This post was written and contributed by Ana de la Vega of Zenda.
Did you know that your shipping choices can end up having a significant impact on your global ecommerce business?
From influencing your customers to abandon their carts before checkout to costing your business a fortune in fees, your shipping practices have the potential to damage your profitability.
When it comes to choosing the right shipping provider for your company, there are many factors that you want to keep in mind.
The most important factor to consider is cost. While shipping products internationally can work wonders for your company’s bottom line, it can also end up costing you dearly.
Here are some of the obvious and not-so-obvious costs you should be aware of when you are considering a shipping provider.
1. Opportunity cost
While many ecommerce merchants do not factor opportunity cost when they choose a shipping carrier, this element has the potential to significantly impact a company’s bottom line.
It does not matter if your carrier offers pretty good services for your customers if an alternative shipping provider can offer an even better experience. If your current carrier has slow delivery times, expensive rates, or limited shipping options, you might end up sending away more customers than packages.
You cannot expect to satisfy all of your customers with a one-size-fits-all shipping method.
Some of your customers are willing to pay more for faster shipping, and others are willing to wait a little longer for a package in order to save on shipping costs.
You can meet these customers’ needs and avoid losing money to your competitors by using various shipping providers that offers fast, medium, and slow shipping options that will appeal to a wide variety of consumers.
2. Sticker costs
While the sticker cost of a shipping provider is a little more obvious, global ecommerce merchants still need to take these costs into consideration. If your shipping provider costs your business an arm and a leg, your customers will end up suffering for it.
Roughly 36% of consumers who abandon their carts due so because of high shipping costs. You can prevent this loss of revenue and decrease your cart abandonment rate by choosing a provider that allows you to offer reasonable shipping prices.
3. Dimensional weight costs
Dimensional weight, also known as DIM weight, is a pricing tool used by carriers to determine how much they will ultimately charge you to ship a package.
DIM weight pricing is relatively new, and was instituted by the major parcel carriers who – as a result of the ecommerce boom – were getting more and more light packages that took up lots of space.
The classic example are pillows, which are bulky but don’t weigh very much. These carriers began to charge a premium for lightweight yet relatively large packages.
The dimensional weight of a package is found by calculating the cubic size of the parcel and dividing it by a set DIM factor (Zenda’s DIM factor is 166 in³). This number is then compared to the package’s actual weight, and the larger of the two numbers is used for the billable weight.
Regardless of where you are shipping – domestically or internationally – it is always a good idea to know what DIM factor your carrier is charging, and to be mindful of how much empty or void space you have in your parcels.
If your DIM factor is relatively low (e.g. lower than 166 cubic inches per pound), then you may pay a steep premium for light packages that take up a large amount of relative space.
4. Signature service costs
How much could a signature cost? Turns out, quite a bit.
In order to make sure your product was delivered properly and received by the correct consumer, you may need to pay fees for a signature service.
There are additional guidelines that must be followed to make sure signature services are able to uphold international standards and regulations. This further increases the price of signature services for ecommerce merchants that ship goods internationally.
5. Residential delivery costs
Delivering to a residential area is not a simple as it may sound. Factors like difficulty reaching the address, gated entrance ways, and customers working during delivery hours add extra challenges to delivery drivers who are often under tight schedules to deliver products on time.
Because of these challenges, when your ecommerce business offers door-to-door shipping to customers in residential areas, there may be extra fees.
6. Unexpected declaration costs
When you ship an item internationally, you will need to declare the value of your shipments.
If customs agents believe that your items are under-declared, they will hold onto your package until you send a new invoice with accurate declaration.
This means your business will have to pay fees for package storage in addition to any fees from undervaluing your products.
7. Fuel costs
Some shipping companies charge businesses a fuel surcharge to make up for the fuel that their delivery trucks need to deliver products.
These surcharges change frequently depending on the price of gas, and they are presented as a percentage of the total shipment costs.
8. DDP costs
DDP, or delivered duty paid, is a shipping arrangement where the import taxes and duties on a parcel are paid on the front-end of the process, and typically collected from the customer during the checkout process.
In contrast, DDU, or delivered duty unpaid, requires the same taxes to be collected from the consignee upon delivery.
What are the differences between DDP and DDU shipping?
DDU is a far more common shipping method than DDP, as it is less work for the merchant: they don’t have any responsibility to estimate or collect any owed taxes or duties. However, it often results in a bad experience for the customer, who might not have been expecting these additional fees when receiving their package.
DDU shipping can result in delivery delays and extra fees while the package is held in customs, and the package can actually get returned back to the shipper if the customer refuses to pay the owed taxes and duties. The cost of returns, wasted products, and a lost return customer from a poor delivery experience, can make DDU an expensive hidden cost.
DDP has clear advantages, especially when it comes to your customer’s shipping experience. However, it can come at a steep and somewhat hidden cost.
In fact, adding a DDP service to a cross-border shipment can add $5 to $10 per parcel with some well-known carriers.
Therefore, it pays to familiarize yourself with how your packages are being shipped, and if you do choose to ship DDP over DDU, exactly what you will be charged per package for this value-added service.
Navigating these hidden costs with Zenda
Zenda is a shipping provider that can help you offer a great shipping experience for your customers while avoiding many of the hidden costs associated with international shipping.
Zenda has the tools you need to ship products from the USA to Europe without hassle.
Daily international flights
Zenda is powered by British Airways, which means that your company will be able to take advantage of using one of the largest international airlines in the world.
Plus, Zenda has over 40 daily international flights out of 21 different airports that you can use to offer more shipping options for your customers.
Instead of offering a one-size-fits-all shipping option for your customers, you will be able to offer a variety of options that will meet your customers’ diverse shipping needs.
While DDP shipping does come with fees, it is significantly cheaper than Delivered Duty Unpaid (DDU) shipping in the long run. With DDU shipping, customers are responsible for paying taxes and duties when they receive their shipment.
If these fees are higher than expected, the customer might forfeit their package, causing your business to pay hefty storage and return fees.
Zenda offers DDP shipping and an accurate, real-time calculator that will make sure that everyone knows exactly how much taxes and duties are owed at checkout.
Because British Airways aircraft are constantly flying internationally, Zenda is 30% to 50% less expensive than other express carriers. This means that you can offer cheaper shipping options for your customers when you use Zenda.
Keep your customers from abandoning their carts by making sure your shipping costs are reasonable and affordable.
Zenda offers a door-to-door service that will help you avoid paying fuel surcharges and additional costs for delivering to residential areas in Europe.
With Zenda’s door-to-door service, you can also be sure that your customers will receive their package without any trouble.
Learn more about how Zenda can help lower your shipping costs while improving your shipping experience by contacting us.