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We always get asked the simple question on “How to lower my logistics costs” and we know exactly how it can blow out very quickly. Logistics costs have traditionally been extremely variable. Different service providers will give costs that are so different, you either think there’s a catch or that it is too expensive. Somehow you always get slapped with unknown costs that you didn’t even take into account.
It is important to keep logistics costs as low as possible to maximize profit margins for your company. Here are 5 quick ways to reduce costs of logistics:
Sourcing products effectively can significantly reduce logistics costs. Many e-commerce businesses choose to source products made in China (or other Southeast Asian countries) due to low manufacturing costs. However, it is important to be aware of taxes and tariffs that come along with sourcing products from overseas.
You need to be reviewing your carrier options time to time as most carriers update their prices on a yearly basis. Changes in prices can either benefit your business or increase costs. By re-evaluating your options you can choose the most cost-effective carrier for your business. You van calculate your shipping costs by using your carrier’s shipping costs.
Shifting to Bulk Packaging
Overtime, packaging expenses can add up and become costly very quickly. Instead, if you have your order information and product weight details, you can shift to bulk packaging. This way you can gain volume discounts or spread your packaging expenses over large quantities of goods to reduce your average per-order costs, gaining economies of scales.
Restructure your company’s operations
Re-evaluating your logistics costs time to time may lead to a restricting of your operations. This can include: your warehouse layout warehouse space the accuracy of your inventory, the productivity of your staff, meeting shipping deadlines, the efficiency in assessing product quality. By reconsidering such aspects of your business, you can improve the efficiency of your operations and reduce costs.
Outsourcing to a 3PL
You may want to consider outsourcing fulfillment logistics to a third-party logistics company. This would remove the need to invest resources and time in supply chain management yourself. Instead, a 3PL has multiple warehouses and overlooks covering rent, equipment and labor in the most efficient way possible.
If you need assistance with reducing logistics costs, you can reach out to our specialists – hello(a)zhenhub.com or submit an enquiry here.