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Demystifying Small Business Shipping

Mona 24 June 2021

Everything You Need to Know as a Small Business to Save You Time, Money & Stress!

The small business shipping services you use are as important to your small business's profits, as they are to your customer's wallet.

From actual weight to dimensional weight to what shipping tools and shipping discounts you have available to you, it's important to secure a fulfillment shipping option that makes sense for you and your business. In this post, we'll answer all of those questions and more!

The shipping business can be confusing, especially if you're just starting out. There are a lot of terms to learn and understand, and not all of them are intuitive or self-explanatory. 

But understanding the difference between some of these commonly used terms and modes of transport can have a positive effect on your profits and keep more money in your pockets where it belongs.

Let's start with some easy terms and phrases every small brick-and-mortar business or ecommerce start-up should know.

The who's who of shipping: The shipper, the consignee, the carrier - oh my!

Defining who's who in the world of shipping may seem straightforward but it's not always so clear especially nowadays with dropshipping and ecommerce subscription-based software systems like Shopify booming.

The Shipper

The shipper is the individual or business that is sending the product. When an individual takes on a role as both sender and receiver they are called a "shipper". 

Everything involved in getting your product ready to ship falls under their umbrella, which includes packaging to make sure you have all necessary paperwork before loading it into our truck!

The Consignee

The consignee, or buyer, is often paying for this service but not always. A consignee is a person who receives a shipment. As a small business, you'll want to make sure that your customer's billing address and shipping address are clearly defined as they can sometimes be different.

The Carrier

The carrier is the one who is actually transporting the goods. In most cases, the carrier is a third-party shipping solution service like Canada Post, UPS, DHL, Fedex, Purolator or CanPar. 

You'll want to know your carrier's terms and conditions so that you can accurately quote delivery rates for customers as this can be a costly mistake for most online businesses.

Types of transportation carriers are: Air carriers, trucking companies and/or less than truckload LTL carriers, Rail, and Barge Line or Ocean freight shipping companies - just to name a few. 

Third-party logistics providers and brokers.

Third-party logistics providers and brokers (think FedEx, UPS, and Canada Post) are used by small businesses to help save money and to handle the shipping process when delivering products to the end customer or consumer.

It's a good idea to contract with one of these services if you don't have your own in-house systems for order fulfillment and to set up for shipments if you want assurances that your packages will arrive on time.

Larger and more established businesses are sometimes less likely to use a third party as they often facilitate this in-house, but this could end up costing more in the long run. 

A third-party shipping platform could have access to pre-negotiated rates not available to the general public regardless of the size of the company. They can sometimes offer a flat rate or shipping solutions for international shipping. 

Save time, money, and stress and solve all your shipping woes with one click of the button.  Click here to set up your free account.

A Quick Guide to Shipping Solutions for Small Businesses

The difference between courier and post office services?

Courier services can transport all the same things that a regular post office can such as letters and packages and take on the responsibility for shipping costs and tracking numbers.

You might think of couriers in terms of how you would use a taxi or Uber to get from one place to another quickly. They're often used by small, local businesses, ecommerce startups, and long standing businesses who don't have access to freight trucks or other large transportation options like air or rail.

Couriers provide quicker shipping times but are often more expensive than mail. 

Mail service is typically slower but has certain benefits. Mail services are often cheaper and have the ability to send longer packages through the mail that can't be sent via courier services.

With both options, you'll need some form of tracking so your customers know when their product will arrive at their doorstep. 

Now let's get into the nitty-gritty and the most frequently asked questions about shipping terms and shipping options for small businesses. 

Actual weight vs dimensional and how it affects your billables.

This is the most common and costly mistake that many businesses make when it comes to calculating the cost of shipping your goods. 

The actual weight when talking about shipping rates refers to the weight of the package with its contents, like a suitcase or a box with clothes or a present inside.

In contrast, dimensional weight is calculated by length x width x height and divided by 139 and is used to determine the shipping cost of a package based on size weight. Meaning the cost your package takes up rather than the actual weight itself.

