For ecommerce businesses, shipping costs these days can sting: U.S. parcel carriers including FedEx and UPS had average price hikes of 5.9% over the year before in 2022, with additional fuel charges and other surcharges bringing the total increase up above 9%.

You can either grin and bear it and continue offering free shipping, cutting into your profit margins, or pass the charges on to your customers, which may decrease their likelihood of completing a purchase.

Or, in certain situations, you might consider a cost-effective alternative: economy shipping.

In this article, we’ll discuss:

• What is economy shipping?
• Is it right for your ecommerce business?
• Using economy shipping for returns

What is economy shipping?

Economy shipping is a shipping option offered by most major couriers, including USPS, UPS, FedEx, and DHL, and is the cheapest way to ship products both domestically and internationally. It differs from standard, priority, or expedited shipping services in terms of delivery time and cost.

Economy shipping services are conducted via the least expensive—and slowest—methods of transport: water or road.

Economy shipping offers the trade-off of slower delivery time for a lower price than standard shipping or other shipping options, though couriers are still able to offer tracking and signature services. If you’re shipping domestically, most of the couriers offer guaranteed delivery within five business days.

Economy shipping can lead to substantial savings on shipping and returns, whether you’re covering shipping costs or passing them along to your customers. For example, USPS First Class offers delivery within five business days starting at $4.50 for lightweight packages, while guaranteeing next-day delivery for the same package would cost $26.95.

If you’re not shipping time-sensitive products, making use of economy shipping may help your ecommerce business reduce costs and improve profit margins. We’ll take at some of the benefits of economy shipping, and some of the potential downsides.

Is it right for your ecommerce business?

With so many ecommerce businesses offering next-day, or even same-day deliveries, economy shipping could put you at a disadvantage—but it may end up being your competitive advantage if you position it correctly.

If you’re competing against ecommerce stores that offer faster shipping, make sure that you set customer expectations clearly and show them the benefits of your shipping solution: By offering economy shipping, you’ll be able to pass the cost savings on to your customers if they’re willing to wait a few extra days for their product. You may wish to offer a variety of shipping solutions, with free economy shipping as well as the option to upgrade for a fee for expedited shipping times.

Additionally, if you’re selling bulky products, such as furniture, or shipping your products internationally, economy shipping may be the only cost-effective shipping option for your products, as expedited options may double the total price to ship your packages. If your products are unique or have a great reputation, your customers will more than likely be willing to wait the extra time to receive them.

That said, if you offer time-sensitive or perishable products, such as certain types of food, economy shipping isn’t a viable option for you. In this case, you’ll need to factor in the cost of priority shipping into your business model—perhaps by offering subscription packages that ensure that you’ll bring in a certain number of sales per month to make the shipping costs worthwhile.

If you’d like to save on shipping costs without the delays of economy shipping, you might also consider offering pick up in store options. Under this model, you’d be able to partner with certain stores where your products could be picked up by customers, making use of bulk shipping rates or cheaper logistics services to ship to retailers in your network.

Using economy shipping for returns

Whether or not it makes sense to offer economy shipping to your customers when they’re purchasing items, it may be a good solution to save on costs when managing returns.

For items that don’t need to be immediately restocked, economy shipping can help you save costs on reverse logistics, while using the same tracking services available from pricier shipping methods to ensure that your return shipments are coming back safely.

You can offer customers printable economy shipping return labels, or ask your shoppers to drop their products off at a drop-off location, where they can be consolidated for shipping in a bulk shipment—giving you access to an even more cost-effective shipping solution.

Using a returns management solution like Loop makes it easy to provide flexible return delivery service options to your shoppers. You can automatically set up express shipping for products that you want to restock immediately, while relying on economy shipments for products that are less time-sensitive to restock, helping you save money on reverse logistics. You can also give your shoppers the option to send back the return with a pre-paid return shipping mailer, or provide them with scannable QR codes that they can take to nearby drop-off centers for bulk economy shipping.

By choosing the right shipping method to fit both your ecommerce business’ and your shoppers’ needs, you’ll be able to offer a range of personalized services that meet your customers goals, giving you the ability to customize your delivery service to focus on faster transit times or lower costs on a case-by-case basis.

While economy shipping may not always be the right option for your shoppers, it’s a great choice to consider when it makes sense—helping you save costs on shipping and build a more profitable business.

Learn how to customize your return shipping options with Loop. Get a demo today.