August 20, 2021 | Last Updated on: February 21, 2023
Shipping your products is typically the final stage of the order fulfillment process, but keep in mind that being the last step does not make it the least important. How you handle your small business shipping will determine whether or not you’ve made a successful transaction.
Ideally, getting the best shipping rates and services should go hand in hand and should apply to both you — as the small business owner — and to your customers. Fortunately for everyone involved, the courier and delivery services industry has become more diverse, versatile, and definitely more accommodating of the needs of small businesses.
Let’s look at the many small business shipping options currently available and how you can decide on the best shipping solutions for both you and your customers.
On the consumer end of the supply chain, the standards for delivery times have gotten higher, especially relative to shipping costs and finding the best rates. YouTube and social media platforms have made popular “unboxing videos” and provided a convenient and effective means for customers to provide feedback regarding their entire shopping experience. Satisfaction or dissatisfaction with a company’s product delivery can quickly go viral online and significantly impact a company’s image and future success.
On the small business end of the supply chain, the wide variety of shipping solutions available means better opportunities to meet customer needs, provide them with a satisfying experience, and the chance to put a highly favorable spotlight on your brand. Before you start setting up your business’ shipping process, you must first choose the best shipping options for your products and customers, taking into account the cost of shipping, management, customer experience, and other factors.
According to The Balance SMB, the 7 best shipping companies for small businesses for 2021 are as follows:
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Getting the best shipping rates and services should benefit both your small business and your customers. Shipping rates are, of course, dictated mainly by carriers but the competitive market guarantees decent options for you and your customers. Shipping costs are calculated based on the following factors.
When it comes to shipping, customers also get what they pay for – which means that faster delivery equals higher shipping fees. Of course, customers make the final decision on the type of shipping they’re willing to pay for, but as the business owner, ensuring that they are given the best shipping solutions in terms of rates and quality of service is still your responsibility.
Speed of deliveries depends on several considerations:
Different carriers have different pricing structures, but in general, larger and heavier items cost more to ship. Keep in mind that “larger” and “heavier” may be mutually exclusive.
Let’s look at FedEx, UPS, and USPS, which all charge based on dimensional weight (DIM). This means shipping costs are calculated based on package size, not weight. So large and light items will cost more to ship than small but heavy ones. DIM is calculated by using the formula: (Length x Width x Height)/Divisor. A divisor is a number specific to a carrier; it’s defined as the “base weight of 1 cubic foot of space or 1,728 cubic inches.”
Below are the DIM formulas used by the major carriers:
Carrier
Domestic Formula
UPS
LxWxH 139
FedEx
LxWxH 139
USPS (cheapest)
LxWxH 166
Source: https://www.bigcommerce.com/blog/small-business-shipping-tips/#shipping-cost-101
For domestic shipping, most carriers also offer flat-rate shipping using the carrier’s standard packaging and for a maximum parcel weight. So if you already know the average size and weight of your orders, you can offer flat-rate shipping to your customers.
Carriers also calculate domestic shipping costs based on zones. These zones may vary per carrier, depending on their particular distance measurements. International shipping, of course, costs more and includes additional fees for value-added tax, tariffs, and customs declarations, among others.
Almost all carriers offer volume-based shipping discounts. So whether you’re just getting started or already an established small business or online store, find out from different carriers what negotiated rates they can offer you for higher volume shipments.
Shipping at a higher volume, of course, means closing a lot of sales. However, you can take advantage of volume-based shipping discounts by offering your customers a limited-time sale and discounted shipping or free shipping.
Outsourcing your shipping management means relinquishing control of an important aspect of the order fulfillment process. But depending on the type of business you have, it can also mean a better guarantee of more reliable and cost-effective shipping services. You have two options for outsourcing shipping management: via third-party logistics (3PL) or dropshipping.
With 3PL, you partner with a 3PL provider store, such as Amazon’s Fulfillment by Amazon (FBA), Shopify’s Shopify Fulfillment Network (SFN), and ShipBob. 3PL partners take care of your inventory (they store your products at their warehouses) and shipping needs. Some partners, like FBA, work whether you’re selling through Amazon or other channels (such as your own eCommerce site); others only allow selling through their platform.
Dropshipping is an offshoot of reselling; instead of buying products in bulk to get wholesale pricing, you will only place an order for a product when a customer orders it. So you don’t own the products you sell; you simply purchase directly from the manufacturer or supplier as orders come in, and they take care of the shipping. The downside to dropshipping is that you have no control over product quality, and the profit margins are also lower.
Offering free shipping to customers may mean having to cut into your profit margins. But as some studies have found, offering free shipping can also help boost sales. In fact, customers are more likely to buy more products, so they can take advantage of free shipping, particularly when a minimum order is required.
Remember that you’re free to use multiple carrier options so you and your customers can take advantage of the most cost-effective services. Different carriers have their unique strengths and weaknesses; especially if your company handles different kinds of shipments, you’ll want to have the option to pick the right carrier for the job. The multi-carrier approach also provides you with a backup plan and makes returns management easier.
