So your webstore is doing great, orders are rolling in and packages are filling up the UPS truck at the end of the day. But, the weekly bill leaves you wondering how you can save money on transportation costs. The answer is simple, rate negotiation.

Prior to the ecommerce boom of the late 90's, discounting small parcel shipping was unheard of. Today, UPS, FedEx and DHL are all fighting to get a piece of your business and they're ready to deal. Of course, you have to work up to a consistent daily volume, usually between 75 and 100 packages, in order to realize substantial savings.

The first step is to contact your account representative. A package study will be done so they can get a feeling as to what your average package size and destination zone is so a discount schedule can be customized to best meet your needs. Generally, discounts will be broken down into weight groups (0 - 5lbs, 6 - 10lbs etc.) with a flat percentage taken off, this is considered a flat discount. Many carriers will also tie in a "kicker" referred to as a tier discount which is a percentage tied to revenue goals. This extra incentive is above and beyond the flat discount and is applied if your annual spending with that carrier is between certain amounts. In some cases these "kickers" can be as much as an additional 3 or 5%.

The second step is to play the carriers against each other. After all, this is negotiation time! Get rates from all three, compare them, and use the power of negotiation to get the lowest possible rate.

The final step is one that most shippers are not aware of or don't have the time or resources to do on their own, requesting refunds for late packages. On average, 5% of all packages shipped arrive late and in most cases, those packages are eligible for a complete refund of the shipping cost. It used to be that only air services were backed by an on-time, money back guarantee, but thanks to the growth of ecommerce, that now applies to ground shipments, including ones to residential addresses.

So how to you claim these unreaped rewards? Of course, you could do it yourself, but the simple solution is to call in a 3rd party. In our pet division, we use a Nebraska based company who's sole job is to get money back for shippers like us. Each week a file generated from your shipping computer is sent to them with tracking numbers and location information. They dump that info into their computers, track each package, and phone in your claims to the carriers. When your transportation bill arrives, you'll see the refunds immediately. Services like this are affordable, in fact, there are no up front costs. You simply pay them 50% of what they recover. After all, this is found money for most shippers, so a 50% cut is still a great value. If you would like more information about this service, visit http://www.solidcactus.com/shipping-audit.html

Hopefully these quick tips can start you on the road to savings, but don't become complacent. As your shipping volume grows, ask for another study to determine if further discounts can be applied. If you'd like some more advice on trimming your shipping costs, feel free to drop me an email at scotts@solidcactus.com.