There is nothing worse than seeing high shipping costs eat away your profits. If shipping costs are not carefully considered and calculated up front before purchasing a potential item to flip, you may end up with a loser on your hands. With the various different shipping service offerings as well as options such as delivery/signature confirmation, it’s no wonder why so many people are overpaying for shipping. And don’t forget about the packaging materials required as well which eats into profits even more! Have no fear, let me show you 4 pro tips on how to reduce shipping costs.
I’ve covered this concept numerous times but let me touch upon it again.
Flipping Price – Purchase Price – Auction Fees – Shipping Costs = Profit
As you can see, reducing shipping costs is one of the four ways of increasing profit. Pro shippers know that there isn’t much you can do about shipping costs once all the tricks have the applied. But I’m almost positive not everyone knows of these tricks and have overpaid for shipping for years. On a side note, make sure to check out Coupon Stacking For More Profit on ways to decrease purchase price.
Pro Tip #1: Utilize Online Discounts
If you’ve been purchasing labels physically from FedEx Office or UPS store, I’m sorry to say but you’ve been overpaying. Both of these stores have higher shipping rates compared to their website rates. Test it out yourself, bring a boxed item to a store and have them do a quote for you. Then go home and pull up FedEx or UPS’s website and enter the same information and see what the shipping cost comes out to be. You’ll be amazed to find that you can save $1-3 dollars by creating the label online youself.
So what about the USPS? Shipping rates are the same but little things like delivery confirmation are included free when you create labels from USPS.com vs having to pay $.45 cents at the physical location.
Bottom line, you don’t want to be purchasing shipping labels from the stores. You want to purchase all of your shipping labels online. But wait, things get even better because online marketplaces offer you additional discounts based on their collective shipping power. Let’s first take a look at what the big three online marketplaces offer. If you want to know the pros and cons of each, take a look at my post: Amazon vs eBay vs Etsy, Which is Best?
- For eBay/Etsy sellers – Once you’ve made a sale, you have the option to buy a label directly from your account. Both systems are pretty slick and give you services from both USPS and FedEx(only eBay). You can make change weight, dimensions and add on additional services. Besides convenience, since everything is filled out for you, the big bonus is the shipping discount given based on the marketplace’s collective shipping power from all of the users.
Notice the 11% eBay discount given
- For Amazon sellers – Unless you are utilizing Amazon’s FBA service, you are stuck buying your own shipping label elsewhere. If you are utilizing FBA (there is a fee for this) then you don’t have to worry about anything. Everything is boxed and shipped for you by Amazon.
Hidden USPS Discounts from Paypal
So what do you do if you need to ship something that you didn’t sell on eBay or Etsy? Are there any additional discounts offered? For USPS there is a hidden way! Let’s take a look at USPS’ website and options available when creating a label.
On USPS’ website, you are presented with only two types of services, Priority Mail and Priority Mail Express. You have no other options such as just First Class or Parcel or Media mail. The screenshot shows a 3 oz package going from Chicago to Indiana.
- Flat Rate Envelope: $6.65
- Medium Flat Rate Box: $13.60
- Signature Confirmation: $2.45.
Now let’s look at the hidden USPS shipping rates provided by Paypal.
- Flat Rate Envelope: $5.95 – savings of $.70 cents
- Medium Flat Rate Box: $12.40 – savings of $1.20 dollars
- Signature Confirmation: $2.35 – savings of $.10 cents
On top of the huge savings, you now also have an option to pay and print labels for First-Class mail, Parcel Select and Media Mail!
If this hidden secret doesn’t wow you, then I don’t know what will. This option provided by Paypal is a game changer for people who want to ship with USPS and didn’t sell through eBay or Etsy. Not only do you get savings compared to buying labels directly from USPS, you’ve also gained options to print other service type labels without having to pay a third party.
But in order to utilize the online discounts and create labels, you’ll need to know how much your items weigh. Make sure to get a decent scale to weigh your boxes and envelopes. Below is what I use.
