There are many essential aspects that make or break a successful e-commerce business. A supply of high-quality products, an effective marketing strategy, great packaging – you name it. No less important is figuring out how to ship your product from point A to point B, at the same time keeping the shipping costs for both parties as minimal as possible.
Shipping costs not only affect the profitability of your business, but they are also the number one reason why online customers abandon their shopping carts. All the more reason for keeping them under control as much as all other operating costs.
To calculate your shipping costs, or even just estimate the approximate price to ship a given package, you will be needing to consider the following factors. Let’s start with:
Package dimensions and weight
This is one of the main determining factors for your shipping costs. To put it simply, the larger the package, the more you’ll have to pay for shipping. The same goes for package weight – a heavier package will cost more to be delivered.
While you cannot affect the weight, you do have a say over what type of packaging to send it in. The package size should be big enough to hold your products, but relatively smaller to protect your product from unnecessary shaking and damage.
A good idea is to stock several package sizes and packaging materials so that you can select the most appropriate for each of your products.
Apart from the size and weight of the package, the departing location and destination are also an important cost factor. The further the package travels, the higher the cost of shipping.
To see how distance will affect your shipping costs, you can use an online calculator – like the one on eShipper, a Canadian shipping company that provides shipping solutions across Canada, the US, and internationally.
Or create your own free eShipper online account to get access to a more extensive calculator where you’ll be able to see a list of competitive rates from trusted carriers like FedEx, UPS, and others, see a breakdown of prices and compare them by carrier, service, estimated transit time, etc.
Regarding the distance traveled, it isn’t much you can do here. However, when your business grows big enough, it might be time to start thinking about using a fulfillment warehouse by analyzing past sales and their destinations, reducing your shipping costs overall.
Tracking & Insurance
Insurance and tracking are two very important considerations that offer a great deal of security but might increase your total shipping rates.
Tracking almost always comes at some additional cost. At the same time, it can be important for not only proving you sent the package but also for the customer experience.
In the case of most carriers, insurance and tracking is relatively inexpensive and covers your expenses in case one of your packages gets lost or damaged. Shipping services like UPS offer complimentary coverage, but only cover your merchandise up to a certain amount.
For low-value, high volume shipments, consider using eShipper’s SmartPost tracking that offers competitive prices for full tracking to 28 countries and domestic.
If you’re shipping items of higher value or packages that are easy to break, consider purchasing additional insurance or even using a third-party insurance provider like ShipSurance or Insureship that will cover all your packages automatically.
Also, read the related blog: CONVENIENCE RETAILERS WELCOME TO LOWER CREDIT CARD FEES
Customs & Duties
If you’re selling across international borders, one of the biggest challenges you’ll face is dealing with customs and duties.
Usually, when there are additional customs fees or taxes involved upon the arrival of the package, your customer will be responsible for them. To avoid confusion, include that information on your website, for example, a shipping policy page. Here’s an example by a brand that creates inspirational posters:
International Shipping Costs
Shipments outside of the USA may incur customs fees depending on your country of residence. The fee may vary depending on your order value, country limits, and other factors.
Startup Vitamins does not take responsibility for possible fees.
Make sure to explain as clearly that any taxes or duty fees are shipping costs that are beyond your control and not something you will earn a commission from.
To get an idea of what fees might occur, check out resources like:
1. The USPS Customs Information
2. UPS Import and Export Guide
3. FedEx Guide to Customs
4. Canada Post Customs & Duties Information
If you have employees handling your package prior to shipping, remember to account for this when determining total shipping costs. Even if your business is a solo job – your own time is valuable too.
To figure out handling shipping costs, there’s a simple formula that you can use. Multiply how long it takes to package an item and divide that by 60. Then, multiply the number you got by an hourly wage.
•If it takes 20 minutes to package and send an item, divide that by 60 and get 0.33. If the hourly wage in your company is $10/hour, multiply that by 0.33 and get handling costs – $3.30.
As you can see, figuring out your shipping costs is not as simple as you may think, as there are many changing variables along the way.
If you need any help, you’re welcome to contact us at eShipper for recommendations on what packaging might be the most suitable, yet money-saving to keep shipping costs on the down low and for other tips and tricks for best shipping experience.
This piece is a guest blog written by a representative from Arka, the packaging experts who take a highly personalized approach in creating custom packaging for your brand while making it their mission to give you both affordable pricing, and quick turn-around time.