Guide to Shipping for Small Businesses: Know Your Options and Save Money

Running a small business is no easy task. From developing new products to spreading the word about them, there’s no shortage of strategic tasks that demand your attention each day — including shipping orders to your customers.

Managing small business shipping in-house can seem easy at first, but there are many factors to take into consideration when you’re just launching an online store:

  • Which shipping carrier will you use?
  • Do you have the right packaging and materials on-hand?
  • How far away are your customers?

In this article, we’ll cover the top elements to keep in mind when choosing your shipping strategy, the small business shipping solutions offered by each carrier, and how to save money on shipping for your small business.

Top small business shipping considerations

Your small business is unique, so your shipping needs and strategy will be, too. Here are several factors to keep in mind when choosing an order fulfillment strategy for your small business to provide the best experience both on and offline.

What’s your order volume?

The number of orders you ship each month will play a big role in finding the right small business shipping options for you. If you’re new to the world of online selling, your shipping strategy is going to look very different from that of a big-box store like Target or Best Buy.

A low order volume makes it easier (and more cost-effective) to go the DIY route for your shipping operations, from buying and printing labels at home to dropping packages off at the post office every time you have new orders.

If your order volume is steadily increasing, however, you may outgrow your shipping strategy. There are a variety of small business shipping solutions available to help you scale your ecommerce fulfillment, including packaging and shipping discounts from carriers and third-party fulfillment options (more on that later).

What will you use for packaging?

Choosing packaging is an opportunity to do three things: protect your products, showcase your brand, and save money.

First, consider how much protection your products need. If you’re selling t-shirts, you can drop them straight into a poly mailer bag and send them on their way, but if you’re shipping glass ornaments, that’s not a great choice. Make sure fragile items don’t break in transit by using bubble wrap, airfill, crinkle paper, or bubble mailers for extra protection. All three of these can be affordable and lightweight options.

If you have the budget, you can even showcase your brand using custom packaging. For example, providers like Lumi, Arka, and noissue offer customizable boxes and poly mailers that let you incorporate your logo, colors, and imagery for a branded shipping experience. While this is a more expensive option than plain packaging, it can help keep your brand top-of-mind and leave a lasting impression on your customers.

To save money if you’re shipping directly through USPS, UPS, or FedEx, you can use their flat-rate boxes. These are a great choice to save on shipping for smaller, heavier items. That said, if your products are lightweight, flat-rate shipping may end up costing more than using your own packaging. If that’s the case, consider ordering boxes from a supplier like Uline and shipping orders through whichever carrier is most cost-competitive.

What are your average package dimensions?

When choosing packaging and small business shipping solutions, don’t forget about dimensional weight, or DIM weight. DIM weight takes the dimensions of your package into account when calculating shipping costs.

Larger boxes will lead to larger DIM weights, which in turn will lead to more expensive shipping costs. Use the smallest box possible while still ensuring orders are shipping securely and leaving enough room for any necessary air fill, bubble wrap, or crinkle paper.

Your average package dimensions will also play a role in calculating shipping costs and building your budget.

What is the package weight?

Unless you’re using flat-rate shipping, heavier packages cost more to ship. If you’re printing labels and shipping from home, consider investing in a postage scale to help ensure you’re able to predict costs more accurately and purchase the right shipping labels.

What is the shipping destination?

Distance is another factor that affects which small business shipping options are right for you.

  • Are you shipping internationally or keeping it domestic?
  • Where are you located in relation to the majority of your customers?
  • How quickly do your customers expect to receive their orders?

All of these questions are important pieces of your small business shipping strategy. Customers expect quick and affordable delivery, and location plays a big role in how well you can meet those expectations.

One way to lessen shipping costs while increasing delivery speeds is by minimizing the number of shipping zones your average package travels. This can reduce shipping costs and delivery times, leading to happier customers.

For example, if you’re currently shipping orders from a more rural area, or constantly shipping orders to the opposite side of the country, you’re probably incurring unnecessarily high shipping costs. Instead, you may want to consider outsourcing shipping to a fulfillment center in a more urban or central location. We’ll discuss this option in more detail later on.