Billable weight is calculated by combining the actual and dimensional weights. You are charged for both types of weights when calculating your billable costs. 

It's important to research your carrier before you send an order out and always add a buffer to your estimated weights just in case there are any unexpected costs. 

How do you measure the girth of a package?

Weigh your package on a scale and measure the circumference of it with a piece of string. Measure from one end to another without measuring over any perforations or edges that are not part of the length/circumference measurement. This is called girth measurement, which may be different than dimensions like height, width, and weight.  

Types of courier services

Now that we've covered who is sending the package and common questions that affect the delivery, let's cover how quickly you can get your product into your customer's hands. 

Express

Express delivery is one of the fastest and most reliable shipping methods. For an extra fee, customers can have their shipments delivered 24-72 hours after they are shipped as opposed to waiting days or even weeks for regular deliveries. Delivery by express is often touted as one of the quickest ways to get your product or mail delivered in a timely manner!

When sending a parcel express you want to ensure that you have the right balance of time and cost. Express services are great for meeting tight deadlines, but they also tend to be more expensive than other types of transportations. 

Same-day 

Same day service is pretty straightforward and is often the fastest option. Customers can request for their parcel to be shipped same-day and it will usually arrive by the end of that day, depending on where they are in relation to the shipper's location.

Overnight Service

Overnight delivery is a popular option for those who need their parcel to arrive the next day. This method of delivery can be expensive but it's also fast, usually arriving just one or two days after they have been sent out!

Next day

Next day can be misleading as it refers to the next business day and not necessarily within a 24 hour period. Next-day delivery allows customers to have their goods delivered the day after they're collected by the courier. 

International Shipping Services

When sending your packages across borders, you'll want to look into customs and duty taxes. Customs is the government agency responsible for collecting tariffs on imported goods. 

Duty is a tax that some countries charge based on the value of your shipment once it enters their borders (i.e., the United States charges an import tariff). Taxes are fees or duties charged by governments when imports enter.

Some transport carriers offer international shipping solutions, but not all. 

What is peak surcharge?

Before selecting your delivery type you should become familiar with your shipping provider's additional fee structure.

Some courier companies may charge a peak surcharge for packages that are delivered on the weekend, during the holiday season, or after regular business hours making it less affordable to ship when demand is high.

Are you a Shopify store owner? We've got the best ecommerce shipping service for you. Contact us today

Shipping Costs FAQ

Why is shipping so expensive for small businesses?

Shipping is probably the largest expense that small businesses have to deal with and is often the heaviest cost that small businesses face.

Shipping costs are relatively high for small businesses when they have to ship a lot of items or if their products are heavy because freight rates go up with outbound weight and volume. 

Finding an affordable shipping platform is the only way to save on costs when trying to deliver your products. See real time fulfillment and delivery information plus some platforms will even allow your small business to pay as you go making it even easier to save upfront and to ship more.

What is the cheapest shipping strategy for a small business?

If you're a small business looking to ship within Canada then the most cost-effective way to do so is with an online e commerce shipping platform that can offer you consolidated rates and discounts you otherwise wouldn't have access to.

We know shipping can be a hassle. That's why we've built CourierGateway, the best free shipping software on the market! It takes care of everything from rates and tracking to invoices and integrations.

You can compare rates, print labels, and work with multiple carriers all within one simple account; plus you'll save up to 75% in cost and time. 

Schedule a Demo today. We'll show you how you can connect to our shipping costs platform and instantly save. Click here.

How to manage shipping costs as a small business.

Managing your shipping costs is a key factor when it comes to small-business success and using a third-party courier shipping platform can help you do that.

You can find out the weight of your box or package and get instant competitive quotes for shipping costs from various couriers, including ones in your country, all with the click of a button.

It's important to know how fast you need the product delivered because this will dictate what type of carrier service is required.

How do small businesses offer free shipping without losing money?

Great question! Small businesses or e commerce stores that offer free shipping need to balance their shipping costs with other factors like profit margins, payment processing fees, and product costs.

