Small business shipping costs 101

Editorial Team

4 min read
Woman applying shipping label to box

When it comes to eCommerce, online customers have always had high delivery expectations. The pandemic accelerated this trend so much that even customers who live within driving distance now expect swift and free delivery.

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Unfortunately, the bulk of these small business shipping costs fall to you, the owner. It’s important to understand what these expenses are and how they work. Doing so allows you to streamline shipping costs while maintaining customer satisfaction.

How small business shipping costs are calculated

Nearly all shipping-related expenses are based on variables such as distance, weight, volume, and delivery speed. That said, most carriers use some combination of the pricing models below. As a business owner, it’s important to choose the right solution for your products and customers.

1. Order weight

This rate is based on the total weight of your order. Because distance is irrelevant, there may be opportunities to save money when shipping items outside of your geographic region.

2. Item quantity

As the name suggests, this rate is based on how many total items are in the shipment. Merchants that sell identically sized products often use this rate for its simplicity.

3. Flat rate

Favored by major carriers, this rate ignores weight or distance if shipping domestically and focuses solely on the dimensions of the package.

4. Real-time rates

This is the most comprehensive of all shipping rates, since it factors in weight, dimensions, speed, where the package originates, and where it is ultimately going.

Tips and shipping options for small business owners

Many small business owners lack the resources to manage all their shipping needs in-house. Fortunately, there are platforms and providers that can help streamline the process. For example, there are online companies that offer reduced shipping rates and discounted small business postage options.

In addition, Clover’s POS systems work with a number of shipping and labeling software integrations in the Clover App Market that can help streamline the packaging and postage process. Other ways to enhance your operations and control small business shipping costs include:

  • Diversifying with multiple carriers: Working with multiple carriers gives you more negotiating power and control.
  • Outsourcing (if necessary): If you’re overwhelmed by all the details and rates, let someone else worry about storing, packing, and shipping orders. Using a third-party logistics provider may mean less profit from each sale, but outsourcing can free up valuable time for other aspects of growing your small business.

Tips for enhancing the customer shipping experience

Your customers may not know whether you signed up for flat-rate shipping or outsourced the job to a third-party logistics provider, but it’s still important to provide customers with a positive delivery experience – while choosing the most cost-effective shipping for your small business.

Common strategies for achieving this include:

  • Providing free shipping for all orders over a certain value
  • Offering multiple delivery options based on service speed
  • Using branded and eco-friendly packaging
  • Adding tracking so users can follow their orders in real time
  • Offering world-class support in the event of returns or exchanges

Managing returns and exchanges

While returns are common in the brick-and-mortar space, they’re even more prevalent in the online world, since customers must buy before they try. 

No business owner wants to lose a sale – especially if the owner already covered the original shipping costs out of pocket. However, one of the best ways to handle returns is to simply pay for the full cost of shipping back the items at the lowest rate that makes sense. Moreover, this policy should be front and center. An estimated 55% of eCommerce shoppers abandon their purchases when extra costs are too high, such as shipping costs and an inflexible return policy.

Whether your business is virtual or physical, your customers now expect free and fast delivery. To learn how our point of sale solutions can help streamline some of the shipping process, schedule a free demo with a Clover Business Consultant today.

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