Small business shipping solutions by carrier

If you’re fulfilling orders in-house, you’ll have to choose which shipping carrier(s) to use and which small business shipping options you offer. Every major carrier offers their own version of a small business shipping solution, each with its own benefits and drawbacks. Here’s how three of the main carriers compare.

USPS benefits

USPS can be a great option for small businesses shipping lower volumes. They offer a free Priority Mail Starter Kit for small businesses and allow you to set up a PO box for your company.

In addition, USPS has several programs that make it easy for small businesses that are shipping low volume to fulfill orders in-house, including Click-N-Ship, which allows you to pay postage and print shipping labels online, and a home pickup option.

One of the biggest benefits of USPS is its last-mile delivery capabilities. Last-mile delivery is a logistics term used to describe the transportation of a package to its final destination with the goal of delivering it as quickly and cost-effectively as possible.

USPS also offers a certificate of mailing for most of their services.

Because USPS runs local routes every day, they already deliver to your end customer daily and don’t have to go out of their way to do so.

FedEx benefits

FedEx offers a program called FedEx Small Business geared toward growing companies in need of shipping solutions. This includes a variety of benefits, including a rewards program and the Packaging Help Hub, a resource to help you calculate your packages’ dimensional weight and learn packaging terminology.

Other features FedEx offers include scheduled pickups and temperature-controlled shipping.

UPS benefits

Similarly, the UPS Small Business program aims to provide resources for small business owners to make the most of their shipping solutions.

In addition to the ability to schedule pickups and manage customer returns, UPS also offers UPS Connect, which provides shipping discounts, consultations with logistics experts, and a dedicated support team.

How can small businesses reduce shipping costs?

As a growing business trying to save money, it may be tempting to choose the cheapest available options for every piece of your shipping strategy.

While there are several key ways to reduce logistics costs, the lowest shipping and fulfillment costs don’t necessarily correspond to the highest efficiency.

As a business owner, your to-do list is never-ending, but some tasks are more valuable than others. Here are some ways to save on shipping costs for your small business while staying efficient and using your time wisely.

Pick-up vs drop off

Each major carrier offers the ability to schedule pickups from your home. While USPS provides this service for free, UPS and FedEx both charge a fee for scheduled pickups.

Do you have the time (and vehicle) available to take orders to the post office or carrier storefront, or is it worth the potential fees to save time and have the orders picked up from home? Scheduling free USPS pickups can be a happy medium.

Negotiating rates

If you’re shipping more than 100 orders per month, you may be able to negotiate shipping rates with carriers. The higher your shipping volume, the more likely it is that you’ll be able to negotiate lower shipping rates.

However, even if your shipping volume is too low to give you much leverage, carriers offer a wide variety of discounts and special offers for growing businesses. Look into the small business programs listed above and feel free to reach out to carrier representatives to learn more about discounts or lower rate options.

Choosing affordable packing materials

In addition to shipping rates, packaging costs can add up quickly. While branded packaging is an enticing option, don’t consider it a must-have if your budget is tight. You can buy plain, traditional packing materials — boxes, bubble wrap, airfill, and poly mailers — in bulk to save money. While buying in bulk is more expensive upfront, you’ll have what you need on hand for the foreseeable future while saving money on a per-unit basis.

Outsourcing vs in-house fulfillment

One big money and time-saver for growing businesses can be outsourcing order fulfillment to a third-party logistics provider, also called a 3PL. Outsourcing order fulfillment refers to hiring a third party that performs shipping services for small businesses, including storing inventory, packing orders, and preparing them to be picked up by carriers.

“Other service providers can pass on economies of scale once available only to consumer-goods giants… Businesses such as ShipBob, a Chicago startup, do something similar with shipping, allowing small brands to offer faster, cheaper deliveries.”

The Economist

While it may not be cost-effective for businesses that don’t yet have a lot of customers, outsourcing fulfillment can be the small business shipping solution that saves the most time and money as companies scale and order volume increases.

As your business grows, fulfilling orders in-house becomes more expensive. These costs include warehousing, machinery, recruiting and labor costs, liability insurance, and more. Outsourcing can help your business save money in the long run by avoiding these costs.

Outsourcing fulfillment-related tasks to a 3PL can also save you precious time: Instead of packing boxes and standing in line at the post office, working with a 3PL gives you time back to focus on strategically growing your business.

