Selling Online? How to Reduce Your Parcel Costs

29 August 2014

If you’re running an online retail business, you’re probably sending out a lot of parcels regularly. Most online sellers work to tight margins in managing shipping and postage costs so a hike in prices by carriers can hit business profits hard. There’s not much you can do to stop Royal Mail boosting their rates but you can find other ways to make savings and reduce your parcel costs. Here are 3 of the best ways to deliver unbeatable savings without short-changing your customers.

Frankly, Start Franking

Franking machines have been around for 130 years and, no, they weren’t invented by a man called Frank. Norwegian inventor Engle Frankmussler created the first machine in 1884 to stop thieves stealing adhesive stamps from envelopes. Using a piece of metal, a manual crank and some printing dye to print stamps directly onto a mail item, Frankmussler’s device soon had the stamp thieves licked! Today’s franking machines are digital devices with many more features on board but the basic idea is still the same. Most importantly, with the discounted postal rate utilised by franking machines you can make significant savings on your postage.

You may think that franking machines are only for big businesses with large daily mail requirements but that’s no longer the case. These days you can find a model suited to every size of business, with basic low volume models costing less. Franking machines are simple to use and can be topped up with credit at any time. The main thing to remember is to update your machine when postal rates go up, although your provider should send you a notice of any increases as well as reminders. If you don’t want to buy a franking machine outright, you can also lease one with a service contract included.

Of course, the main thing you’ll want to consider is the potential savings you can make. That will depend on a range of factors such as the volume, size and weight of the parcels you send, whether you typically send parcels first or second class and if you use Recorded, Signed For or Standard Delivery. For example, sending a franked 2nd Class Small Parcel will cost £2.50 while a franked 1st Class Small Parcel costs £2.90. This represents a saving of 30p on both over the cost of using stamps. On a 1-2kg medium-sized parcel you can save even more – £1.40 per delivery for 1st Class and £1.35 for 2nd Class. If you send just 10 of each per week, you’ll be saving £110 a month or £1,320 per year – that’s before adding in savings on other types of delivery.

An added bonus with modern franking machines is that you can use them to embellish your mail with more than just the postage rate. Extras such as your company logo, your website url or details of a seasonal promotion can also be added to every mail piece you send out for a tiny extra cost. Making sure your logo or website address is seen by every one of your customers when they receive your delivery is a great way to cement brand recognition and build a loyal customer base.

Courier Opportunities

Franking machines are particularly well suited for online businesses sending out a lot of small and medium-sized parcels. However, if you send out a lot of heavier parcels, you may also want to look into using a courier service. Discount couriers have brought prices down significantly in the last few years so that savings once applied only to big corporations can now be enjoyed by small businesses and consumers. Discount couriers work by bulk-buying postage space from companies like UPS and DHL and then selling it on to the general public at a reduced rate.

Royal Mail is still generally cheaper for any type of delivery less than 2kg but above that, you’ll likely make savings by shopping around for a reliable and affordable courier service. However, using a middleman means your delivery will be less protected if something goes wrong. For this reason, it’s always worth checking online reviews and recommendations before opting for any discount courier. Finally, don’t be afraid to ask for a discount on top of the regular discount, particularly if you’re able to guarantee a regular supply of deliveries. Competition is fierce among discount couriers and if you don’t ask, you’ll never know!

Pack It In

After franking and couriers, the next best way to reduce your postage costs is to look at how you pack. Postage rates are not just calculated on the basis of weight but size dimensions too. That means you’ve got to be super-efficient when it comes to wrapping. For example, you may be using newspaper or woodchip for stuffing when a small amount of bubble-wrap would be more cost-effective. Perhaps you don’t need to use a box at all but could put your delivery in a large padded envelope instead.

Whichever method you choose to wrap your deliveries, the safety and security of the item has to come first. If goods are damaged by the time they reach your customers, you’ll be paying for a new item and additional delivery costs. Worse still, some customers may not bother returning to buy from you in future. However, provided you can keep goods protected while shrinking down wrapping requirements, you should make substantial savings when it comes to postage costs.

Running a successful online business requires taking advantage of any opportunity to cut costs without sacrificing quality. By making substantial savings on your postage costs, you’ll have more money available to reinvest in your business and help it to grow. That’s a guarantee – signed, sealed and delivered!



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