How to reduce shipping costs: E-commerce shipping solutions for SMEs

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E-commerce continues its meteoric rise as the number of small and medium enterprises (SMEs) in Singapore turning to online sales is growing. Now more than ever, platforms like Shopify and WooCommerce are leveraged to sell anything from clothes and jewellery to dog food.

While online retailing offers a myriad of opportunities, the cost of shipping remains one of the biggest expenses for small businesses. So, how can SMEs and online businesses save on or reduce international shipping costs and boost profit margins?

Overview of the high shipping costs faced by SMEs

The e-commerce sector in Singapore is growing rapidly, with brands such as Taobao and Alibaba establishing a strong presence in the market. Local SMEs are also playing a vital role in its expansion. 

However, SMEs in the e-commerce sector are facing the challenge of high shipping costs, which is a significant burden on their resources. These are caused by several factors, including the distance between the seller and the buyer, the size and weight of products, the prices of fuels and the delivery timeframe.

High shipping costs affect their competitiveness and their ability to remain profitable, ultimately hindering their growth potential in the e-commerce market. Therefore, SMEs require innovative and effective solutions on how to reduce their cost of shipping to enhance their competitiveness in the e-commerce industry in Singapore.

Factors affecting the SME shipping costs

When it comes to shipping costs for SMEs in the e-commerce sector in Singapore, there are several components to consider. 

1. Delivery charges

Delivery charges are a significant factor in determining shipping costs for SMEs in the e-commerce sector. These charges are typically determined by the shipping carrier and are based on factors such as the weight, size, and distance of the package being shipped. Depending on the shipping carrier, delivery charges may also vary depending on the speed of delivery required.

2. Packaging costs

Packaging costs are another component that contributes to overall shipping costs for SMEs in the e-commerce sector. Effective packaging is critical to ensure that products arrive at their destination undamaged, but it can also add to shipping costs. Businesses must consider the cost of materials and labour required to package their products effectively. To learn more about how to save costs while packing, read DHL Express’ guide on how to order packing supplies.

3. Fuel surcharges

Fuel surcharges are an additional factor that can significantly impact shipping costs for SMEs in the e-commerce sector. As fuel prices rise, shipping carriers may add fuel surcharges to their delivery fees to offset these increased costs.

4. Insurance fees

Insurance fees can also contribute to overall shipping costs for SMEs in the e-commerce sector. These fees are charged by the shipping carrier to provide coverage in the event that a package is lost, stolen, or damaged during transit. While insurance fees can add to shipping costs, they can also provide peace of mind to businesses that are shipping valuable products.

How to Save on Shipping

When SMEs in the e-commerce sector in Singapore understand the components that contribute to their shipping costs, they can make more informed decisions to help cut down on their expenses. By analysing the various components, businesses can identify how they may be able to reduce international shipping costs. Here are some tips SMEs can use to cut down on their cost of shipping.

1. Choose a trusted shipping partner 

You don’t have to be an industry giant to get discounted shipping rates. While higher shipment volumes typically get discounts, even a small business can benefit by comparing prices for various e-commerce delivery solutions and negotiating lower rates.

Make sure to request for a selection of quotes from numerous e-commerce shipping companies to compare prices. It is always best to research providers thoroughly so as to assess whether they offer the best value for your money. 

Use each carrier’s quote as a bargaining chip in negotiating for more favourable rates. Also, you can share your sales projections if you expect demand to increase in the coming months due to seasonality or growth.

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2. Consider using an integrated e-commerce platform 

Over 60% of Singapore’s online retailers are on the Shopify platform, with the rest using numerous other sites like WooCommerce. If you are running an online store using Shopify, you might just be able to access hassle-free international shipping and shipping discounts within the platform using the DHL Express Commerce integration directly. 

DHL partnered with Shopify to enable Singapore-based online retailers to easily ship their products worldwide through a simple, seamless plugin on their shipping app. By leveraging this function, you can access flexible express shipping services to 220 countries and territories at negotiated rates. With this partnership, DHL’s plugin will make it even easier and cost-effective for Singapore retailers to ship their products internationally.

3. Include shipping costs upfront

While still trying to stay competitive, offering free shipping might not be financially feasible. Stating the product’s shipping cost upfront will manage your customer’s expectations and ensure transparency in delivery charges.

4. Pre-pay shipping costs

More often than not, pre-paying ahead of time can get you discounts on shipping costs. Even if it's a small percentage, it can lead to significant savings for small businesses in the long run. Simply purchase shipping labels upfront and use them on packages only when you’re ready to ship.

This tactic works best when you ship products consistently with the same weight and dimensions, or have this information before purchasing the labels.

5. Package your products appropriately 

If you intend to purchase and print labels by yourself, invest in a postage scale to give you a better idea of the package weight, allowing you to get a more accurate cost. 

Most carriers charge based on either the volumetric (dimensional) weight or actual weight whichever is greater. This means reducing any unnecessary volume of the package can help save on excessive shipping costs. Small items can be packaged in more compact boxes or lightweight poly mailers. If you don't have boxes or are unable to find suitable materials, fret not, as DHL Express provides a range of external packaging supplies to meet your needs.  Another way to streamline shipping operations is by developing clear and consistent packaging guidelines. This can help reduce packaging costs by ensuring that products are packaged in a way that minimises weight and size while still protecting the items during shipping. Additionally, using standardised packaging materials can help simplify the process and reduce the cost of materials.

Unsure what’s the best way to package your products? Check out our handy shipment packing guides for clothes, shoes, cosmetics, and fragile items, to get started. Alternatively, speak to our specialist today.

6. Streamlining shipping operations

Streamlining shipping operations is a crucial step for SMEs in the e-commerce sector in Singapore looking to cut down on shipping costs. By optimising shipping processes, businesses can achieve greater efficiency and cost savings, which can ultimately lead to improved profitability. 

One way to streamline shipping operations is by implementing automation technology, such as automated labelling software. This technology can help reduce errors and speed up processing times, allowing businesses to handle a higher volume of shipments with fewer resources.

Consolidating shipments is an effective way to streamline shipping operations too. By combining multiple orders into one shipment, small businesses in Singapore can save time, reduce shipping costs for customers, and simplify logistics. Taobao's consolidated shipping service is a great example of how this process can work. With Taobao's service, customers can purchase items from multiple sellers and have them shipped together, saving both time and money. By consolidating shipments, Taobao can optimise its shipping routes, reduce the number of packages that need to be handled, and provide customers with a more streamlined shipping experience. Overall, consolidating shipments can be a highly effective way to improve the efficiency of shipping operations, reduce costs, and enhance customer satisfaction.

Finally, consider implementing a Delivery Duty Paid (DDP) model, where the business is responsible for fees and risks of shipping until they are sent to an agreed location by the business and buyer. Read our guide to learn more about what DDP shipping is and when you should use it.

By optimising processes and leveraging technology, businesses can not only reduce their shipping costs but also improve their competitiveness and growth potential in the market.

7. Sign up for corporate accounts with discounted business rates

Signing up for a corporate account with a shipping carrier such as DHL Express Singapore can offer significant cost savings, especially for small and medium businesses in the e-commerce sector. By taking advantage of discounted prices and streamlined shipping operations, SMEs can reduce shipping costs and remain competitive in a growing market. For Singapore-registered businesses, save up to 60% of your business’ international shipping by opening a DHL Express business account today.