The Canadian e-commerce market didn’t need a shot in the arm. But the COVID-19 pandemic juiced it anyway, accelerating a spike in online shipping when consumers took to their computers and smartphones to order groceries and other necessities.

According to research firm ecommerceDB, Canada is the tenth largest e-commerce market globally, with an estimated annual revenue of US$35.5 billion in 2021. With an anticipated yearly growth rate of 6% to 2025, now may be the time to build a website and launch your own online business or open an Etsy shop or other third-party marketplace and ride that momentum.

People are getting out and about again since public health measures were eased, but it’s safe to say e-commerce activity won’t take a dive as a result. Likewise, we won’t be ditching our smartphones and returning to the good old days of rotary landline telephones either. But I digress.

There’s a lot about e-commerce for a small business owner to like:

  • You’re open 24/7 for consumers to make purchases (the internet doesn’t sleep)
  • You can gather a motherlode of data about your consumers and learn how to market your business better and directly to them
  • You can lower your operating costs and hold less inventory
  • You can expand your reach and sell goods and services outside of your community with ease

There’s also plenty to dislike, including:

  • You’re a moving target for cybercrime. Security and data breaches are always the top concern with online businesses. Cyber liability insurance can help if you’re hacked or your data is compromised
  • Convincing and converting consumers into paying customers. You’re relying on your site’s content, navigation, and ease of use to woo consumers into buying from you versus having a conversation about the product and allowing them to see and touch it in-person
  • The cost of shipping and abandoned shopping carts because of it
  • The challenge of meeting consumers’ expectations for quick delivery times of purchased goods

In general, it’s been said Canadians are polite and patient. That isn’t the case if we’re playing hockey – or buying something online. According to Canada Post:

  • 55% of Canadian consumers abandon shopping carts with online retailers because free delivery is unavailable
  • 53% of Canadian consumers expect free shipping when making a purchase online
  • 68% of Canadians say free shipping plays a significant role when deciding where to shop online
  • 19% of Canadians expect the goods they buy online to arrive in two days or less

Whether you endeavour to satisfy those expectations or not, you need a shipping strategy. Choosing the proper shipping provider, striving to meet delivery time demands, stocking packing materials, and weighing the pros and cons of all variables and options will allow you to determine how to keep your consumers happy, shipping costs down, and product prices competitive.

Let’s go over what you need to know:

Infographic - 7 Ways To Reduce Shipping Costs

What Shipping Materials Do You Need?

Think about the supplies you need to prepare and package your products for shipping. Among the materials you need are:

  • Packaging. Shipping boxes of varying sizes (think about your products), envelopes and mailers, tubes, poly bags, and more.
  • Package Sealers. Start with basic shipping tape, but also investigate strapping, shrink wrap, and stretch wrap for larger and heavier items.
  • Labels and Tags. For shipping and handling, you need labels, laser labels, mailing labels, warehouse and inventory labels, and tags.
  • Void Fillers and Cushioning. To protect your products in transit, you’ll want cushioning, biodegradable shipping peanuts and foam, bubble wrap, edge protectors, or inflatables.
  • Anti-Static Supplies. For anti-static shippers, poly bags, bubble wrap and bags, foam, and peanuts.
  • A Scale. To accurately weigh packages and save time at the post office and money on postage.
  • Label Printer. Consider a thermal laser printer over inkjet or laser for clear labels printed at higher speeds, with no ink.
  • Tape Measure. Package size can affect shipping costs. You’ll need to know the precise dimensions of your packages.

How to Calculate Shipping Costs for Small Businesses

Many factors affect your shipping costs. Your packaging material, size, and weight; the origin and the destination; the actual product you are shipping – all contribute to the significant variability of shipping costs. Shipping locally will be a lot cheaper than shipping internationally, for example. Be cautious that you are balancing reliability and timeliness with affordability.

Most of the popular shipping providers in Canada will provide shipping calculators online so you can play with the shipping options and package specifications to determine your best shipping solutions. In addition, when working with the primary shippers such as Canada Post, UPS, DHL, Freightcom, and FedEx, you may qualify for their respective small business programs, so inquire and know your options.

Also, if you use third-party marketplaces like Amazon, Etsy, and Shopify to sell goods, they may offer negotiated rates with shipping providers as part of their services. Otherwise, partnering with third-party logistics services (also known as fulfillment warehouses or centres) means you can get their negotiated discounted shipping rates.

