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 (you as the seller) to point B (your customer), at the same time keeping the costs for both parties as minimal as possible.
Shipping rates (or costs, fees) not only affect the profitability of your business, 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 rates, or even just estimate the approximate price to ship a given package, you will need to consider several factors. Let's start with:
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 it. The same goes for package weight - a heavier package will cost more to be delivered.
While you cannot affect the weight of your product, 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 snug enough to keep dimensions to the minimum to avoid inflating your shipping costs. In addition, a smaller packaging size is more likely 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. Remember that some package and filler types are more lightweight than others so they'll add less excess weight to your package.
Below you'll find a list of shipping calculators for some of the largest and most popular shipping couriers. Give these a try to see how size and weight affect shipping rates depending on the carrier you plan on using:
- USPS: Shipping Calculator
- Canada Post: Shipping Calculator
- FedEx: Shipping Calculator
- UPS: Shipping Calculator
Note: Make sure to weigh your products in their final packaging (that includes fillers, too) to see their complete weight.
Apart from the size and weight of the package, the departing location and destination are also an important cost factor.
The one very simple rule you can keep in mind here - the further the package travels, the higher the cost of shipping. For example, if you had to ship your package across the state, it would cost you less than mailing it all the way around the world.
To see how distance will affect your shipping rates, 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.
For an instant estimate of shipping costs, enter information like:
- Sender address (country, postal code, city, state)
- Receiver address (country, postal code, city, state)
- Package dimensions and weight
Or create your own eShipper account (for free) 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, there 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, you can choose a warehouse closer to the bulk of your customers, reducing your shipping costs overall.
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 and USPS Priority Mail offer complimentary coverage, but only cover your merchandise up to a certain amount (usually around $100).
For low-value, high volume shipments (parcels, envelopes or small packages), consider using eShipper's SmartePost tracking that offers competitive domestic and international prices for full tracking to 28 countries.
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.
If you're selling across international borders, one of the biggest challenges you'll face is dealing with customs and duties. They create a level of uncertainty for both the retailer and the customer, as it's hard to know what extra fees will be charged from country to country.
Usually, when there are additional customs fees or taxes involved upon the package's arrival, your customer will be responsible for them. To avoid confusion, it's a good idea to include that information on your website (for example, on the Q&A or shipping policy page). Here's an example by StartupVitamins, a brand that creates inspirational posters:
Make sure to explain as clearly as possible that any taxes or duty fees are 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:
- USPS Customs Information
- UPS Import and Export Guide
- FedEx Guide to Customs
- 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 costs, there's a simple formula that you can use. Multiply how long it takes you or your employee to package an item and divide that by 60. Then, multiply the number you got by 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 rates 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 for recommendations on what packaging might be the most suitable, yet money-saving to keep shipping costs on the down low. Or reach out to eShipper 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.