Use USPS Flat Rate Boxes
Here are some of my other thoughts on ways to save on shipping cost:
Point 1: Use USPS Flat Rate Boxes. Consider using Flat Rate Envelopes as well. In 2011, USPS will introduce a flat rate LEGAL envelope which you can stuff as well. This will provide some simplified shipping costs or a profit center for items able to ship inside a Flat Rate Envelope.
Point 2: This also brings me to another point about re-thinking your product’s package weight and/or design to make it fit into flat rate dimensions. Also, think about the shipping weight. If a shipped box is 2.1 lbs, wouldn’t you want to get that down to 2.0 or 1.9 lbs to save on shipping cost? We stopped sourcing a square boxed product for the same product in a rectangular box because it fit in a flat rate envelope. We save about $4 on shipping each time this way.
Point 3: For some items, we started using Fulfillment By Amazon (FBA). There is definitely a sweet spot for items above 1 lbs where you can leverage Amazon’s infrastructure and negotiated shipping rates to the point you can: 1) introduce a flat rate shipping scheme based on what Amazon charges you, 2) make profit off the difference between UPS/FedEx Daily rates and what Amazon charges you. There are some automation hurdles like typing in the order details or integrating with their web services platform. You also have to label each SKU which can cause additional labor expenditures. If you can have the supplier ship directly to Amazon for less than it costs you to receive and ship it out, try to get the supplier to perform this labor for you.