Sponsored by
Why sticking to one shipping carrier is costing your online shop
Shipping costs make or break an online store, so you’re likely seeking how to optimize yours. Using multiple shipping carriers is the first step towards cost optimization. New e-commerce entrepreneurs often rely on one carrier, but that leads to overpaying on rates and keeping too many eggs in one basket.
In that case, a service failure from your sole shipping carrier can disrupt your whole business, an undesirable situation in a competitive industry where customers can quickly find alternatives to your products.
Let’s get into more detail about the risks of a single-carrier strategy and the best practices for switching to multi-carrier shipping.
Why a single-carrier strategy costs your e-commerce business
1. Higher shipping rates
Shipping is an intensely competitive business where carriers race to the bottom to offer the best rates to customers. Sticking with one carrier means you can’t compare real-time rates and get the best deal, even when many deals are available.
For example, if you’re shipping an item from the U.S. to France, another carrier may have a cargo plane flying this route with a nearly full payload. What then happens? The carrier sells the remaining space at highly discounted prices, offering great bargains for businesses shipping from the U.S. to France. However, your sole carrier won’t offer such a good deal, so you’ll pay higher rates even when you could pay much less if comparing multi-carrier rates.
Industry benchmarks estimate that using multiple carriers reduces shipping costs by 15% to 30%, and that’s invaluable for e-commerce businesses whose customers make major decisions based on shipping prices. You can pass those savings on to customers, and the more affordably you ship, the more buyers you’ll get.
2. Surprise fees
Occasionally, carriers can add surcharges that you didn't budget for. From sudden fuel fees to peak-season markups or extra fees for deliveries to remote locations, unexpected surcharges can add up to 30% to your baseline shipping costs.
However, when you work with multiple carriers, you won’t have to contend with sudden surcharges from a single carrier. If the bill for a specific route gets too high, you can always shop around for carriers offering better options. With multi-carrier shipping, you manage unexpected surcharges, not get trapped in them.
3. Operational risks
Working with multiple carriers isn’t all about cost savings. It also spreads your risk around, ensuring that a mishap from one carrier doesn’t dent your whole business.
For instance, if one carrier has a cargo plane temporarily grounded for maintenance inspections, you won’t have to sit with the delay, but can quickly choose another carrier flying the same route. Your shipments keep moving, and customers stay satisfied.
The alternative could be even more costly, but it’s only temporary. You can absorb some higher costs to keep customers loyal in a fiercely competitive e-commerce niche.
4. Peak-season supply chain bottlenecks
During peak season shopping periods like Black Friday in November, Christmas, Halloween, Cyber Monday, and the back-to-school months, shipping carriers experience demand surges that can be difficult to fulfill. Surcharges, volume caps, packing backlogs, vehicle shortages, and port congestion are bound to happen as businesses ship higher-than-usual volumes.
Sometimes, automated shipping platforms, the type that aggregate fees from multiple carriers, experience timeout errors or system crashes because of concurrent transaction spikes.
A multi-carrier model shields your business against disruption in these periods. One carrier adds a surcharge you can’t afford? Switch to another. A carrier sets a volume cap that’s below your needs? Select an alternative. Slight delays may still happen, but the risk of stalled deliveries gets minimized.
With multiple options at your fingertips, you’re sure of not frustrating customers during their most exciting shopping seasons.
How to approach multi-carrier shipping
You don’t have to directly approach multiple shipping carriers to build business relationships. That can work for large e-commerce businesses shipping massive volumes, with sufficient resources and teams to handle direct carrier partnerships, but not for the average e-commerce business. Instead, you can use a multi-carrier shipping platform that directly plugs you into the ecosystem. With the platform, you can input shipping details and see real-time rates from many carriers.
It gets even easier by integrating your e-commerce store’s backend system (Shopify, Magento, etc.) with the multi-carrier platform. This way, once someone places an order on your store, the details are automatically sent to the platform, and you’ll see live shipping rates across many carriers. You’re free to choose the most reliable, cost-effective carrier for every order, not sticking to one carrier for everything.
With a multi-carrier platform, you can set up automated routing rules, like sending lightweight parcels to a specific regional carrier that offers competitive rates, time-sensitive orders to an express carrier, and heavy goods to specialized carriers.
Multi-carrier platforms offer even more. Before printing shipping labels, built-in address-checking tools can scan for typos to prevent misdeliveries. You can manage customs declarations, including filling out the declaration forms and prepaying import duties. Multiple orders can be processed from one dashboard.
After sending out goods, you can monitor them across all carriers from your dashboard. You’ll know the status of each item (pre-transit, in transit, delivered, or picked up/dropped off. If there's a delay, you'll be alerted on the dashboard and can quickly contact the carrier.
Criteria for selecting a multi-carrier shipping platform
First, you need a platform that syncs directly with your existing e-commerce tech stack. If your store runs on Shopify, a multi-carrier platform with a Shopify app works best. The same applies to your warehouse management system and customer support tools. Direct integrations let you manage complex e-commerce operations from one app instead of constantly switching tools.
Verify which shipping carriers the platform directly integrates with. Ideally, you need access to active domestic, regional, and global shipping carriers that can get your goods wherever needed.
You should receive real-time shipping rates from these carriers, helping you make cost-effective choices for each delivery. Also, consider other valuable features like real-time delivery tracking, shipping label generation, customs paperwork, and automated fallback routing.
