategy is one of the most effective ways to save money on shipping during the holiday shopping season. Allocating new orders to whichever fulfillment center is closest to the end customer shortens last-mile delivery timeframes and avoids expensive cross-country shipping services.
This opens the door to sought-after priority mail services including same day delivery, thanks to the greater availability of short-haul ground service levels. Multiple fulfillment locations also help you to manage shipping deadlines more effectively.
To make multi-node fulfillment a viable strategy, inventory management needs to be on point. Pay close attention to which SKUs are most popular in each of your fulfillment center locations so you can avoid having to use expensive split shipments or fulfilling orders at facilities further away from your customer.
Offering free shipping during the holiday season is one of the best ways to attract shoppers and boost sales. But footing the postal service bill for every order will likely result in significant losses.
Thresholds set a minimum order value to encourage higher order values, ensuring that free shipping is only awarded when your business can make a profit from a sale. But if you’re already using a free shipping threshold at your online store, it’s important to re-calculate this for the holiday rush.
Thanks to higher shipping and fulfillment rates, the threshold you currently have in place may no longer be enough to offset these higher seasonal costs. On the other hand, a higher volume of sales may allow you to maintain or even lower your shipping threshold for online orders to attract more holiday shoppers. It’s important to crunch the numbers and review sales data in the lead-up to the holiday season to determine what is the best course of action for your brand.
Managing dimensional (DIM) weight is crucial to keep your shipping costs down at any time of the year, but especially during the holiday season.
DIM weight refers to a pricing method used by a postal service that calculates your shipping rate based on how much space a package is taking up. For this reason, oversized and larger packages will be charged a higher shipping rate than small, lightweight packages.
Moreover, because oversized packages tend not to fit within automated sortation systems, many shipping carriers will levy steep additional handling fees on packages with a high DIM weight during the holiday shopping season, when parcel networks are overstretched.
To avoid these additional fees piling up, brands will need to practice strict cartonization and endure that their shipping materials aren’t adding unnecessary bulk to packages. You may also need to look at splitting up multi-item orders, as two small packages could end up being the cheapest way to ship instead of a single large package. Using flat rate boxes is another way to ensure you know exactly what you’re paying to ship packages. However, it’s important to be aware of the caveats of flat rate shipping before you commit to this shipping method.
While sticking with just one postal service for your e-commerce orders can feel like the most hassle-free approach, this means you could be missing out on significant cost savings during the holiday season.
The rate charged by one shipping service is unlikely to be the same as another, depending on where they operate and the service levels, they offer e.g. ground service versus first class mail. There may also be other additional costs, such as handling fees or charges for residential delivery.
Combining multiple carriers within your holiday shipping strategy gives you much more flexibility and the chance to choose the cheapest option for each order. Regional carriers, for example, can be significantly cheaper than nationwide carriers like the US postal service or FedEx home delivery. This makes them a great option for brands whose customer base is located within one or two regions, rather than coast to coast.
Home delivery is the most expensive delivery option, simply because it’s the least efficient. This gets worse during the busy holiday shopping season, when small parcel volumes surge and peak season surcharges kick in to cover those higher operating costs.
This puts e-commerce brands in a tricky position. Covering shipping rates means there’s less revenue to reinvest in your business. Fortunately, Online-to-Offline (O2O) retail offerings such as Buy Online, Pick-Up In-Store (BOPIS) and curbside pick-up offer customers the best of both worlds during the holidays.
Orders for store-based pick-up can be fulfilled in a much shorter timeframe than even same-day delivery – and without requiring a trip to the post office. And because BOPIS orders can be fulfilled much faster, this is a great option to promote as an alternative to home delivery as shipping deadlines draw closer.
With growing numbers of consumers shopping online, increasing order volumes during the holiday shopping season are a real boon to e-commerce brands. Yet managing seasonal demand with an in-house fulfillment operation is rarely cost-effective. Rising holiday fulfillment costs, combined with a lack of economy of scale, can result in delays to fulfillment and even lost sales thanks to slow delivery time or shipping delays.
By partnering with an experienced e-commerce fulfillment provider like Ryder E-commerce by Whiplash to manage shipping during the holiday season, brands are eligible for wholesale rates by leveraging their partner’s shipping volumes. By keeping shipping rates affordable, you can reinvest more into your retail operation and achieve a more streamlined shipping strategy year-round.
Want to find out more about managing fulfillment and shipping during the holiday season? Check out Ryder E-commerce By Whiplash’s full holiday fulfillment guide for the best tips and tricks for a profitable peak season.