How do couriers charge retailers for shipping?

2022-02-15

Written by Starshipit

This article was updated in October 2022 to provide the most accurate and up-to-date information. 

Do you want to learn more about courier services, how much courier services cost and the factors that impact shipping costs? You’ve come to the right place.

Whether you’re just getting started with your eCommerce business or you’ve been around the block a few times, we’d wager there are probably some easy changes you can make today that will significantly lower the cost of your shipping, and the whole process easier to boot.

In this article, we’re going to answer some burning courier service questions, and show you how it’s possible to implement easy changes that help to keep your shipping costs as low as possible, all while streamlining your operations and delivering better experiences for your end-customers.

Let's dive in!

What factors affect shipping costs?

There are four main factors that have a direct impact on cost when it comes to choosing a courier service:

Pricing structure

When researching different couriers, it’s always good to compare rates across several different providers to find one that best suits your business and the type of products you sell. You’ll also find that you’ll likely be able to negotiate discounted rates when you ship over certain threshold, too.

Note that you won’t be able to negotiate cheaper rates if you choose to go with a courier aggregator (more on this later).

Services offered

To give your customers the best shipping experience, you may want to offer a range of services at checkout such as Express, International Shipping or Same Day Delivery. To begin with you might want to use the same courier for all the services, but it’s often a good idea to diversify and use different couriers for different services as you scale.

Diversification can also help if you need to ship specialised items. For example, if you sell food items that need to be chilled then you will need to enlist a specialist courier.

Customer support

What level of customer service does your business require? Do you need customer support on standby via phone call? Perhaps you require direct communication with the driver? The courier’s quality of service directly impacts your brand’s reputation, so always read customer reviews and ask what level of support they offer.

Specific requirements

It’s important to state upfront if your products require specific handling. For example, some cosmetics are classified as dangerous goods or restricted commodities and the courier must adhere to relevant shipping regulations. Or if you’re selling large bulky items that require a tail-lift, you need to consider these additional charges when researching different courier services.

Weight and how it affects your shipping charges

What is deadweight, volumetric and cubic weight – and how do these factors impact my shipping charges?

  • Dead weight is the physical weight of your product. Place the package on the scales and this is your dead weight.
  • Volumetric weight/Cubic weight/Dimensional (DIM) weight is the parcel’s volume, and this is used to determine how much space the parcel will take up in the courier’s van/aircraft.

How does weight affect what I’m charged?

How much you’ll end up paying for shipping costs depends on each individual contractual agreement you have with each courier. This is why it’s a good idea to use different couriers to ship different products.

We find that couriers will look at both the dead weight and volumetric weight, and then take the higher value out of the two.

Remember, when measuring odd-shaped parcels, measure the width at 90 degrees to the length measurement.

  • Measure the parcel where it is: L(ongest), W(idest), H(ighest).

Volumetric weight for international shipments is calculated using the formula below.

  • Length x Width x Height in centimetres / 5000 = Volumetric Weight in kilograms rounded up to the nearest 0.5kg.
  • Length x Width x Height in inches / 138.4 = Volumetric Weight in pounds rounded up to the nearest pound.

DHL has a handy volumetric calculator which you can access here:

Volumetric calculator

Are there any additional costs to consider when shipping internationally?

If you want to start shipping internationally, there are a few important factors to take into consideration.

Research the different courier services available

It's likely your domestic courier will offer an international option, and there are also premium options with couriers such as DHL Express who are a global international shipping provider. The main difference will be speed, and the faster the delivery time the more expensive the shipping will likely be.

Understand the tax requirements

Checking the tax regulations of the locations you're sending parcels to. For example, if you’re shipping to Europe, you will need to comply with EU Tax requirements. You may also want to read about IOSS.

You’ll also need to investigate and prepare any additional documentation that is required by the receiving country. For example, some products will require country of origin certificate or a prescription, there are also special requirements for dangerous goods.

