8 Vital Factors That Affect Shipping Costs of eCommerce Businesses

Shipping costs are the foremost factor that affects the success of an e-commerce business. It has a significant effect on the client’s decision. That’s why it is crucial to calculate shipping rates correctly. Listed below are the eight vital factors that affect shipping costs.

Factors That Affect Shipping Costs

Whether you’re about to start a business or have an ongoing one, take note of these aspects that influence the shipping costs.

Distance and Zones

The departing location and destination significantly affect shipping costs. It’s pretty understandable. The farther your package travels, the higher prices it takes. For example, shipping an item across the state is cheaper than mailing it around the world. The same goes for the different zones in a country.

To help you identify the appropriate shipping cost, use an online calculator. It provides an instant estimate of the expected rates. All you need are information like the sender and receiver’s address and the dimension and weight of the package.

Any business cannot do much with the fees regarding the distance. But, it can help any business owner in analysis. First, gather the past sales and locations. Then, pick a fulfillment warehouse closer to the bulk of customers. This way, you can reduce the overall shipping costs. Plus, get to expand over different regions.

Dimensions and Weight

The package dimensions and weight are determining factors that affect shipping costs. The logic is simple. The larger the package is, the higher the shipping rate buyers have to pay. Also, the heavier the box is, the more cost it takes to be delivered.

Although you cannot change the product weight, the type of packaging is manageable. Choose a pack size big enough to hold the products. But keep it snugged to maintain the dimension to a minimum. This way, it avoids inflating the shipping costs. Furthermore, the smaller packaging size protects the items inside from shaking and damage.

In addition, stock various packing materials and sizes for appropriate selection. Choose lightweight fillers to lessen the weight of the entire package.

Shipping Method and Time

Various shipping methods can affect the shipping costs. For example, ground shipping is more affordable. Meanwhile, air and ocean methods are more expensive for overseas shipping. But who doesn’t like expedited shipping like the service of Red Stag?

To minimize shipping charges, find a balance between the amount you’re willing to settle and the shipping times you want to offer. For example, delivering overnight packages or expedited requires consideration for air shipping. A two-day delivery package outside the zone needs air shipment too. Although ocean shipping charges a little less than air, it still costs more than the ground option. The latter is less expensive, but it will take more time.

Delivery Surcharges

E-commerce courier shipping comes with extra costs like delivery surcharges. It increases the shipping costs as the package travels. In addition, packages pick up specific fees along the way for the additional required services. Although the following are the expected delivery surcharges, it is not limited to it.

Rural, remote, or hard-to-access locations outside the courier’s range
Above weight, size, or dimensions handling fees

Residential surcharges
Fuel surcharges
Weekend surcharges for overtime shipping

These fees might be difficult to mitigate, but it helps you get an estimate. Therefore, you can allocate a shipping budget for them.

Tracking and Insurance

Tracking and shipping insurance also affect the shipping costs. Although not all merchants have this service, it offers a great selling point. It guarantees customers that the package will be safe and secure throughout the delivery.

Tracking is an essential element for giving a sense of security. It proves that sellers sent the package. Also, it allows customers to monitor their items. On the other hand, insurance covers the expenses if ever the parcel gets lost or damaged.

A majority of shipping and fulfillment companies have plans for shipping insurance. Some offer complementary coverage. It covers the cost of the merchandise but up to a certain amount only.

Customs and Duties

Customs, duties, and other taxes are vital factors that affect shipping costs. Cross-border shipping considerably has country-specific fees. It is typical for commodity-specific tariffs and import duties.

Learn about the de minimis value or the threshold set by other countries. Then, find out which one had no custom duties applied to imported goods. Although the customers are responsible for the additional custom taxes, it is crucial to inform them. Explain that these duty fees are beyond a merchant’s control. Plus, sellers don’t earn commission from them.

Declared Value

A declared value is another factor that affects the shipping costs. The stated amount of the shipment’s worth applies to both domestic and cross-border deliveries.

Sellers have the liberty to lower the declared value from the actual sale price. Thus, it might be a discounted rate from the actual cost the customer paid. Nevertheless, courier companies are only held liable for any damage or loss based on a set and specific amount. For example, a package maximum liability limit costs $100. Any value declared beyond that incurs additional fees.

Handling and Labour

Calculating the handling and labor costs relatively affects the shipping costs. Handling shipping in-house with hired employees is part of the business expense. Even if you do a one-person job in the business, remember your time is valuable too.

If there’s no team dedicated to preparing the packages, the computation might be challenging. But there’s a simple formula to figure out the handling costs. First, find out how long it takes you or the employee to pack an item. Then, divide it by 60. Afterward, multiply the resulting number by hourly wage. The answer will be the rough handling expense for one package.

Several factors indeed affect the shipping costs. Know these details before diving into the e-commerce industry. Remember, a reasonable shipping rate encourages more buyers.

Tips To Save Up Costs

Now you know the different factors that affect the shipping costs. The next step is to learn how to save up from these expenses.

Find the Right Service for the Right Job.

Consider a multi-carrier strategy. A single carrier is a time-saver, but multiple shipping is more beneficial. It allows merchants to choose a courier that is suitable for a particular shipment. It can be for domestic, international, or oversized freight.

Use Free Packaging

Shipping fragile items adds up the cost quickly. Lessen it by using free packaging. Do it by purchasing plain and traditional packing materials like boxes and bubble wrap. Keep it light to cut the shipping rate.

There are various ways to save the costly shipping fee. Keep in mind these two to keep the customer’s buying and business going.

Figuring out the shipping rates have many changing variables. Nevertheless, it should not stop business owners from achieving their goals. Understanding the 8 vital factors that affect the shipping costs is one step ahead for it. Contacting Red Stag is another bright decision. It is a world-class fulfillment company that operates to extend business to the homes of each customer.

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