How To Reduce Logistics Costs :- In order to run a successful e-commerce business, you need to get your priorities in order. Some of the key areas you need to focus on are keeping to a tight budget and maximising your profits. Though you may not realise it, one of the most costly aspects of your business can be the supply chain; your logistics and shipping.
But with pressure to stay ahead of your competitors, offer the best possible services and create memorable consumer experiences, all whilst turning a profit, it can be hard to know where to invest your money and where to cut costs.
If you’re hoping to improve your bottom line whilst still offering a great shopping experience, we can help. Below, we’ve put together a list of some of our top tips for reducing logistics costs and time.
What makes up logistics?
So what exactly makes up logistics and which areas should you be considering when trimming the fat on your business? Some of the most common areas you need to consider are transportation, shipping, inventory storage and warehouses, supplies and employee labour. Keeping these in mind, here are some of the easiest ways to cut time and most importantly, costs.
- Offer different shipping options (but not too many)
The first important step to cutting cost and time is to look at the different shipping options out there and choose the most effective ones for your business. You might wish to include one or two different shipping options for your customers. This gives people more choice, can be better for the consumer experience and can give you some good insights into what your customers want and prefer. That being said, don’t go crazy and add too many options as this can make life difficult for you and could cost you more in the long run.
Do your research into courier companies and compare their prices and see which offer the best rates. You might also need to look at international shipping options if you have customers overseas. You’ll want to find the most cost-effective but efficient service. Scrimping on shipping to save money is all well and good unless it takes three weeks for your customers to get their goods!
- Consider your own fleet of drivers
You can use couriers or postal services to get your goods out to customers, but depending on the size of the packages, the volume of orders and delivery times you could find that this becomes quite expensive. Having your own fleet of delivery drivers can be a great way to cut costs and you don’t necessarily have to buy your own vans/cars, you could cut costs further by using your own vehicles much like Hermes courier services do.
This also means you can set your own delivery times rather than having to rely on couriers and this could actually help you to get parcels out to your customers quicker. Fleets and products in different regions is the key to making this strategy a success. And one final plus side to having your own fleet is that if a courier service every goes down or they’re having issues, your customers won’t be affected.
- Source your products closer to home
Depending on where you’re getting your products or materials from, you might be paying more than you need to in order to get your stock over. For example, if you’re buying certain products from China. By finding a manufacturer closer to the home you can cut down on the costs of shipping. This is also a great way to cut down the time it takes for you to get your products and materials. Sometimes sourcing closer to home might mean paying a bit more for the products initially, but the money you save on shipping and other logistics can more than makeup for this. Just be sure to do your research first.
- Reduce the packaging of your products
In recent years there has been a push to reduce packaging on products because it’s better for the planet, but guess what, it’s also better for your pocket! Many couriers are incentivising businesses to reduce their packaging by offering a reduction in pricing. But not only this, using less packaging means buying less in the first place! It also means storing less and it takes less time to package up and send your products, saving you time and money.
Interestingly, a study also found that 75% of consumers feel that minimising packaging is important to them and it can influence their buying decisions. As such, it literally pays for you to cut your packaging and could lead to more sales and more profit in the long run.
- Get rid of any deadstock
You might not think about it, but somewhere in the back of your warehouse, shop or storage area there could be deadstock lurking and silently costing you money. Though it often goes unnoticed, using up space to store old or outdated stock that you won’t sell is just a waste of space and resources. As such, it’s a good idea to have a cleanup and make sure you get rid of any dead stock you don’t intend to sell. This will free up space for products you are currently marketing but can also help to make the warehouse logistic more efficient.
- Automate your warehouse and logistics processes
Automation can transform your business by helping you to streamline your logistics and reduce your costs. There are a number of warehouse or distribution processes that can be automated and this not only saves you time on getting products ready and out for delivery, but it can also reduce the risk of human error. You might also be able to reduce the number of staff you’re employing or focus their energies elsewhere as automated processes are able to pick up the slack.
- Outsource your logistics
Believe it or not, you can also outsource your logistics to a third-party provider (often called a 3PL) if you want to start seeing savings immediately. These service providers specialise in logistics and can help to maintain larger networks of warehouses, fulfilment centres and delivery driver fleets. Again, do your research to make sure you find the most cost-effective provider, but this really can take the time and stress out of your business and help you to save money down the line.