Delivering success for e-commerce sites
So your business is beginning to take off, and your volumes are building. Congratulations. However, there’s still a lot more you can do to ensure your profits are maximised with every sale.
Your main interest will undoubtedly be in the products you are selling online; but it really pays to take an interest in the less exciting, but still essential, topic of postage. I’m sorry, it’s not a sexy topic, but do read on, because for some e-commerce businesses postage costs can be the difference between success and failure.
The default position for many start-up e-commerce businesses is to use the local Post Office, of course, but it pays to delve a little more deeply. Over the course of a month you could save yourself £100s, or even £1000s.
Online courier companies get the best rates with delivery companies by buying slots in bulk, and passing the saving on to their customers. They will also pick up the package from your door. For example, my company, online courier Parcelhero.com, only partners with the leading parcel companies such as DHL, UPS and DPD, ensuring customers benefit from the latest developments in track and trace, etc. The possible savings to be had against the Post Office are significant though.
For example a 20kg parcel to anywhere in the UK - for next day delivery or Express delivery - will be 62% cheaper through ParcelHero than directly from your local Post Office.
A number of pitfalls await the new business looking to stretch its horizons overseas. Beware when you are posting abroad to ensure your packages are packed carefully and tightly. Whatever you do, don’t fall into the trap of shipping very light products in large cartons. The cost of a shipment can be affected by the amount of space that it occupies on an aircraft, rather than the actual weight.
This is called the volumetric (or dimensional) weight. Carriers will charge whichever is greater: the volumetric or dimensional weight is calculated and compared with the actual weight of the shipment to ascertain which is greater; the higher weight is used to calculate the shipment cost. There’s a good calculator on the ParcelHero web site at http://www.parcelhero.com/support/volumetric-weight-calculator
Born to do business in the USA?
Looking to do business overseas? The US can be a lucrative market, though it can also be a step too far for many start-ups. One thing to ensure is that you have calculated your costs down to the bottom dollar, literally. Again, the world of postal delivery may not be glam, but by paying attention to postage costs to the US you can improve your profits considerably.
Have a look at the cost of a 10kg Express delivery parcel to the USA:
- Parcel2Go - £61.53
- Interparcel - £65.73
- Royal Mail - £131.60
- ParcelHero - £39.55
That’s a saving of 35.7% between the most expensive and the best-priced service.
Again, a 30 kg parcel to the USA, Express Delivery:
- Parcel2Go - £119.91
- Interparcel - £125.70
- Royal Mail - £256.10
- ParcelHero - £73.24
That’s an even greater saving of 38.9%
It’s not just for express deliveries that online courier services can really save you money. A 30kg parcel to the USA, by Economy Delivery, can also see savings:
- Parcel2Go - £87.20
- Interparcel - £94.90
- Royal Mail - £196.25
- ParcelHero - £70.30
That’s a not insubstantial saving of 19.4%
If you are looking to places even further afield, costs can grow quite prohibitive unless you keep a close eye on the bottom line. Using a courier service such as ParcelHero there are some quite remarkable savings to be made. ÂÂ A 50kg parcel delivery to Australia will save you £216.44 against using the Post Office and a 50kg express delivery to South Africa will save you an impressive £435.
Negotiating rates with carriers
If I’ve convinced you to at least look a little further than the counter of your Post Office, you will be becoming aware there are considerable differences in the price changed by different parcel delivery companies. Beware using the cheapest delivery companies without considering their reputation. Look at online reviews and their Trust Pilot ratings. A poor delivery service could have a huge impact on the perceived quality of your own business. With delivery services, as most of the rest of life, you get what you pay for. Failed or poor quality deliveries will cost you dear. You know already that online shoppers are very quick to vote with their feet, or mouse.
As you build your business you could try to negotiate a better rate with your chosen provider, but a new e-commerce business is unlikely to have sufficient leverage for substantial discounts for volume postage.
Compare this to a courier service such as ParcelHero, we ship thousands of parcels every day within the UK and Worldwide. That gives us the volume to secure the best rates. ParcelHero.com also brings together the services of the world’s best carriers including DHL and UPS, and organises the fastest transit times from the world’s best carriers. What’s more, we make life easier by selecting the best carrier for each shipment, so all you have to do is select the service and transit time to suit your budget.
Remember the bottom line
The early days for an e-commerce company are very exciting, and as you start to sell increasing amounts, it’s easy to sit back and think that is all you need do to ensure your business is a success. But if you pay attention to the basics, such as your postage, you will see you can improve the profit you make on each sale, particularly if you are also looking to build your overseas sales.
ParcelHero is itself an internet business, built by an entrepreneur: we understand the needs of start-up e-commerce businesses. We’re not at the glamorous end of your business, but it’s not so long since we were a start-up ourselves– so we understand your issues! Find out more at www.parcelhero.com
About The Author
David Jinks MILT is Head of Publications at ParcelHero.com, and a longstanding member of The Chartered Institute of Logistics & Transport. Leading international online courier ParcelHero strategically partners with the world's leading, logistics companies, including DHL, UPS and DPD to provide a flexible, cost-effective range of parcel delivery services to over 220 countries worldwide. Huge bulk purchasing power allows ParcelHero to offer highly competitive pricing with no compromise in service quality.