In the last several years, more people than ever have turned to selling things online to make money. These rookie sellers often have little or no experience in business and frequently underestimate their shipping costs. Obviously, you must account for your shipping expenses when pricing your products or you could wind up only breaking even on sales – or worse.
How do new sellers underestimate costs? After all, even people who haven’t been in business before would certainly mailed packages through the USPS, UPS, or other shipping services. First, you have to understand that the cost you get when you plug a weight plus shipping address into a shipping calculator from UPS or USPS is not your total expense to send the item. You must also consider the cost of shipping supplies, insurance, added services like signature or delivery confirmation, plus any oversize package charges.
1. Shipping supplies cost money. When you are just starting out, you will probably be shipping in low volume and may be buying only a few boxes or supplies occasionally. The cost of single cardboard boxes from a shipping store like Mail Boxes Etc. or The UPS Store can add $5-$8 to your bill. You might have to pay a bit more if you have them pack it as well! Not figuring the cost of shipping supplies is probably the number one cause of rookie sellers underestimating their shipping expenses.
2. Don’t forget insurance. You also need to either have insurance for your product or self insure. For items that aren’t too expensive, self insurance can be simpler. This saves you the time and trouble of filing claims with a carrier. Also, bear in mind that USPS won’t accept an insurance claim for a “lost package” when they have a delivery confirmation scan for it – and they almost always do.
3. Signature or delivery confirmation is also needed. Signature confirmation is an absolute necessity for expensive products, or you could find yourself facing chargebacks for items not received. For cheaper items, sellers sometimes skip the signature requirement. In this case, of course, you’ll have to agree to ship a replacement product if the customer calls to say he didn’t receive it. You’ll usually also have to do this if you have delivery confirmation from the USPS but the customer says he didn’t receive it.
4. Double check your box dimensions. If the package is oversize, your costs can rise quickly. A box with a physical weight of 12 pounds might have a billable weight of 32 pounds once dimensional weight is taken into account. Look up current dimensional weight guidelines for your carrier before shipping. Bear in mind also that dimensional weight can be different for air vs. ground shipments and may also be different for international vs. domestic deliveries.
We hope this helps you if you are a new seller and that you won’t get discouraged too easily. As your sales volume increases, you’ll be getting supplies in bulk and you’ll be much more efficient at handling deliveries and service issues. Also be sure to audit the shipping invoices from your carrier to be sure you aren’t getting hit with any unexpected bills like extra fuel surcharges or oversize package fees.
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