For example: if your profit margin is 50% then you can afford to offer free shipping for orders over $50 or under a certain weight like 20 pounds max without running into profitability issues. 

How does small business shipping work?

Shipping for small businesses can be a tedious task. You'll need to make sure you're following the regulations for each carrier, as well as how your product is packaged.

Shipping can be expensive too. That's why it pays off to do some research and find a small business shipping option that works best for you!

Choosing the right shipping app can be the difference between finding a new customer and losing them. There are many different apps with diverse features that can help your small business, so it's important to understand what they all offer before you make a decision.

How should I ship my small business items?

The method that's right for your business's needs will depend on how many items you wish to ship and what size they are, as well as when it has to arrive at its destination and whether or not customs may be charged.

You would use a parcel post service if you are sending a small number of packages and they are relatively light. 

Parcel post services are often used by individuals looking to mail a letter or small package in no specific time frame. 

Small business shipping tips

When you're first starting out you need all the help you can get so let's talk about carrier agreements! 

Many carriers offer different deals for small businesses in an effort to attract customers. Check out all your options before you commit so that you can take advantage of discounted rates.

The best way to achieve this for your e commerce store? Take advantage of an order fulfillment shipping solution like CourierGatweay to help lower your costs and provide a better customer experience. Or follow these quick tips here:

1. Choose Ground Shipping

Ground shipping is the cheapest option and will get your package to its destination in an average of four days.

2. Choose a Flat Rate Box

Courier’s packaging is often cheaper than standard sizes, and we can also avoid fees for non-standard items.

3. Use pre-paid shipping labels

Shipping labels can save you a lot, especially if you know the average cost of sending them out.

Small business shipping supplies

What shipping supplies you'll need will depend on what you're shipping. If your small business is just starting out, don't worry about buying a bunch of different things that will only end up gathering dust in the closet!

Choose your packaging wisely and don't overspend on custom boxes or designs until your profits warrant it.

With an online fulfillment solution, your business can reduce its cost of shipping plus you can print your shipping labels right from your home office or companies office printer.

How can I ship internationally cheaply for my small business?

Depending on where you are shipping internationally, there are a few ways to get your small business the best rates. 

It's always worth checking whether or not you can do bulk shipping for international orders if they're close together in time and origin city or country. 

The other is to check the rates for third-party shipping options like DHL, UPS or FedEx. While these may not be the cheapest option for your business or your customers, they're certainly a lot more cost-effective than shipping via another country's postal service which seems to take forever.

Quick definitions for common shipping terms for small business

What is an HS code?

An HS code is a six-digit number that's used to classify products for customs purposes and is a required field for all Shopify stores. It can be found on the product information page or it may also appear with other codes at the bottom of an online order form.

The first two digits correspond to broad categories include metal, wood, plastics, and textiles while the last four identify specific materials.

What is flat rate shipping?

Flat rate shipping is a shipping method that offers you the same rate no matter how much you ship.

What are import taxes and duties?

Import taxes and duties are a charge for bringing goods into the country usually in your customs form.

What is volume in shipping terms?

Volume is the total weight of your shipment, which can be very different depending on what you're shipping.

 

Who is the cheapest in terms of shipping rates to send out packages from?

Shipping has a lot to do with the weight of your order, how close you are in proximity to the country being shipped to and what type of courier service you use.

Shipping can be difficult! It's always worth checking upfront about any policies or fees that may affect your small business. 

You can save on shipping and offer your customers more affordable shipping options with a small business shipping account.

Many accounts allow you to select the best rates available to you and help you determine the final cost of shipping for each of your packages.

With these discounts, it's possible that UPS is cheaper than FedEx or DHL when shipping out of state, but it really all depends on what and how quickly you want to send your products out.

For Canadian-based businesses using a courier shipping platform like CourierGateway can help you save more on your shipping rates than any other traditional method of delivery. 

Contact one of our customer experience agents for a shipping strategy solution that can help you schedule pickups right from your home or office while helping you save not only money but your time and sanity as well.