The Hidden Costs of Shipping Explained

Running a business can be an extremely tough but highly rewarding experience. You're constantly trying to balance costs to make sure your intake is profitable and attainable long-term. When it comes to shipping your products, it may seem like you're only paying for the final delivery cost, but there are other expenses - both indirect and direct - that many merchants don't factor into the cost of doing business.

In this article, we're going to break down the costs of shipping to avoid any unexpected surprises when you start or expand your business.

What is shipping and handling?

Shipping costs refer to the cost of postage and related transportation to get the package from the shipping carrier to the consumer. This fee includes surcharges, fuel charges, and other costs related to the distance travelled and delivery time chosen. This is why international parcel delivery costs are often higher.

Handling costs refer to the labour associated with collecting inventory for an order, packaging products, generating shipping labels and loading the shipment onto a truck.

When you book with us at Interparcel both of these costs are calculated and then subsequently discounted to keep courier fees as low as possible, this way eCommerce shipping costs are kept profitable!

The cost of packing materials and supplies

At the most basic level, product packaging serves to protect the product inside during shipment between the retailer and the customer. A product's packaging communicates many things, from what a product can do for your customers to your company values.

Depending on how you package your items and which carriers and services you use, you may need to purchase any combination of the following:

• Packing tape
• Bubble wrap
• Boxes, envelopes and mailers
• Labels and paper
• Printer and ink

These materials are necessary to ensure your parcel is protected when sending any kind of goods. Some of our couriers like DX offer printer-free label options too which saves money and is environmentally friendly.

The cost of transportation

Transportation costs refers to the cost of having to send the shipments to the shipping location. This often takes the form of driving to the post office or to your nearest drop-off point. Every mile spent driving costs money and wastes petrol. Every hour spent delivering parcels, is time that you could spend growing your business.

We offer lots of excellent collection services that can come right to your workplace or home address and collect your parcels for delivery. This way you can save time and money and have your orders taken care of without added extra costs. These services cost the same or less than our drop off ones, so you won't be paying more for them either!

The cost of dimensional weight

Dimensional weight is a pricing tool that carriers use to determine how much they will charge you to ship a package. The dimensional weight of a package is found by calculating the cubic size of the parcel and dividing it by a set DIM factor. The number is then compared to the parcel's actual weight and the larger of the two items is used as the billable weight.

Although larger and heavier parcels may come up as more expensive to ship, it's best to select a specialist courier such as Tuffnells that are experts in handling such shipments. This way you know that your goods are with a reliable and experienced courier.

The cost of inefficiencies

In retail fulfilment, when you don't already know the best practices, your processes are manual and time consuming. As more orders roll in the inefficiencies double and triple.

Bulk discounts: If you're shipping multiple packages a month, shipping by yourself means that you don't have the best rates negotiated with carriers.

Automation: If your store isn't connected to technologies that are already out there, you're losing time and money on automated processes and data driven decisions.

The cost of shipping insurance

Transit cover is an essential service when it comes to parcel delivery for business. It's a solution that protects brands against lost, stolen or damaged packages. If an insured package does not reach its destination or it is damaged along the way, the business owner is reimbursed the declared value of the items in the packages.

If you're shipping in high volumes of valuable items, then the shipping insurance will likely pay for itself, as the more you ship, the more packages at risk. For eCommerce businesses shipping insurance is a no-brainer, 70% of customers are unlikely to shop from an online store after a poor delivery experience. Transit cover allows you to win back customers by quickly reimbursing or replacing items without taking a loss.

Interparcel offers free transit cover of differing amounts on all services booked, and these parcel delivery costs are often added to the already low price of delivery. This gives businesses peace of mind when delivering goods.

The cost of a bad customer experience

Since the arrival of Amazon, customers expect their goods to be delivered in three to five days, if not sooner. Cheaper shipping may seem like the sensible option, but when shipments take too long to arrive at the doorstep of a customer you are jeopardising your repeat business with that customer. Customer reviews are extremely important for your brand image, so sending parcels out fast and safely will help ensure shining five-star reviews.

The cost of a shipping internationally

Shipping internationally means that the sender or the recipient will have to pay taxes and duties under certain conditions. There are two ways duties can be applied: delivery duty paid (DDP) and delivery duty unpaid (DDU). DDP is when the merchant is responsible for all the duties and taxes associated with the shipment. DDU is when the customer is responsible for paying for those associated costs.

Customs bond: For importers, there are two main types of bonds, single-entry and continuous transaction bonds. This bond is essentially your insurance policy that the costs associated with importing goods will be paid.

Customs bond: For importers, there are two main types of bonds, single-entry and continuous transaction bonds. This bond is essentially your insurance policy that the costs associated with importing goods will be paid..

Documentation fees: The correct customs paperwork required will vary from country to country. Typically, countries need a commercial invoice and export packing list.

International shipping rates: There's no escaping the fact that international shipping costs are higher, especially for heavier items. If you're shipping by yourself, you're potentially missing out on tailored pricing deals that courier aggregators like Interparcel have with individual carriers.

Remote area surcharge: Depending on your pick-up location, you can face a surcharge. This means that your location is far from the usual collection path of the courier.

In the UK, customers looking to send to anywhere in the EU and beyond will need to fill in customs information during booking, but don't worry, we've streamlined the process to make it as simple as possible. However, if you need more help, we've got a few blogs explaining HS codes and EORI numbers so you can find out exactly what they are and why you need to know them!

If you want help to streamline your parcel shipping, we created our Shipping Manager to help you process and despatch your parcels with ease.

By integrating your online store with our Shipping Manager small businesses can benefit from a range of additional features:

• Free account set up
• Parcel Presets to shortcut package detail input
• Access to a range of eCommerce integrations through our Shipping Manager
• Full use of our 'Send Again' and 'Return Parcel' actions to streamline sending
• Unlimited no-cost label printing options

We've partnered with all the biggest and best eCommerce platforms such as BigCommerce, WooCommerce, Shopify, Magento, and more. Plus, all of these platforms can import/export your Etsy, eBay or Amazon listings and bring them straight over to your website.

If you need any more help finding a shipping service that can save you money and time, give our parcel experts a call, live chat message or email and they can walk you through the eCommerce shipping costs included and what you need to know.