6 Ways Subscription Box Companies Can Save Money on Shipping

Shipping is a big expense for every subscription box company. In fact, it consistently represents one of the highest expenses in subscription boxes’ cost of goods (COGS). What’s more, it can be one of the hardest costs to lower, even as you scale.

Saving on Shipping Subscription Boxes

No, not that type of shipping. We’re talking about how you get your product to your customer. 

Shipping is a big expense for every subscription box company.

In fact, it consistently represents one of the highest expenses in subscription boxes’ cost of goods (COGS). What’s more, it can be one of the hardest costs to lower, even as you scale.

Because of how this can impact your bottom line over the life of your business, it’s important to look at as early as possible. Even if you’ve already launched, your company can benefit from evaluating your unique shipping patterns and requirements on a regular basis. Doing so is a key exercise for any online retailer to prevent overspending on small parcel shipping.

Tip: Make sure to use the Cratejoy Shipping Calculator to learn more about how Cratejoy prices shipping.

1. Outsourcing Fulfillment 

One of the simplest ways to lower shipping costs is to work with a partner who can help. Simply put: Your company may not have the personnel, resources, buying power/volume, or the capacity to handle the fulfillment and shipment of your orders.  If it is not cost-effective to do it in-house, using a third party will save your company money in the long term.

Extra perk: Some fulfillment partners may have access to more competitive shipping rates than what you currently use. Ask your fulfillment partner about their carrier options, their rates, and if you’re able to purchase postage directly through them.

2. Do the Research

If you’re looking for leverage when negotiating rates, make sure you take the time to research all the carriers you have access to for your business. Don’t assume any one is your only choice – there are many parcel consolidators and parcel delivery services that can compete with almost all large carriers.

Looking for a list, check out the consolidators who work with the USPS.

Even if you’ve already committed to a carrier, you can still discuss your shipment history and see if there’s any way you can get better rates. If you’re able to make a move to a new carrier, use that data to negotiate with a new carrier.  In general, doing this analysis on your shipment patterns, zones, frequency, and more, will lead to better informed conversations with carriers, and therefore, better pricing. Knowing your company’s needs and considering all the options is the only way to get the best shipping rates.

3. Take Advantage of USPS Cubic Pricing or “Commercial Plus” Pricing

One of the most cost effective forms of shipping is USPS cubic shipping, also referred to as Commercial Plus. Cubic shipments are based on volume of the box, not the weight. This makes it easy to standardize and project shipping accurately month to month.

What’s more, USPS cubic shipping offers up to 20 lbs of weight per box. If your box is heavy, switching to cubic can immediately lower shipping rates, as the weight of the box will no longer dictate the price.

(Note: If your box is under 16ozs in weight, First Class will likely be a cheaper option.)

Remember: Typically, the USPS requires 5,000 First Class packages per year or 50,000 Priority packages per year to qualify for Commercial Plus Pricing. To ensure you’re getting base prices, you’ll need to open your own contract. Purchasing cubic postage through a reseller will almost invariably include an up-charge. However, you’ll still likely save money vs. weight based shipments. 

To learn more about USPS cubic shipping, see this article and use the Cratejoy shipping calculator.

4. Ship From a Central Location

Outside of volume or weight, postage is also impact of distance of shipping. Most providers will define “zones” or segments of the country — these are predefined areas, usually based on your ship FROM and ship TO zip codes. For example, if using the USPS, sending a box from Southern California to Northern California would be classified as Zone 1 shipping. Sending that same box to New York would be classified as Zone 8 shipping (and this would likely mean many dollars more in cost for you).

Tip: Use the Cratejoy Shipping Calculator to learn more about zones.

If you’re trying to ship around the country, you’re never going to be able to always have Zone 1 shipping, but you can optimize your shipping distance.

For example, if you’re able to ship centrally, you can reduce the number of more expensive zones by virtue of having fulfillment closer to all of them. And this will save serious cash. Taking your average zone from Zone 8 to Zone 4, through the USPS, could mean saving nearly $0.95/shipment.

When doing the analysis we mentioned in #2 on our list, take a look at your most common zones or ‘Ship To’ states. How close or far are they from you? Is it possible to be closer to most of your subscribers?

Tip: If you’re considering moving fulfillment, it would be easier to locate and work with a third-party logistics partner (3PL) or fulfillment partner vs. move your operation or warehouse there. Check out our resources page for suggestions on fulfillment partners.

5. Save on Packaging

Packaging for shipments can also be a large expense, particularly for smaller companies.

One way to reduce costs is to buy boxes and packing materials in bulk.  When possible, recycle boxes and packing material.  Not only are you helping the environment, but also your bottom line. Make sure the box size is the correct size for your items. Using boxes that are too large can mean you are paying for extra packaging and weight unnecessarily. Packaging that is too large, or too small, can also lead to expensive damages and returns. That means you’ll need to repurchase postage.

6. Skipping the Insurance (Maybe)

Depending on the value of your subscription box, it may not be worth paying extra to insure it.  If your carrier offers reliable service with few damaged or lost items, paying for the occasional damaged package might far outweigh insuring every box. Investigating your rate of returned packages can help you figure out if it is worth this extra expense.

Savings Money on Shipping with Subscription Boxes

From taking the time to analyze your shipping habits to optimizing your shipment location & packaging, there are a number of ways to lower your costs on shipping with subscription boxes. What’s more, these savings compound over time; by shaving a few dollars off this month, you position your business to save hundreds, if not thousands of dollars, over time.

This guide was collaborated on with the resident experts at Kable Packaging

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About Jesse Richardson

Jesse Richardson is an author, educator and co-founder of several successful subscription businesses. He focuses on building engaging communities and has been described as "insanely customer centric." Find him in the Subscription School group or at his blog.

4 Responses

  1. Eric

    Hey Jesse,

    First, thanks for the guides. They’ve been a huge help in educating me on various problem points within the subscription box business model. I have a rather specific question I’m having trouble finding an answer to though…

    In regards to shipping candy/food/perishable items (such as chocolates, marshmallows, etc) I’d like to use USPS, but they have a no perishable guide-line. I’m wondering if you have experience with this. Is a cold-pack enough to ensure I meet guidelines (generally) or do I need to look at using something like UPS?

    Thanks,

    Eric

  2. Maria

    Hi Jesse, I’m so grateful for this website and your webinars. Theyve given me the confidence to take action and work through challenges in starting a business. I’m in my pre-launch phase right now.

    What are your thoughts on international shipping? Specifically, I’m wondering if it is a good idea to offer international shipping right from the beginning, and how I can do that most cost-effectively.

    Thank you
    Maria

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