Small business owners excel at juggling. Every day, they are rushing to attract new consumers while also handling manufacturing, marketing, financing, and other aspects. Shipping is one area in which many small business owners are interested. They’ll specifically inquire, “What is the best shipping company for small businesses?” and “Which shipper will get their products to my customers quickly and affordably?” After all, studies show that shipping costs (and the availability of free shipping) influence the purchasing decisions of more than 50% of U.S. consumers.
This blog will look at which carriers small business owners can employ, how to select the correct packing and materials, and how the location of their clients can influence these decisions.
Retail e-commerce sales in the fourth quarter of 2022 totaled nearly $299.1 billion, accounting for 16% of retail sales in the United States during that time period.1 Shipping companies can assist small businesses in maintaining good customer relationships by delivering orders on time and at reasonable rates. Some even aid firms by offering logistical support and inventory management.
Considerations for Small Business Shipping
Do you want to know how to get the best shipping rates for your small business? Are you looking for a 3PL partner and want to know which shipping company is best for small businesses? We’re here to assist! Ultimately, the shipping plan you choose will be determined by the needs of your business. Here are a few things to consider when selecting a small business shipping solution.
#1. Volume of Orders
You are not yet moving things as swiftly as the big boys like Amazon! In the meanwhile, you should think about how many orders you ship each month. Going the DIY approach – buying packages, printing labels, and going to the post office – is definitely the best option if you’re just getting started and shipping a low number of products.
However, if your order volume continues to rise month after month, you may want to investigate an eCommerce fulfillment solution that can relieve you of the shipping strain and give shipping reductions.
#2. Delivery Date
Most customers are impatient; when they place an order online, they expect it to come quickly unless it is a special item or is being shipped from overseas. As a result, how soon a carrier can deliver your product to the final consumer is an important factor.
Of course, there are situations when you should make an exception for speed. For example, if you wish to offer free shipping, you may need to select a slower, less expensive shipping method to avoid exceeding your budget.
#3. Material for Packaging
Flat-rate boxes via USPS, UPS, or FedEx are a natural choice for shipping various things. However, you must evaluate the brittleness of your product. If it is fragile (such as glassware or some ceramics), it will require more packaging than, say, a T-shirt.
On the other side, perhaps you want to really highlight your brand with unique packaging. In that instance, even a T-shirt could require some eye-catching packing in the form of colored boxes and inserts, which these businesses normally do not provide.
#4. Package Measurements
How big are your items? When determining prices, dimensional weight, or DIM, considers the size of your package. Naturally, the larger the item, the larger the box, and hence the greater the DIM. Add in the weight of air-filled cushions, bubble wrap, or styrofoam peanuts, and the cost skyrockets.
#5. Package Dimensions
The higher the cost, the heavier the package (unless you use flat-rate shipping). If you’re still a do-it-yourselfer, investing in a postage scale for your “shipping center,” whether it’s a bedroom or a garage, will help you anticipate expenses more accurately.
#6. Shipping Location
Is your package going across the country or across the ocean? Of course, distance is an important factor in shipping rates. It also influences how quickly you can deliver your product to a customer’s door. While startups may be forced to bear the expenditures, other small firms can benefit from fulfillment facilities that are more centrally situated. More on this shortly!
#7. Tracking of Packages
You want to know where your package is at all times during its journey. Choose a carrier that provides free online package tracking; some even provide automatic updates through text or email. You can also provide tracking information to the consumer so that they can follow the product’s trip as well; this can avoid them from wondering where it is, especially if the delivery period is lengthy.
#8. Items that are easily broken
Sending anything fragile? You’ll need a sturdy box that can withstand the weight of your item (your best bet is generally a rigid box or a corrugated box with large flutes; you can learn more about these boxes in our blog Six Types of Custom Packaging). You’ll also need cushioning material to keep things from moving around. Always pack fragile items separately, seal the box tightly, and label it “fragile.”
#9. Items that are perishable
Shipping perishable commodities used to be limited to local and regional clients, but now they can be shipped internationally with accelerated delivery. Perishable goods transiting within the United States must be able to tolerate a transit time of at least 24 hours longer than the delivery commitment.
You can use a refrigerant to maintain things within the temperature range you choose. According to FedEx, gel coolants should be used for refrigerating products between 32oF (0oC) and 60oF (16oC), and dry ice for frozen materials.
#10. Third Parties Insurance
Insuring your shipments is a good idea, but using the carrier’s insurance can be costly. Instead, you may look into third-party insurance. While carriers normally charge around $1 for $100 of insurance, third-party insurance companies typically charge half that amount. On this forum, you may read more from small business owners looking for third-party insurance like you.
4 Small Business Shipping Carriers
There are four major carriers to choose from if you’re following a DIY shipping program. Every carrier offers some sort of small business shipping solution. Here’s a look at the various options, and it’s up to you to decide which one provides the best shipping rates for your small business.