Keeping your customers in the loop

When it comes to cross-border shipping, it becomes even more important to update your customer along the post-purchase journey.

Ensure you can offer seamless cross-border tracking with regular branded tracking notifications to reassure them their order is on track for delivery. It’s important to be proactive by managing customer expectations if there are changes in the delivery schedule.

How will you handle international returns?

Consider how you’ll manage returns. Have a clear returns policy and provide additional instructions for customers wanting to make returns from overseas.

Penalties for non-deliveries

Finally, it is important you take measures to avoid penalties for non-deliveries, so ensure you validate addresses before you print your shipping labels. If you use fulfilment software like Starshipit, this is an automated process.

How to book a pickup with a courier for your orders

The pick-up process is different between couriers and retailers will often need to have a collection contract if they meet the criteria, which is usually a minimum volume per day. Always speak to your account manager at the courier company to discuss the various pickup options available.

For example, Australia Post’s MyPost Business provides pick-ups for only certain locations and it includes additional charges. With Royal Mail, you can easily book online and it will only cost 60p.

How to book a courier pickup within Starshipit

Did you know that you can book courier pickups right from within Starshipit? And even trigger a pickup when you print a shipping label?

Currently, you can book a pickup within Starshipit for DHL Express, Couriers Please and TNT.

Once you’ve generated your shipping label, simply make sure the following information is passed over to the courier when booking the pickup:

  • Number of packages
  • Total weight of packages (kg)

The Starshipit team will also be able to advise you on the different options when setting up your account.

The benefits of courier accounts over using a broker

Setting up your own courier accounts is a great way to future proof your business, and it’s really easy as most couriers require little to zero technical setup. Just watch our video showing the process with MyPost Business to see how easy it is.

If you use a multi-courier automation platform (like Starshipit) you can track all your orders for multiple couriers from a single dashboard. This is because Starshipit receives the native tracking number from the courier.

If you use an aggregator platform (a courier broker) sometimes you will only receive the broker’s ‘tracking number’ (not the courier’s native tracking number), so you can’t track your order via the courier’s website or receive updates.

We’ve got a full article explaining more about shipping rates and the benefits of platforms like Starshipit, as opposed to brokers, which you can read here.

What are the benefits of using multiple couriers?

By holding accounts with multiple couriers, you ensure you’re always getting the best price, but there are a range of other benefits.

When you use multiple couriers (say a combination of Australia Post, FedEx and Uber), you can easily switch between couriers based on the order’s requirements. For example, courier price, delivery location, speed and special requirements (like dangerous goods).

  • 💰 Save on shipping costs by choosing the cheapest courier every shipment.
  • 😊 Keep your customers happy by offering multiple delivery options.
  • 🔄 Easily swap out couriers that aren’t performing or experiencing delays, with no loss of service.
  • ✳️ Benefit from the diverse shipping options and features by using multiple couriers (such as on-demand delivery, paperless trade or sensitive items).
  • 📈 You don’t want to be left out in the cold when your business grows – the ability to add new couriers means you can always keep up with demand.

With Starshipit, you can easily compare rates or use rules to ensure the cheapest option is selected.

We find that many customers hold multiple accounts to offer options at checkout e.g. Express, Same Day Delivery, International) or variable product sizes.

Note: Some couriers require certain order thresholds and others require retailers to ship all parcels with only them.

How you can easily manage multiple couriers using Starshipit

Starshipit simplifies the process of managing multiple couriers, as there are ready-to-go integrations with all leading couriers, plus the major eCommerce platforms and inventory management systems.

Starshipit also your shipping processes using one centralised software platform. All the manual parts of your fulfilment are handled automatically, reducing human error and cutting down on shipping time.

Book a call with our team who will show you how to make shipping easy – and deliver better customer experiences. Or, start your 30-day free trial to get started now.

Starshipit

Starshipit

Starshipit is the best practice shipping and fulfilment platform that helps retailers save time and deliver great shipping experiences.

More from this Author