“As a business owner, you should always be in the highest dollar activities bucket to best utilize your time and, ultimately, make the most money for your business. The more time you spend doing high dollar tasks in a given bucket ultimately determines how quickly your company will be able to scale in the long term, especially if you are bootstrapping (like my business) and have zero investment dollars coming in.”

Teri Miyahira, Founder, TERI MIYAHIRA BEAUTY

Are you ready for a 3PL?

If outsourcing shipping for your small business sounds like it could be a good fit, consider the following questions:

1. Do you ship more than 100 orders a month?

While 100 orders isn’t a magic number, if your order volume has increased and you can’t keep up, it’s time to consider outsourcing fulfillment.

If you’re shipping fewer than 100 orders per month, outsourcing fulfillment may be more expensive than it’s worth. However, as your business grows and your order volume increases, keep an eye on how much time and money you’re spending on shipping and consider having a plan in place to outsource shipping before it becomes the only task you have time to do.

“I could lease a warehouse somewhere and grow into the new space, but with how cyclical our business is, I would have to hire people to scale up over the summer and let them go in the fall. Having to do that every single year didn’t appeal to me. I knew I had to find a 3PL partner. I kept hearing very good things about ShipBob and decided to go with them.”

Noel Churchill, Owner and CEO of Rainbow OPTX

2. Are your shipping routes optimized?

Shipping cost calculations aside, the math is simple: The farther you’re shipping, the more it costs. When you’re handling your small business shipping from home, you are limited to the one location you’re shipping from.

If you find that you’re consistently shipping orders to faraway and expensive destinations, outsourcing to a 3PL with fulfillment centers in multiple regions can help you reduce time in transit and shipping costs. Distributing your inventory across locations can be particularly helpful if your customers are spread out across the country, if you’re an international business trying to expand to the US, or if you simply want to offer affordable expedited shipping options in more cities.

“ShipBob’s multiple locations really allow us to scale in ways that a company of our size would not be able to if we tried to own and operate the logistics and shipping components ourselves.”

Francesca Cavallo, Co-Author of Rebel Girls and Co-Founder of Timbuktu Labs

3. Are you running out of space to store inventory?

As your order volume increases, you’ll need more inventory on hand. If you’re fulfilling orders from home, it can be hard to find the storage space without renting or buying warehouse space. Working with a 3PL can save you from a garage filled to the brim or expensive warehouse leases.

Outsourcing warehousing and order fulfillment to a 3PL can help you stay organized and manage inventory more efficiently.

“My garage was at maximum capacity — we couldn’t even fit another person in there. I knew I had to make a transition in order to scale. With the seasonal nature of our business, meaning we’d have to scale up our fulfillment and workforce every year, I knew I had to find a 3PL partner.”

Noel Churchill, Owner and CEO of RainbowOPTX

4. Do you want to offer 2-day shipping at a lower cost?

Two-day shipping is the new standard for many online shoppers. If you’re doing self-fulfillment, 2-day shipping can take a huge toll on your margins — especially if you’re offering it for free.

Outsourcing fulfillment can make offering 2-day shipping more affordable for merchants of all sizes. By leveraging a 3PL’s network of fulfillment centers, you can offer 2-day ground shipping — which costs exponentially less than 2-day air — to more customers.

“By encouraging customers to meet a spend threshold for free 2-day shipping, we’ve seen great results without harming our margins. Offering this shipping option has increased our average order value [in qualifying zones] from $75 to $148.”

Ryan Casas, COO of iloveplum

[Download: ShipBob’s 2-Day Express Shipping: How to Drive Revenue Through Ecommerce Fulfillment]

Discover the best small business shipping solution

If you’ve decided that outsourcing fulfillment is the best shipping solution for your small business, the next step is choosing a fulfillment provider. However, when it comes to choosing a 3PL, the options can seem endless. It’s important to find a fulfillment company that you trust to handle your inventory, provide a positive experience to your customers, and ultimately help you grow your business.

To help you find the best 3PL for your small business, we created a free e-guide, “How to Choose a 3PL for Your Ecommerce Business.” In it, we cover the right questions to ask a potential 3PL to make sure it’s a good fit, what technology and features to look for in a fulfillment provider, and much more. Download the free guide to take the next steps towards outsourcing shipping for your small business.

Download the Guide