In today’s increasingly digital world, e-commerce is vital for Canadian businesses. Data from Statista states revenue from the Canadian e-commerce market is expected to show a compound annual growth rate (CAGR) of 10.6% in 2023, resulting in a projected market volume of more than US$82 million by 2027.

Shopping online eliminates the obstacles of distance and boundaries for consumers, but it creates challenges for small business owners and e-commerce startups. The increase in online shopping and the rise of mobile and social commerce — buoyed by the growing adoption of digital payments and the availability of high-speed internet — doesn’t negate the expenses associated with delivering products to customers. The cost of shipping can erode profit margins and limit business growth.

But by implementing effective strategies to reduce shipping costs, businesses can increase profitability, customer satisfaction, competitiveness, market reach, and profitability.

Read on to discover practical and effective ways to help your business ship on the cheap!

Business Shipping Costs
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What Shipping Materials Do You Need?

You will need shipping materials specific to your product type, and here are some essential shipping materials to get started:

  • Sturdy boxes of appropriate size and weight for your products.
  • Strong packing tape to seal your boxes and keep them sealed.
  • Bubble wrap for fragile items that need shock-absorbing and cushioning.
  • Shipping labels for identification and relevant shipping information.
  • Mailing envelopes for smaller items or documents that do not need a box.
  • Packing peanuts for filling gaps and spaces in boxes to prevent shifting.
  • Shrink wrap for securing packages within a heat-sealed film.
  • A scale to weigh your packages and a tape measure for precise dimensions.

In addition to these essential shipping materials, you may need other specialized materials depending on the products you sell. For example, dry ice and heat packs keep items cold or warm in shipping; garment bags and tissue paper; gift boxes; foam inserts and anti-static bags for electronics or as needed.

Finally, none of the above matters if you don’t take the time to pack your packages carefully! Use a suitable packaging size for your products; ensure your packages are not too heavy. Following these tips will assist you in choosing the proper shipping materials for your e-commerce business, thus ensuring that your products arrive safely to your customers.

How to Determine Your Shipping Costs

When determining your shipping costs, there are several factors to consider. These include the size and weight of your products, the distance they will travel, and rates for different shipping carriers and methods. 

Consider your customers’ needs when determining your shipping costs. Some customers may be willing to pay more for shipping if it means getting their products faster. Others may be more concerned with saving money on shipping.

Research and compare carrier rates before setting your shipping prices to get the best deal. When ready to roll out your options, be transparent with customers about shipping costs before, avoiding any surprises later. 

Offering your customers various shipping options will give them more flexibility and make it more likely that they will complete their purchase. After considering the factors, you can calculate costs using a shipping calculator or get quotes from other carriers. You can determine your shipping costs in a way that is fair to your customers and profitable for your business.

What Shipping Strategy Should You Use?

There are several shipping strategies available to a Canadian e-commerce entrepreneur. The best system for you will depend on your specific business and your customers’ needs, but the most common shipping strategies are free shipping or charging customers for shipping. 

Free shipping is a popular strategy that can help you attract customers and boost sales. 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 prices. If your small business prioritizes quality over quantity, skip this strategy.

Offering various paid shipping options will give your customers more choices and make it more likely that they will complete their purchase. There are a few ways to pass on the shipping charge to your customers, but bear in mind that these alternatives may also be more complex to manage: 

  • Flat-rate shipping, regardless of the weight or size of the package, can be a good option if you sell various products with different shipping costs.
  • Dimensional weight shipping strategies consider the package’s size and weight when calculating shipping costs, which is a good option if you sell large or heavy products.
  • Allowing the customer to choose between options based on delivery speed, carrier, or cost leaves the decision-making to the customer. 

You can also combine these strategies to create the best shipping strategy for your business. For example, you could offer free shipping on orders over a certain amount and flat-rate shipping on orders under that amount.

Shipping costs can add up, so choosing a provider that fits your budget and strategy to attract customers, boost sales, and keep expenses low is vital.

Which Canadian Shipping Provider Should You Use?

Knowing which shipping provider is right for your business can take time and effort.

Canada Post, our national postal service, is often the most cost-effective option. They offer various shipping options, including standard, expedited, and overnight shipping. Other shipping companies include Freightcom, Purolator, UPS, FedEx, DHL, and Canpar.

Once you have considered all these factors, you can choose the most suitable shipping provider for your business and your customers.

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:

Save On Shipping - Infographic
  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. Our licensed brokers will shop our partner network of over 50 insurance companies to get your business the coverage it needs.

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About the Author: Brandon Bowie

Brandon Bowie is a Team Lead, Professional Lines at Zensurance.