#1. USPS
USPS shipping provides a free Priority Mail Starter Kit for small businesses, which includes a PO box. There are also a number of systems available for low-volume shippers, such as Click-N-Ship, that make it easier to fulfill orders in-house. You can use this tool to buy postage and print shipping labels online. For people who are unable to make frequent excursions to the post office, there is also a home pickup option.
Another USPS shipping perk is last-mile delivery, which allows an item to be delivered to its final destination swiftly and affordably. Additionally, for most shipping services, USPS gives a certificate of mailing.
#2. FedEx
FedEx Small Business, as the name suggests, caters to new businesses. The program includes a rewards scheme and the Packaging Help Hub, a resource that helps you determine package DIM. Are you shipping perishable goods? FedEx also provides temperature-controlled shipping services.
#3. UPS
UPS has a Small Business Program that provides small business owners with a number of resources. UPS allows you to participate in virtual brainstorming sessions with their small business solutions team in addition to scheduling pickups and managing client returns.
They can assist you with mapping out and fine-tuning your supply chain, identifying chances for improved agility, productivity, and growth, and discussing various technologies and services that can help your business accelerate.
#4. DHL
What about international shipping? DHL is an excellent choice for international express delivery and global freight forwarding via air, sea, road, and rail. The organization also offers small business shipping options and will assist you in selecting the appropriate service as well as addressing all customs issues. They also give you complete access to the status of your shipments at all times.
Making Use of a Multi-Carrier Shipping Strategy
How do you determine which of the four big carriers is ideal for your business? Busy shippers will frequently opt for a single carrier strategy and negotiate a reasonable rate. There is no need to investigate rates online or seek a spot quote, which simplifies decision-making. Despite the time-saving advantage of using a single carrier, you may wish to examine multi-carrier shipping solutions.
Benefits of a Small Business Using Multiple Shipping Carriers
While a single carrier plan saves time, having numerous shipping carriers has five advantages of its own.
#1. Increasing Your Negotiating Power
As the owner of an eCommerce business, you can frequently negotiate a better rate than the average one with a single carrier. However, you are still at the mercy of the carrier and may become complacent as a result. This is because many shippers who have an exclusive arrangement with a carrier do not keep up with the types of services that other carriers offer if their present carrier meets their expectations in general.
Furthermore, unlike cable providers, carriers may not offer their most competitive service options or rates to existing customers.
You gain more negotiating power with a multiple-carrier approach because carriers understand they must earn your business on every shipment. They’ll also keep you updated on new rates, routes, service types, and service levels, ensuring that you’re always getting the greatest bargains in town.
#2. Choosing the Best Carrier for the Job
While a single carrier plan can save time because you know who you’re shipping with, not all carriers are made equal. Some carriers simply outperform others when it comes to managing various types of cargo.
Following a multi-carrier shipping strategy, you would select the carrier best suited for each specific cargo (for example, domestic vs. international shipping, oversized goods, and so on). Again, this can take time, but the return may be worthwhile.
#3. Risk Mitigation
Placing all of your shipments with one carrier is akin to placing all of your eggs in one basket. You don’t have a backup in case something goes wrong. And, of course, shipping is fraught with danger. A carrier may, for example, modify service levels or cancel service in some locations, leaving you rushing to locate another carrier.
You may notice that your carrier is becoming sloppy, losing an increasing number of items in transit. Alternatively, bad weather may drive a carrier to its knees, affecting your capacity to ship merchandise on time. For these reasons, having a backup plan (i.e., an arrangement with another carrier) is usually a good idea.
#4. Meeting Customer Requests
A consumer may have a favorite carrier at times. A consumer, for example, may choose one carrier over another because they provide services such as pick-up/drop-off (PUDO). If that carrier is not accessible, they may abandon their cart (86% of all abandoned carts are due to shipping concerns). Alternatively, a B2B customer may request that you ship their packages on their behalf.
You won’t be able to meet these requests if you have an exclusive deal with a single carrier, which could lose you a customer. If you go to another carrier to meet the request and violate your exclusivity agreement, you may be penalized with increased shipping rates in the future or lose your preferred shipper designation. However, if you use a multi-carrier strategy, none of this will be an issue, and you will be able to meet your client’s needs.
#5. Greater Returns Flexibility
It is estimated that 30% of all online orders are returned (compared to less than 8% of things purchased in physical locations). Returns handling is therefore crucial for eCommerce businesses. While carriers may be comparable when it comes to shipping outward shipments, some may be superior when it comes to reverse logistics. Those that thrive at reverse logistics, on the other hand, may have a greater shipping rate.
When using various carriers, eCommerce retailers may opt for a lower-cost carrier that is less adept at managing reverse logistics for products that are not returnable or are returned infrequently. Then, for products that are frequently returned (this will necessitate some historical research), they may opt for a more expensive carrier that specializes in reverse logistics.
How Do Most Small Businesses Ship Their Products?
Ground shipping is the most popular method used by small enterprises to ship their products. Most small businesses in the United States use USPS, UPS, FedEx, and DHL to ship their goods. The USPS’s shipping volume in 2021 will be 7.6 billion items. In 2021, UPS will have delivered approximately 6.4 billion parcels.
