4 Proven Ways to Reduce Ecommerce Shipping Costs in 2025

It’s a tricky time to run a retail business right now. 

Shipping costs are rising and margins are shrinking for many brands. Meanwhile, customers still expect lightning-fast and affordable (if not free) shipping – and won’t hesitate to abandon a cart if they can’t get it.

For retailers, this creates a serious dilemma, and a major margin squeeze. 84% of merchants report that expedited shipping expectations have increased their operational costs. 

The good news? There are clear, proven ways to reduce shipping costs without compromising customer experience.

In this blog, we’ll walk through 4 strategies to reduce shipping rates – including how offering pickup at checkout with HubBox can help you save up to 25% on your shipping bill.

1. Split fulfilment locations strategically

Shipping all orders from a single warehouse often leads to higher ecommerce delivery costs, especially if you have customers across multiple regions. 

By splitting inventory across different fulfillment centers or working with third-party logistics partners, you can reduce shipping costs by minimizing travel distances.

This is one of the most effective ways to speed up delivery without paying for express services – making it a smart move for retailers exploring how to reduce shipping cost without compromising speed or reliability.

Why it works:

• • Reduces average shipping distance and cost per order
• • Speeds up delivery without relying solely on express services
• • Can lower emissions and improve delivery reliability

2. Use smart packaging strategies

One of the simplest ways to reduce shipping costs is to use smaller, lighter packaging. 

Carriers often price by dimensional weight, so even lightweight products can be costly to ship if the packaging is too bulky.

Automating box selection and reviewing your packaging setup regularly helps you get reduced shipping rates, lower waste and protect your products better in transit.

Why it works:

• • Carriers often price by dimensional weight (not just actual weight)
• • Smaller packages = lower costs and fewer surcharges
• • Better packaging also reduces damage and returns

3. Offer pickup at checkout 

Home delivery is expensive. Carriers tend to charge more for residential drop-offs and, in some cases, even more when deliveries fail, plus shipping surcharges to home deliveries in peak seasons. 

Why it reduces shipping costs:

• • Carriers charge significantly less when they can consolidate multiple packages to one location
• • Make first-attempt delivery 100% successful, avoiding extra costs. 
• • Avoids residential and peak season surcharges and the cost of failed delivery attempts

• Offering pickup at checkout at a lower rate than home delivery will reduce the shipping costs for you but also for your customers. 

That’s where HubBox comes in.

HubBox is award-winning pickup at checkout software that lets your customers choose a local pickup point – like a locker or store – during the checkout process.

It’s the future of e-commerce shipping and it’s proven to help retailers reduce shipping rates by around 25%. 

How it works:

• • HubBox integrates quickly and seamlessly with your ecommerce platform
• • Shoppers choose a nearby pickup point during checkout
• • Packages are delivered to a local location instead of an individual home
• • Everyone wins!

As well as cutting costs, offering pickup gives customers the flexibility they want – our research shows 70% now want to see a pickup option at checkout – with fewer WISMO queries and guaranteed first-time delivery success.

Plus, fewer vans on residential streets can only be a good thing for our planet. 

4. Set minimum order thresholds for free shipping

Offering free shipping on every order isn’t sustainable, but a minimum spend threshold can encourage customers to spend more while helping offset delivery costs.

It’s a good strategy for retailers wondering how to reduce shipping cost without harming conversion. When done right, it can boost your order value and keep margins intact. Win win!

Why it works:

• • Offsets shipping costs by increasing average order value
• • Encourages loyalty
• • Helps maintain margins while meeting customer expectations