Pro Tip #2: Select the Right Carrier and Service
There are basically three shipping carriers out there and I’m positive everyone knows who they are. UPS, Fedex and USPS. As a pro shipper, I can’t say enough great things about UPS. They offer convenience features such as same-day pickups on ground shipments, much faster and more reliable tracking information, much better notification system on incoming and outgoing shipments. There are also a lot more local UPS stores and regional centers when compared to Fedex.
BUT all these convenience features come with a price literally. In an apples-to-apples comparison, shipping rates from UPS are generally higher than FedEx or USPS. Sometimes by a few cents but other times it can be a few dollars. Feel free to use the shipping cost calculator on UPS, FedEx, and USPS and do a fake shipment to some other address and select comparable services. Then you’ll see what I mean.
Therefore my recommendation is to stick with FedEx or USPS for your shipping needs. But how do you determine if you should choose FedEx or USPS?
Choose Fedex if:
- You need to ship Next-Day Air – I’ve done the math and in almost all cases, next-day air is substantially cheaper with FedEx. This is because FedEx’s shipping infrastructure is better equipped at handling extremely fast shipping times. There are also several next-day air options that are available with FedEx.
- Need insurance of $200 dollars or more – Insurance rates are much lower with FedEx compared to USPS’ rates. The more insurance you need, the cheaper it is to ship with Fedex. Plus when you actually need to collect the insurance in case the package gets damaged or lost, FedEx’s turn around time is fantastic. USPS’ claim process is like pulling teeth.
- Need a very cheap shipping solution – As weird as it seems, Fedex has a service called Smartpost which utilizes a joint partnership with USPS to ship your packages. Delivery times are slow, between 2-7 business days and you have no option to add on signature confirmation nor insurance. But this option is usually cheaper than Priority mail and you can still utilize Fedex’s tracking and ship centers.
Choose USPS if:
- Heavy items that are small in size – USPS has flat rate boxes (envelope, small, medium and large) that are great for items that weigh a lot. Traditional shipping options from USPS and Fedex uses both dimensions and weight to calculate shipping. USPS’s flat rate option pretty much eliminates the weight portion (there is a weight limit but it would be really hard to exceed it given the box size) and gives you a set dimension.
- Fast shipping times of 2-3 days – The one great thing USPS has over its competitors is it’s 2-3 day priority mail option. This is the most cost effective solution from USPS and it’s relatively quick compared to the ground / home options from FedEx. You can ship anywhere within the 48 states within 3 days and 2 days for states near your home. FedEx’s ground / home options require you to pay extra for 2nd-day shipping and for some far states, it might take 4-5 days before your package arrives.
- Shipping to a PO Box address – If you receive an order with a ship to address with a PO box, you have no option but to use USPS. No other shipping carrier can deliver to PO box addresses.
- Shipping to Hawaii, Alaska or US territories – USPS treats these places as if they were within the 48 states. Packages do not cost any more than normal when shipping with Priority Mail. Huge savings compared if you were to select FedEx which would require you to select their costly air options to ship.
Pro Tip #3: Save on Shipping Materials
Another way to reduce shipping cost is to reduce costs on shipping materials such as boxes, packing tape, packing peanuts. If you’ve been bringing your item to FedEx Office or UPS store and having your items packaged by them, please stop immediately! Sure they both do a great job at wrapping, boxing, taping the item for you but it comes at a huge cost. First of all the boxes are not free which are especially expensive at those stores. Second, they charge you a fee for boxing your item which is also expensive. Lastly like what I said in pro tip #1, the store fronts charge a higher shipping rate.
Free Priority Mail Envelops & Boxes
Did you know that USPS provides free boxes for priority mail and express? Although this has been around for over a decade, most people are still not aware of this. Simply walk into any USPS postal office and grab as many priority boxes and/or labels you want. You can also order in bulk on USPS’ website for free!
