Why Shipping Costs Rise as Businesses Grow (And What To Do About It)
Business growth is a good sign that things are going well, but it’s not without its problems. As things ramp up, factors that weren’t an issue during early-stage growth can suddenly become major challenges.
Businesses that rely on shipping, for instance, can often find that, even though they expect costs to come down, the opposite is actually true. Shipping ends up costing more, and it does so every single month until it’s addressed. With bigger concerns on their plate, plus the fact that shipping expenses are a result of many small charges rather than one big one, many businesses end up delaying addressing the issue until much later than they should.
The key to getting a handle on your growing business’s shipping costs is to understand why they’re rising in the first place. In this post, we’ll outline some of the common reasons why businesses find that they spend more on shipping than they should, right at a time when they expect it to be lower.
More Orders Lead to More Complex Shipping
It’s easy to handle shipping when you’re running a small operation, but things can quickly become complicated when you have to manage more orders. At that point, you’re not just sending a small batch of orders each month. You’re sending significantly more, and it’s more likely that those orders are made up of different products going to different destinations.
The more complex the shipping, the more inefficient the process becomes — unless you proactively work to address it. Keeping your order logistics in a centralized platform, rather than spread over multiple tools, can help to streamline the process.
Businesses Continue To Use The Same Carriers
Businesses often set up carrier relationships when they first get started, and then stick with them because of familiarity. The problem is that the initial relationship was developed based on different needs that will likely no longer be relevant once the business has growing shipping needs.
Rather than working with the same, often expensive carriers, it can be advisable to work with freight forwarders to manage your shipping. The best forwarders use freight management system software that allows them to optimize their costs and work more efficiently, both of which can provide a direct benefit to your own operations. Ultimately, when you’re shipping large quantities, relying on the per-unit cost you found when you were a smaller business is an expensive mistake.
Delivery Expectations Rise
Consumers can be forgiving of less-than-perfect shipping procedures when a business is obviously in its infancy, but they become increasingly less forgiving once the company begins to hit the big leagues. Fast and inexpensive shipping (or even free shipping) is increasingly expected, and that can put a strain on a business’s shipping costs.
Instead of automatically absorbing those higher shipping costs to stay competitive, be selective about which customers get free shipping. Customers don’t expect free shipping on every order, only for the ones where they’re paying a reasonable amount. That, plus improving shipping update communications with your customers, can help to keep them onside.