Malaysia
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How to reduce shipping costs: Tips for SMEs in Malaysia
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While many businesses across the globe are still recovering from the negative economic impacts of the pandemic, the e-commerce sector continues its meteoric rise. In a report released by GlobalData’s E-Commerce Analytics, statistics have shown that e-commerce sales in Malaysia are projected to increase at a compound annual growth rate of 16.1% between 2022 and 2026, reaching a value of MYR69.3 billion by then. Furthermore, the Malaysian government's efforts in assisting small businesses to adopt digital transformation have boosted the growing trend of small and medium-sized enterprises (SMEs) in Malaysia shifting towards online sales.

Despite the numerous advantages offered by online retailing, the cost of shipping continues to be a major challenge for small businesses in Malaysia. Thus, what are some strategies that SMEs and online businesses can employ to reduce shipping costs? Read on as we share more tips on how small businesses in Malaysia can reduce shipping and logistics costs, whilst at the same time, increase profit margins.

1. Choose your shipping options

There are several types of shipping methods to consider for your small business in Malaysia. However, this also depends if you’re shipping internationally and how quickly your business can get the package to its receiver. Offering the right shipping methods will allow your business to deliver the packages in time, avoid making logistical mistakes, and thus, improve customer loyalty and satisfaction. 

Flat-rate shipping

The shipping price does not depend on the weight or size of your package. This simply means that your customers will pay the same flat rate for every order they make at your small business based on a selection of generic package sizes. 

Free shipping

The vendor covers the overall shipping costs as part of the purchase. 

Domestic shipping

An item is packed and delivered to the customer within a certain radius by the business itself. While this may seem most cost-effective, it can be rather time-consuming in the long run, especially if you receive a sudden influx of orders. 

International shipping

This method is used when shipping a package to another location outside of the country, and is often done by freight shipping. 

Same-day delivery

The order arrives at your customer’s doorstep on the same day the purchase is made. 

Next-day delivery

The order arrives the following day the customer makes the purchase. 

Express shipping

A method of delivery that is guaranteed to arrive at its destination faster than other regular delivery methods. 

2. Choose a trusted logistics partner

Contrary to popular belief, discounted shipping rates are not exclusive to large businesses. Although larger shipment volumes generally attract discounts, small businesses in Malaysia can also take advantage by comparing prices against various logistics providers and negotiating for lower rates. Additionally, if you anticipate a rise in demand due to seasonal spikes or growth, you can share your sales projections with the provider.

3. Use an integrated e-commerce platform

Small businesses in Malaysia using Shopify as their e-commerce platform can enjoy lower shipping costs with Shopify Shipping. With an all-in-one platform, business owners can now manage products, customers, inventory, and shipping all from the Shopify dashboard. This, in turn, makes it easier and faster for you to fulfil orders. 

For instance, Shopify has partnered with various logistics companies to help small businesses in Malaysia ship their products locally and internationally through a simple, seamless plugin on their shipping app. By leveraging this function, you get access to pre-negotiated discounts on shipping rates, making it easier and less costly for you to offer free or flat-rate shipping to your customers at checkout. 

4. Pre-pay your shipping costs

Pre-paying your shipping costs ahead of time lets you enjoy better savings. Albeit a small percentage, it can lead to significant reductions in shipping costs for small businesses in the long run. All you need to do is to purchase shipping labels upfront and use them on the packages only when they’re ready to be shipped. This tip tends to work best on small businesses that consistently ship products with the same weight and dimensions since you do not have to keep changing the package details on the labels. 

5. Choose the right packaging

If you plan on buying and printing the labels on your own, then it’s best you invest in a postage scale to accurately measure the weight of your packages and determine the cost. Most carriers determine the cost based on either the actual weight or volumetric (dimensional) weight, whichever is greater. Hence, minimising unnecessary volume of the package can help reduce excessive shipping costs. 

Pro tip: Consider packing smaller items in compact boxes or lightweight poly mailers. If you don't have the right packing materials to ship specific products overseas or domestically, fret not, because logistics partners tend to offer a variety of external packaging supplies to meet your needs.

Find the best way to reduce shipping costs

Working out the most affordable way to ship a package might come down to trial and error when you first start your small business – from understanding the various shipping methods and couriers to identifying where the majority of your sales come from. However, once you have a solid shipping strategy in place and shipping costs that work for both you and your customers, you’ll have more time and cash flow to focus on expanding your business instead of fulfilling orders.

Discover more tips and tricks to help boost the performance of your small e-commerce business.