What Shipping Strategy Is Best?

The shipping strategy you opt for can end up paying off for your business big time, or it can cost you dearly.

If you pass on your costs directly to the consumer via shipping charges or higher product costs, expect profits to take a hit. But on the other hand, absorbing free shipping costs can also take a big bite out of your earnings. Here are two of the most common strategies to consider:

1. Free Shipping

Consumers expect it, which certainly incentivizes sales, but it may not be the best option. Nothing is free, of course, and that includes shipping. You’re not a big-box retailer that can strongarm a courier company into lowering their prices. If your small business prioritizes quality over quantity, skip this strategy.

2. Flat-Rate Shipping

Flat-rate shipping is an excellent strategy if your business cannot afford to offer free shipping, but you still want to provide your consumers with consistent pricing.

Alternatively, some e-commerce sites are linked directly to their shippers and provide a real-time rate based on the buyer’s location and preferences. These linked systems often offer shipping confirmation emails, tools to create shipping labels, and tools to calculate your package costs.

Or you can use a third-party shipping service to manage your supply chain, including warehouse and inventory management, order fulfillment, shipping coordination, and handling exchanges and returns.

What Shipping Provider Options Are Best for Small Businesses?

The shipping game has many recognizable names, each with pros and cons. However, Canada Post is consistently one of the most cost-efficient nationwide package and parcel shipping options.

There are others: Purolator, FedEx, UPS, DHL, Freightcom, and freight services like Uber Freight. If you are shipping heavy packages, you will want to compare costs often so that you are confident you are getting the best rates. Each offers shipping programs that allow you to schedule pickups and drop-offs, print labels and other necessary shipping documents, and pay for your postage. They also have rewards programs, post office boxes, starter kits, and discounts.

If you sell on marketplaces such as Amazon, eBay, or Etsy, you can buy shipping labels, ship and confirm your orders, track your shipments, and choose your carrier preference. They work with some of the top carriers in Canada, including Canada Post, Purolator, UPS, DHL, and FedEx.

7 Ways to Reduce Your Shipping Costs

Like when you’re looking to purchase a business insurance policy, remember that the cheapest option isn’t always the best one. “Cheap” doesn’t mean quick, reliable, or safe shipping either. Here are seven ways you can try to lower your shipping costs:

  1. Offer local delivery or pickup. Don’t use a third-party delivery service at all. Stick with the COVID-19 trend local, independent businesses championed by offering local delivery (but be sure to have commercial auto insurance) or curbside pickup only. Nearly a third of consumers say they bought something online and had it delivered locally or picked up their online order.
  2. Reduce the weight of packages. Lightweight packaging means corrugated boxes and lightweight packaging materials. Choosing the most compact packaging possible can reduce costs.
  3. Join a business association. A membership with your local Business Improvement Association or Chamber of Commerce may include discounts on shipping. Discounts are also available to members of the Canadian Chamber of Commerce, Canadian Federation of Independent Business, or Startup Canada.
  4. Use Canada Post. Canada Post is often the most affordable option to ship packages, especially if you use their online shipping tools and skip visiting a post office.
  5. Stick with ground shipping. Give consumers the option to select ground shipping. While delivery will be slower, costs for you and the consumer will also be lower. Show your customers the cost difference between ground shipping and express delivery via air.
  6. Pick a shipping partner. If your shipping volumes are low or you ship infrequently, lean on a shipping solution provider to pass their savings to you. Choose from many leading courier companies and compare prices all on one platform.
  7. Use everything your courier’s got. Use the courier’s standardized packaging, which is often cheaper to purchase and lower fees than non-standard sizes. Prepay for shipping labels at a discount and use your spend history to negotiate rates.

What Insurance Does My E-Commerce Business Need?

High shipping costs can hurt sales and eat into your profits, but those costs pale compared to the cost of a third-party lawsuit, damages to your commercial property from a fire, or the impact a cyber-attack can inflict.

Explore your options for coverage at the best prices available by filling out an application to get a free quote for e-commerce insurance. Our licensed brokers will shop our partner network of over 50 insurance companies to get your business the coverage it needs.

Get Instant Price

Related Posts

  • Businesses flooded by overflowing rivers

What to Do If Your Small Business Floods

By |August 3rd, 2022|

It doesn’t take a catastrophic natural disaster or extreme weather to disrupt a small business. The most common causes of flooding for commercial properties are often more mundane. Here’s how you can protect your business from flood damage.