What Do Shipping Companies Charge?
Charges vary depending on the size of the shipment, its destination, and how quickly it needs to arrive. Domestic shipping costs $8 to $12 on average for a small item and $17 to $21 for a large box, with arrival times varying from one to five business days.
Shipping Volume Management
Carrier businesses, like you, seek high-frequency, loyal consumers.
Shipping in larger quantities may result in volume-based negotiated rates with certain carriers.
Establish a relationship with your carrier account manager when you first start, as this might expose your business to further perks, such as shipping reductions.
Most online retailers use many carriers to find the best carrier, service, and rates for their business – so don’t be afraid to look into alternative options.
With all carriers and rates readily available on one platform, shipping software can help make this process smoother.
Saving on Extra Shipping Costs
- Packaging: Carriers will usually provide gratis packaging. Consider insulation and cushioning, inserts, special boxes, and envelopes as well. We’ll go over packaging and branding in more detail later, but make sure to factor it into your cost estimates and rate it accordingly.
- Insurance: Most of the major carriers’ service levels include a preset insurance value:
With a few exceptions, FedEx and UPS normally have a preset value of $100.
Priority Mail Express packages from the US Postal Service contain up to $100 in insurance.
Priority Mail shipments may contain up to $50 in value. - Third-party insurance: If you require additional coverage, third-party insurance providers such as Shipsurance offer low rates compared to carrier charges. Carriers typically charge between $0.75-0.85 per $100 worth, with a minimum cost of around $2.50. Shipsurance, on the other hand, charges only $0.55 for every $100 and has no minimum cost.
Managing Profitability
Even the most well-known and highly rated things on the planet are returned.
Returns are an unavoidable feature of doing business online. However, how you manage returns is what makes or breaks a successful one.
Did you aware that before making a purchase, the majority of customers check your return policy?
A buying choice involves weighing the risks and rewards. Buying online carries extra risk because you cannot physically hold or inspect the product.
A customer-centric return policy mitigates this risk for the customer. Customers are more likely to become repeat customers when you provide a fantastic returns policy and experience.
A short note for overseas merchants:
- International returns may be more expensive and time-consuming, and you may be subject to additional charges and levies.
- If you sell to overseas customers, make sure your returns policy communicates how you manage returns in an unambiguous, straightforward, and transparent manner.
- Depending on the item’s value, you may wish to just issue a refund or send a replacement without requiring the item to be returned.
How Much Should I Charge for Shipping to My Customers?
Now that you understand what factors influence shipping costs, you must decide how much you will charge your consumers for shipping.
Every business strives to save costs while remaining competitive and appealing to customers.
The best option is determined by your business needs, and you may choose different methods for different instances.
Free Shipping
Whether you like it or not, the Amazon Prime free 2-day shipping age is to blame for this phenomenon.
Shipping costs are one of the primary factors driving shopping cart abandonment, according to numerous research and surveys. However, we recognize that you must safeguard your profit margins.
While faster delivery times are becoming more popular, many buyers are ready to wait longer if free shipping is given.
This allows you to choose more cost-effective shipping options. Customers are also willing to add things to their shopping carts in order to receive free shipping when a minimum price is attained, according to studies.
Flat rate Shipping
If you are unable to provide free shipping, flat-rate shipping is a viable option.
You may offer a predetermined fee for different service levels with simple preparation and analysis of your average shipping expenses.
This works great if your parcels are all of the same size and shipping rate.
The shipping rate may change slightly, but if you have constant shipping rates for your goods, it will level out in the end.
This is especially true if you can use services such as USPS Priority Flat Rate at a low cost.
Real-time rates
This option may be especially appealing for big commodities, specialist products, and business-to-business transactions.
What are the Shipping Options for Small Businesses?
Although the major carriers in the United States are USPS, UPS, FedEx, and DHL, there are additional options. APIs enable small businesses to easily compare shipping prices across several carriers. This can help them save money on shipping.
Which is Better for a Small Business: UPS or FedEx Shipping?
Actually, if you’re a small business, the USPS may be a superior alternative for shipping in terms of affordability. However, UPS and FedEx may deliver your packages faster (at an additional expense).
What is the Most Economical Way for a Small Business to Ship?
The USPS provides reasonable shipping rates. However, EasyPost is an appealing option for small businesses as well because it allows you to compare carrier rates and choose the best price for a certain cargo.
Conclusion
We’ve gone through everything you need to know to get your business started with effective ecommerce shipping.
Concentrate on developing a low-cost, customer-centric fulfillment experience that will encourage loyalty and repeat transactions.
For your business, don’t view shipping as a cost center.
Consider it an extension of your brand and the customer experience.
If you do it correctly, you may even be able to turn shipping into a competitive advantage as you develop and scale your business.
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- SHIPPING INSURANCE: Definition, Coverages, and Benefits
- HOW TO CREATE A SHIPPING LABEL: Detailed Guide
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