Data Enrichment & Validation

How to Calculate Shipping Cost and Reduce It with Address Verification Tools

July 27, 2021
Author
Inkit Team

Companies using postal services for bulk mailing need to mind expenses. If they don't calculate the cost of shipping in advance, they risk losing money. By choosing more expensive shipping rates instead of affordable ones, such businesses waste several cents or even dollars per mailing. Hence, when the shipping volume reaches thousands, material losses become overwhelming. If the shipment issues persist, it will undermine business profitability, especially for logistics companies and small businesses.

The accuracy of shipping details is another thing affecting finances. In 2020, UPS and FedEx increased the address correction charge to $17 per record. If a shipper provides incorrect address details, the carrier will try to fix them, but the fee will be huge. If they fail to correct the addresses, the senders will get their parcels back and disappoint customers waiting for their orders. As a result, all the stakeholders suffer.

If you wonder how to reduce shipping costs and prevent delivery problems, we know the answer.

Use address verification tools and research the rates of the major carriers before mailing. These preventative steps will allow you to save on shipping and improve the quality of delivery services.

Find more about address verification tools and calculating the cost of shipment in the article.

How to Calculate Shipping Cost to Choose the Best Rates?

Shipping costs mean direct costs resulting from moving a product from a shop or warehouse to a customer’s house. They usually include the cost of boxes, packages, stickers, worker and courier’s efforts, and the delivery fees. Insurance and handling fees are some other extra expenses. Therefore, when planning how to reduce shipping costs, you should remember that multiple factors shape the final price.

Shipping Cost

The speed and accuracy of delivery are among the most critical ones. Shipping carriers offer several delivery options, the pricing of which varies depending on shipping zones, delivery times, and other aspects.

Overall, shipping providers formulate their pricing based on:

  • Time in transit/Speed to destination;
  • Type of service offerings (priority mail, flat-rate shipping, etc.);
  • Package density: dimensional weight or the space occupied by a package in relation to its actual weight;
  • Shipping supplies;
  • Delivery area surcharges;
  • Shipping insurance and declared value;
  • Collect on delivery cost when a customer pays at the point of receipt;
  • Additional international shipping costs;
  • Unexpected expenses (e.g., misdelivery, incorrect address details, etc.).

If it sounds too challenging to estimate the cost, we’ve got great news. You won’t need to learn how to calculate shipping costs manually. Major carriers like UPS, FedEx, or the United States Postal Service have handy online calculators. They allow you to indicate the parcel and delivery instructions to view the final cost in real-time. The destination, origin, package weight and dimensions, and expected time are enough to learn the price. It is an excellent way to test different mailing options and choose one for your business. Such research will help you avoid paying more than necessary.

You can also outsource shipments to a third-party vendor. In this case, an external company will manage all the product delivery stages and offer the best rates. Inkit is one of the vendors that can help you fully automate mail marketing campaigns covering everything from mail printing to delivery and tracking.

Start verifying addresses today
Don't waste time and money dealing with lost shipments that never made it to your customers.
Start for free

Why Use Address Verification Tools to Reduce Shipping Costs

Even though you cannot manipulate shipment pricing much, you can prevent misdeliveries and address correction charges using verification. When you validate address data, the shipment quality considerably improves, and the final shipment check reduces. With address verification tools, you won’t have to worry about how to reduce shipping costs. It will be minimal because of the following reasons:

#1. When you validate addresses, shipment vendors offer more favorable conditions

First of all, by using address verification tools, you will avoid additional charges for incorrect addresses. Secondly, some major shipping carriers offer discounts on prepared mailings. If address records are standardized and validated, you can get cheaper rates.

Learn What Industries Need Address Verification More Than Others

#2. When you validate addresses, mailings are more likely to reach the destination

Address verification tools reduce the risk of human error and related losses. If a buyer fills out a wrong ZIP code on a website, the software will either instantly highlight it or fix the record while checking the database later on. This way, the address verification tools make offline communications and shipments more reliable. Ecommerce shipping, parcels, print invoices, and anything else delivered by mail is sure to reach the recipient.

#3. When you validate addresses, you prevent fraud

Address data verification is a part of many fraud detection tools and security checks, like AVS. Address matching allows businesses to detect people that provide false information about themselves. The software notifies a company about the address mismatch to double-check the buyer and confirm or discard fraud suspicion. If the fraud is detected, the company is saved from possible financial losses.

How Do Address Verification Tools Automatically Validate Addresses?

Basic online checkers where you enter records one by one are suitable for businesses that use delivery services once in a while. Companies that handle many shipments adopt automated address verification tools.

So how do automated address verification tools validate addresses? There are generally two options, stand-alone web services, and API integration. If you integrate a web-based address verification tool, it will check the connected database to spot incorrect addresses and fix them when possible. Such tools can process a single record and validate address batches. When choosing such a tool, you will need to make sure your current services run well with it.

Companies that want address verification tools as a part of their existing system prefer the second option – API. Integration through an API enables them to layer automated address checks into any system. It’s very convenient for e-commerce businesses, finances, healthcare, and other companies that need the maximum level of address verification tools automation. After the API is connected, the software starts offering address suggestions, enriching address data, and validating it in real-time. For example, when a buyer wants to checkout in an online store, they will see automated address suggestions as they type in.

Learn More About Types of Address Verification Systems

Additional Tips on Making Shipments Cheaper

In addition to address verification tools, several other life-hacks can help you cut postal service and shipment expenses. Check them out:

  • Reduce dimensions of packages;
  • Cut shipping distances by optimizing your logistics network and connecting warehouses;
  • Look for discounted supplies and shipping rates;
  • Try prepaid shipping purchasing some shipping labels in advance for reduced shipping cost;
  • Provide customers with address formatting instructions when they share shipment details;
  • Combine address verification tools with inventory management software to reduce delays and, thus, make shipments more profitable.

Inkit for Shipment Address Verification

Inkit is a reach enablement platform (REP) that includes an address verification tool called Verify among its products. Verify allows businesses to autocomplete and verify shipping addresses at the checkout. Hence, if you sell goods or ask customers to pay for shipment on your website, Inkit can help you.

Inkit Verify is offered as an API, so it smoothly integrates with existing websites or applications. It cuts development time from months to one day and enables you to have automated address checks built into your software.

Want to test Verify in your company? Contact us to get the demo.

Start verifying addresses today
Don't waste time and money dealing with lost shipments that never made it to your customers.
Start for free