Shipping costs typically represent 5 to 15% of revenue for product businesses, making them one of the largest controllable variable costs. Reducing them without degrading delivery speed or reliability requires a systematic approach rather than simply switching to the cheapest carrier available.
Use a Comparison Platform
Booking directly with a single carrier means paying retail rates. Comparison platforms like Cargosender aggregate volume across thousands of businesses to access pre-negotiated rates that are typically 20 to 40% lower than retail. This single change — shifting from direct carrier booking to a comparison platform — is the highest-impact, lowest-effort cost reduction most businesses can make.
Optimise Packaging Dimensions
Carriers charge based on actual or volumetric weight, whichever is higher. Volumetric weight is length x width x height (cm) divided by 5000. A parcel in a box that is 10 cm too large in each dimension may be charged as significantly heavier than it actually is. Audit your box sizes and reduce dimensions where possible. Custom-sized boxes cost more to produce but often pay for themselves in reduced shipping charges within a few months.
Consolidate Shipments
Sending one parcel daily is more expensive per shipment than consolidating orders and sending a batch twice a week. The saving is not in carrier rates — you pay per parcel regardless — but in reduced collection fees, less administrative time, and the ability to fill packaging more efficiently. For businesses shipping to the same destination regularly, weekly consolidated pallet shipments are often cheaper than daily individual parcels.
Use Economy Services for Non-Urgent Shipments
Not every shipment needs express delivery. Identify which of your customers or order types are genuinely time-sensitive and which are not. Route non-urgent shipments through economy services — two to five day transit times — that cost 30 to 60% less than express. This requires either segmenting your shipping tiers at checkout or working with your customer base to set expectations around standard delivery times.
Negotiate Volume Discounts
If you ship more than 100 parcels per month, you are in a range where volume negotiations become worthwhile. Carriers offer tiered pricing based on monthly shipment volumes. Cargosender can assist businesses at this scale in accessing appropriate pricing tiers.
Reduce Returns Costs
Returns shipping is often the most expensive and least visible shipping cost line. Reducing return rates — through better product photography, accurate size guides, improved packaging — is more effective than optimising return shipping costs. Track return rates by product and address root causes before optimising the return logistics themselves.
