Small Business Shipping Costs: Why We Can’t Compete with Big Business

• Posted on 1 December 2021
• By Lisa Jeffery
• Posted in shipping costs, shop local, shop small business, small business shipping
• 0

I think every online shopper can agree that filling our cart to get free shipping has always been a goal. As consumers, we are conditioned to want to get more for our money, "Why pay $14 in shipping for this $50 purchase when I can just hit the $100 minimum and save on those empty shipping costs!" I used to think that shipping costs were astronomical. That was until I owned my own business.

Shipping costs are one of the biggest reasons for people to abandon their carts online. I recently learned this after launching The Huntress Collective website. I was fortunate enough to have some statistical data about shipping costs from the year prior to launching my website, and I used that information to ensure the most fair and reasonable flat rate shipping cost for customers purchasing under $150. That price for my Ontario customers is a flat rate of $18.

Here is what that breakdown looks like for my business:

-Expedited shipping (meaning it will get to you within 2-3 days) with $100 insurance starts at around $12 if there was literally nothing inside.

-If you have a postal code that has 0’s in it (Example: K0J 1B0 - Shout out to my Barry’s Bay ladies!) there is a shipping premium. That means an additional $2-3 dollars because it’s a rural postal code.

-Now let’s add some weight. We need to add the additional charge based on how heavy the parcel is, and we also need to factor in how far that parcel is going. That typically ranges from $3-$10 on top of the base shipping cost.

-Depending on what’s inside, you’ll need to add additional insurance. This is something as a business owner I cover out of pocket because I need to be able to refund the customer if the parcel doesn’t get delivered, but I also need to be able to pay the consignment client for their lost garment. It’s about $2 for every additional $100 of coverage. That also means that as the business owner, I take a loss on any lost parcel.

When you add up all the costs, the amount for an item to be shipped ranges between $15 on the lowest end (that’s like a bralette shipped to Toronto) and upwards to $24. And don’t forget about HST!

Finding a flat rate to offer customers typically means that the small business owner has looked at their shipping data from the previous year and come to a cost that aligns with the average cost per shipment without taking too much of a loss. I can tell you that each business owner factors in a loss budget for overages or additional insurance, and we always go over it.

Small businesses can’t compete with big businesses when it comes to shipping--it’s impossible. But what we can do is ensure that each purchase is wrapped with love, shipped with care, and brings a smile to your face on the other end.

Happy shopping this holiday season, and remember #shoplocal #shopsmallbusiness