Every business that opened an online store last spring had a similar December: parcels piled up, delivery dates slipped, and the inbox filled with the same question, namely where the order was.
By March, things have settled somewhat, and many small shops are finding a gap when they review their holiday results. Sales were satisfactory, but the margin was not. On analysis, the gap almost always comes from shipping.
No one starts a store out of a passion for boxes, but this is the part that determines whether an online shop is profitable.
What does shipping an order really cost?
More than the price of the label. Most merchants set their shipping price based on that cost alone, which is only part of the picture.
The real cost of shipping an order includes the label, the box or mailer, tape, tissue paper or filler, the invoice or thank-you card, and your packing time. Daily trips to the post office add to it. Losses must also be counted: the parcel that went missing, the one that had to be reshipped and the one that was returned.
Do this calculation once, thoroughly. Take ten ordinary orders, add up every cost and divide by ten. The result is usually higher than expected, and it is the amount your shipping charge must cover, or that your product prices must absorb.
Watch the size of the box
Carriers do not charge by weight alone. For parcels, Canada Post and the couriers also consider volumetric weight, so a light product in a large box can cost as much as a heavy one. A pillow shipped in an oversized box results in a loss on every sale. Keep two or three box sizes that fit your products well and stop using whatever packaging happens to be available.
Free shipping is a pricing decision
Customers value free shipping highly, an expectation Amazon has made widespread. However, free shipping simply means the cost is built into the price or taken from your margin. Both options are valid, provided the choice is deliberate.
A common compromise is free shipping over a certain order amount. Set that threshold based on your real cost per order, not by copying the large chains.
Which carrier should a small business choose?
For most small shops in Quebec, Canada Post is the default, and it is a sound choice. It reaches every address, including rural ones where some couriers hand their parcels over to it anyway. We recommend signing up for Canada Post's small business program, which is free and offers discounted rates compared to the counter with no account.
Couriers such as Purolator or UPS can be advantageous for heavier parcels or for business customers who want next-day delivery. Request quotes for your actual products and destinations. The cheapest option for a 500-gram parcel to Gatineau is not necessarily the cheapest for a 3-kilogram parcel to Vancouver.
If your store runs on Shopify or WooCommerce, connect it to the carrier so shipping is calculated at checkout from the real address and weight, rather than with a flat rate that is wrong half the time. This simple setup pays for itself quickly. If your store cannot do this, it may be time to consider a proper e-commerce setup.
When and how should you write a return policy?
Before the first return. Returns often seem like a matter to deal with later, until the day a customer wants to send back a pair of boots in an opened box, worn outside and taped shut again, and a policy has to be improvised on the spot.
Write it now. It does not need to be long, but it should specify:
- How many days the customer has to request a return or exchange.
- The condition the item must be in, and which items cannot be returned.
- Who pays for return shipping.
- Whether you refund, give store credit or exchange, and how long the refund takes.
- How to start a return, and who to contact.
Publish it on its own page, with a link in the footer and near the add-to-cart button. In Quebec, the consumer protection law sets specific rules for contracts made at a distance, and a merchant must disclose, among other things, the return and refund policy before the sale. The Office de la protection du consommateur explains what must be displayed. It is a short read, and it avoids learning these obligations through a complaint.
A clear policy also supports sales. Customers buy more readily from a small shop they do not know when they can see exactly what will happen if a problem occurs.
How can you reduce customer service emails?
By sending tracking numbers. The solution is very simple: most emails asking where an order is disappear when the customer receives a tracking number by email as soon as the label is printed.
Most platforms do this automatically when labels come from the same system. If you print labels elsewhere, still copy the tracking number into the order. It takes ten seconds and saves a longer exchange later.
Be transparent about delivery times as well. Given the volume carriers are handling this year, delivery estimates are not what they were. State this on the product page and in the confirmation email. Customers are very patient when informed in advance, and much less so when the date shown on your site was only an estimate.
Are local pickup and delivery worth offering?
Yes. If most of your customers are within reasonable driving distance, offer pickup. It involves no shipping cost, customers appreciate it, and it brings them to your business, where they may make other purchases. Some shops run a delivery round once or twice a week within a defined area. It requires more work, but it is a service a large online store cannot match.
These aspects are not spectacular, but they are often where the profitability of small online stores is decided. A simple site with shipping properly calculated is preferable to a polished one that loses four dollars on every box.