How to reduce shipping and delivery costs

Cost of shipping and delivery is a perennial hot topic, particular with customer demands for low cost or free delivery. There are a number of ways that the costs can be reduced, by taking a closer look at the customer options for delivery or shipping, the carrier services in use, business rules and packaging.

Here are some ideas for reducing cost of shipping and delivery in your business:

Shipping options for customer delivery

  • Look at offering customers a choice of  delivery or shipping options so that they can choose from a faster option and a slower delivery service – and pay accordingly.
  • Map your delivery options, delivery areas and actual delivery performance against your preferred carrier services, to identify whether there are areas or services that be changed. Good example is where an express service is used to deliver to an area that can be served by a cheaper carrier service.  

Carrier Services and Selection

  • If you do not do it already, always record the weight and dimensions of every consignment and parcel or package – this will help you in two ways:
      1. Be in a much better position to negotiate with your carrier
      2. Avoid costly surcharges for non-conforming parcels
  • Analyse the delivery performance of your carriers and negotiate accordingly on points including:
    • First time delivery success rate
    • Successful overall delivery (after carded)
    • Late delivery
    • Refused delivery
    • Damages
  • Analyse the profile of the parcels or shipments being despatched, including on which carrier services and the parcel’s weight, size and destination in order to assess whether there are any possible options to save money by using a different carrier or carrier service.
  • Look at using different carriers to provide different levels of service (aka ‘multi-carrier strategy’), for example:
    • Mail vs. small parcels vs. large,
    • Time delivery services
    • Next day vs. longer deliveries
    • Region
    • Residential vs. commercial addresses.
  • If parcels require a signature over a certain order value, try experimenting with changing the threshold at which a signature service is used.
  • Look at consolidating parcels if going to the same address.


  • Customise packaging sizes to better fit the typical parcel profile, in order to reduce the average overall size of the parcels.
  • Define business rules that can help recommend the most cost effective combination of packaging for each order.
  • Reduce the weight of the package by trying different types of packaging materials.


I hope this article gives you some ideas as to how you can reduce the cost of delivery and shipping in your online business.

What do you think? Do you have other ideas of that have reduced the cost of delivery and shipping? Please leave your questions and comments in the box below.

If you know others who might be interested in this topic, then please feel free to share it!


Hi, I am the Founder and Editor-In-Chief of
I launched to share the fruits of my experience designing order management, fulfilment, home delivery and customer service systems and processes for ecommerce retailers.

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