How to Choose The Right Shipping Vendor

Most businesses begin by using the best-known shipping vendors. Big names like UPS and FedEx feel safe and established, and your volume may be small enough to justify the expense. However, as your business grows, you may need to choose a multistep and multivendor shipping arrangement to ensure faster deliveries at a reasonable price.

“While using just one carrier may seem like a simple solution, it may not be the most cost-effective one,” said Amine Khechfe, co-founder of shipping solutions company Endicia. “Small businesses should take the time to identify the right shipping mix for their business needs.”

Khechfe recommended that e-commerce businesses consider the U.S. Postal Service (USPS) as an alternative to private carriers, especially if they regularly ship bulky products. Business owners should also consider surcharges for services such as weekend or rural delivery and use this information to determine the most economical options for meeting customer delivery expectations, he said.

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Here are some of the factors to consider when choosing a shipping partner for your e-commerce business:

Using dropshippers and other third-party logistics providers (3PLs) can also reduce shipping costs. Dropshipping – a process in which a retailer sends customer orders to a manufacturer or wholesaler that then ships the products from its warehouse – is a particularly attractive option for businesses that want to boost their shipping volume without increasing the space needed to store their inventory. Similarly, 3PLs can leverage the combined inventory volume of a group of smaller merchants to offer better shipping alternatives, said Jose Li, founder and CEO of shipping insights and analytics firm 71lbs.

Building smart, strategic relationships and using technology can help small businesses find the right balance of price and convenience, said Frank Poore, founder and CEO of online merchandising and fulfillment platform CommerceHub.

“The little guys have to act like the big guys,” he said. “They have to do things systematically to minimize costs and transit times.”

Poore suggested looking for suppliers and drop-shippers in the areas closest to your customer base to minimize the distance between the origin and the destination.