What’s the catch? The only one I’ve found is that if you have an item in a priority mail box, you cannot ship the item using another form of service with USPS such as First-Class, Media or Parcel mail. They will refuse or ship the item back to you if you try. That’s really it. I usually have a dozen or so of various different size priority mail boxes around at all times.
Reuse Boxes From Amazon or Other Online Merchants
Do you or your wife buy a lot of stuff from Amazon, Walmart, or any other online merchant? If so keep those boxes! In my household, we literally get something shipped from Amazon every other day so I’m left over with a ton of boxes and packing bubbles every week. Store all the boxes in your garage or basement and then reuse them down the road.
Buy Cheap Boxes
Ok if the two options above simply doesn’t work for you then the only other option is to buy cheap boxes online. I’ve had to do this from time to time and boxes range anywhere from $.25 cents to a few dollars each depending on the size. Here are a few common ones I use. For more take a look at the selection from Amazon here.
Packing Materials and Tape
For packing materials such as filling paper or peanuts or bubbles, keep as much as you can from other online merchants you’ve received items from. Unless you’re buying in bulk, shipping peanuts and bubbles are extremely expensive. I’ve found the cheapest solution is to buy a huge kraft paper roll and use it as filling paper in packages. The roll below has lasted me 3 years so far and I am barely past half way. Keep in mind I’m reusing a lot of what I get so your mileage may vary.
As for tape, there isn’t much you can do but to buy them. Make sure you buy as much of it in bulk or semi-bulk to save on cost and try to stay away from generic brands. Generic brand tape usually is a lot thinner and doesn’t nearly stick nearly as well. So you’ll end up using more tape or worse your package opens up during shipment. You’ll know what I mean once you use Scotch packing tape and then switch to a generic brand due to cost. Trust me, avoid them if possible. Below are a few semi-bulk options for tape.
Pro Tip #4: Be Aware of Paypal’s Seller Protection Program
This tip doesn’t help you reduce shipping costs but it is very important to know about. Since the vast majority of online sellers use Paypal, knowing the seller’s protection program is vital in terms of protecting yourself from a huge loss. Paypal’s seller protection program was developed by Paypal to help sellers settle disputes from buyers.
What kind of disputes? The seller’s protection program helps settle cases of items not received complaints and unauthorized payments. The gist of the program is mostly common sense, you have to ship the items to the address listed in the buyer’s account and you have to prove you shipped the item with a tracking number. But a hidden thing most people isn’t aware of is the requirement to have signature confirmation when the transaction amount reached a certain dollar amount.
Below is snippet from Paypal’s website:
What is signature confirmation for transactions of $750 or more?
Signature Confirmation is an online documentation that can be viewed at the shipping company’s website and indicates that the item was signed for on delivery. Signature confirmation is required for transactions, including shipping and taxes, that are $750 USD or more.
This means that if the Paypal transaction is over $750 dollars, you better add-on signature confirmation. If not and the buyer claims either your shipped item was not received (even if the tracking number shows it was delivered) or if the buyer claims the item purchase was unauthorized, you will automatically lose the case. Yes, you will automatically lose the case. I’ve learned this the hard way and I’m sure many others have also. As unfair as it may seem, this is the way it is.
The good thing is the dollar amount changed to $750 dollars because for years and years prior that number was $250 dollars. That means you won’t have to add on signature confirmation as much as before. I highly urge that if your shipping items over $250 dollars in value please think about adding on signature confirmation and insurance regardless. Even though most packages are delivered without issue, I’ve experienced packages lost in transit, packages getting damaged during transit and packages stolen from buyer’s doorstep.
This blog post was based on a request from a reader and I’m glad she did. I’ve been shipping for so long that I forgot about the fact that not everyone else has! These 4 Pro Tips On How To Reduce Shipping Costs sums up everything you can do to reduce your total shipping costs. When flipping for profit every dollar counts and by following these tips can net you savings of hundreds to thousands a year. If i’ve missed anything, feel free to chime in on the comments. Good Luck!