According to NFIB The Voice Of Small Businesses, small businesses in the U.S. currently pay over $4,000 annually to the postal service.
This number can vary greatly according to the business size and selling activity. Some merchants are spending as much as 22 percent of their average order value (AOV) on logistics alone each year, says Shippo. If you are planning to start an online business, shift your current business to eCommerce, or offer catalog sales, shipping is a key component to keeping customers satisfied. Ensuring your product is delivered on time and efficiently is a great selling point for any business today. However, business owners also need to balance profits and cost affordability with fast and reliable shipping options - and getting the balance right can sometimes be a tricky process.
Get The Basics Down Before Choosing A Carrier
Before you can decide on a shipping carrier for your business, you need to understand what is included and have an idea of the kind of service you are looking for.
This includes narrowing down a delivery timeline for your product from the warehouse to the customer. Do you want to offer a next-day shipping option? How fast do you want standard delivery to take? Businesses may also want to pay more for reliable shipping and shipping insurance when choosing a shipping carrier. Unexpected conditions like the recent pandemic can impact shipping times and parcel delivery. Paying a bit more for a reliable shipping carrier and the added protection of insurance means you can rest assured your packages will arrive on time, or be reimbursed if delayed.
Additionally, it is important to have an estimate of your shipping volume each month/week. If you are a new online business and expect to be sending out just a few packages each week, then you may be better off not subscribing to a business plan. However, if you plan on sending out a large volume, finding a great shipping plan may be incredibly cost-effective. You should also be familiar with the standard weight of your products. This can help you estimate shipping rates, particularly if you choose to use flat rate shipping and your product weight varies.
Decide Whether Flat Rate Or Domestic Weight Shipping Is Best For Your Product
In the age of digital shopping and same-day deliveries, customers expect fast and sometimes free deliveries. A survey by BigCommerce showed that 36 percent of buyers would give up ride-sharing in exchange for free deliveries for a year. A stunning 50 percent say they avoid retailers that do not offer free shipping, indicating the rising expectations for businesses to account for shipping costs in the product pricing or overhead expenses.
However, if not properly managed shipping costs can quickly eat into your profits - particularly if you choose the wrong kind of shipping. Flat rate shipping is great for its standardization in delivery times and shipping criteria. It can save you money, since you pay a predetermined rate per package. Packaging can also be cheaper, as most UPS or post offices offer free flax rate boxes. However, if you want to offer expedited shipping or several delivery destinations, domestic weight shipping could be a better fit, particularly since it offers custom quotes.
Be Prepared For Annual Hikes From Carriers
Every year, postal carriers review their requirements and prices for both domestic and international shipping. Often, they increase their shipping rates or postal requirement conditions. For instance, beginning from 24th January 2021 first-class mail saw a 5 cent increase to $0.20 per ounce. Similarly, Priority Mail prices increased by 3.6 percent for 2021. Staying updated with these changes ahead of time means you can budget for increased freight costs to your business in the new year. It may mean making a planned increase in your product price or looking at competitors to get a better business shipping deal.
Lastly, be clear on your delivery timelines to customers. While many customers love free or low-priced shopping, they also appreciate transparency. Including a delivery FAQ page on your website is a good start. Also, be sure to either include package tracking or regular shipping updates on orders. This will do a lot for your brand in your customer’s eyes.