Most small businesses will need to ship their products at some point. If you operate out of a brick-and-mortar location, shipping services allow you to reach a larger pool of consumers and offer more flexible customer service. If you don’t sell out of a physical location and instead run an ecommerce business, shipping is pretty much a required part of your business model if you are to make any sales at all.
However, to offer shipping services, small businesses will have to work with a third-party shipping company. We understand that it can be daunting to outsource an essential business service. Fortunately, there are many reputable companies that offer efficient shipping services to small businesses at affordable prices.
To help you get started with shipping your products, we evaluated the merits of some of the most popular shipping companies. But to understand which is right for your business, you first need to understand how the shipping industry works.
To get the most bang for your buck when it comes to shipping, you need to consider all the costs associated with shipping a product. With almost every one of the shipping services out there, the price you pay will depend on the following factors:
How often you ship can greatly affect the price you pay to ship. Ecommerce businesses that ship hundreds of products each month have more leverage to negotiate cheaper per-item rates than businesses that only ship occasionally. Some ecommerce platforms and marketplaces like Shopify and Amazon offer in-house shipping services or discounted rates with third-party providers.
Unsurprisingly, smaller and lighter items are often cheaper to ship than larger and heavier items. Any small business owner who offers shipping services should have a precise measurement of the weights of all their products. It is also prudent to invest in a postal scale so that you can determine the weight of your shipments.
Packaging and shipment size kind of go hand-in-hand. The size and weight of your product will have a direct impact on the type of packaging you need. Smaller and lighter items could be shipped via envelope, while larger items will require boxes.
You should also factor in the cost of packaging materials, such as foam or paper cushioning, to ensure your product arrives in good condition. Some shipping services offer flat rates depending on the type of packaging material. In other words, if your items can fit in the packaging, it ships for the price of the packaging, regardless of the weight. Flat-rate shipping services will often save you money if you ship heavier items.
The type of product you are shipping will have an impact on the price you pay. Most shipping services companies will charge you an additional fee to ship hazardous materials. Products that can expire, such as food items, need to be insulated while shipped, which also costs more.
Generally, the faster you need something to reach its destination, the more money you will pay. Depending on where you are sending your products, most shipping services offer either overnight shipping or same-day delivery, at an additional cost. Standard transit time, in which you don’t have to pay an additional fee, is usually between one and five business days.
Most products are shipped via ground (truck), rail, air, or sea. The shipment method will have a direct impact on the time of delivery. Ground and air shipments tend to be fastest.
Another factor that will have an obvious impact on price is the distance you are shipping the product. Most shipping services will offer a ballpark estimate of how much it will cost to ship to a specific destination depending on where you are shipping from.
Pickup and drop-off locations are the places you bring your products when you want them to be shipped. If you ship often, you will want to use a shipping service that has a lot of pickup locations for the sake of convenience. You can also arrange to have shipments picked up directly from your place of business. However, this service can cost extra depending on your shipment provider.
Because you are working with a third-party shipping service, you should become familiar with freight claims. A freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for loss or damage of a shipment. Different shipping services will have different claims processes. You should become familiar with the claims process of your provider so that you have some recourse in the event that something goes wrong with your shipment.
Most shipping providers will offer you the opportunity to buy insurance on your shipments. The type of insurance you can purchase depends on the value of the items you are shipping, your shipping origin and destination, and the shipping method of transportation.
The most common type of shipping insurance is carrier liability insurance, which covers the goods being shipped and the cost of shipping up to $100 in the event the shipment is damaged or lost. For international shipments, you may also want to purchase international shipping insurance.
Different shipment providers will charge you different rates depending on a combination of these factors. Before contracting with a shipping service, determine what your business’s policies regarding shipping will be. What areas are you willing to ship to? Which products will you ship? Knowing the answers to these questions will make it easier to find a suitable provider for your shipment needs.
|SHIPPING COMPANY||BEST FOR||STANDARD DELIVERY TIME (Ground Service)|
United States Postal Service
2-8 business days
1-5 business days
1-4 business days
3-8 business days
Keeping the aforementioned factors in mind, here are the best shipping services for small businesses, based on your business’s needs.
Everybody is familiar with the United States Postal Service (USPS), and when it comes to shipping small and lightweight items, their prices can’t be beat. In general, if you are shipping a product that is under five pounds, USPS will offer you the best price, regardless of product size, distance traveled, or delivery speed.
It is also worth noting that USPS offers a flat-rate option based on the packaging used. Commercial prices range from $6.95 for a Priority Mail envelope (arrives in one to three business days) to $19.95 for a large box.
USPS offers a variety of additional service options, including Priority Mail Express (overnight delivery), USPS Retail Ground (delivers in two to eight business days), and Media Mail for the distribution of books and periodicals.
In terms of pick up and drop off, there are USPS offices and drop boxes in every corner of the country. If you purchase and print your postage and shipping labels online (which you can do on USPS.com), you can leave items for pickup with your daily mail at no extra cost. Carrier liability insurance and the ability to track your shipments is included in the shipment cost.
For volume shippers, USPS offers commercial pricing that is cheaper than the price you would pay at the post office. USPS also has access to mailboxes and PO boxes, which none of its competitors can claim.
Although USPS will offer the best value for small shipments, UPS (United Parcel Service) is more affordable if you are shipping large items. By way of example, shipping a 20-pound package from New York to Los Angeles costs $47.91 via UPS Ground service (one to five business days) and $59.64 via USPS Retail Ground (two to eight business days).
In general, items that are heavier than five pounds are cheaper to ship via UPS than USPS. However, UPS doesn’t offer flat-rate shipping, which USPS does.
In terms of services, UPS offers a whole suite of options for small business owners, including guaranteed day-definite ground delivery, overnight, two-day, and three-day air delivery, and international delivery to over 220 countries and territories.
UPS operates over 63,000 locations worldwide where you can drop off your shipments. You can also arrange for UPS to come to your place of business to pick up packages, for an additional fee. All UPS shipments are automatically insured up to $100, and UPS offers the option to enroll in Quantum View, a software that allows you and your customers to follow your shipments via a personalized dashboard.
For ecommerce business owners, there is UPS Marketplace Shipping, a free service that allows online orders to be processed faster by integrating your store with your UPS account. You can also print shipping labels directly from the UPS website.
FedEx (Federal Express) is well-known for their speedy delivery times. If you need something to reach the customer as soon as possible, FedEx is your best option. Their variety of service options include cross-country same-day shipping, overnight shipping, two-day and three-day shipping, and regular ground delivery within one to four business days. Plus, FedEx can offer most of these services for both domestic and international deliveries.
In terms of rates, FedEx edges UPS slightly. Shipping a five-pound item from New York to Los Angeles would cost $17.35 via FedEx Ground (one to four business days) and $18.27 via UPS Ground. A 20-pound item would cost $45.51 via FedEx Ground and $49.91 via UPS Ground. FedEx also offers flat-rate shipping, although it is more expensive than USPS.
FedEx maintains slightly fewer service locations than UPS, but it shouldn’t be too difficult to find a location or drop box that is convenient for your business. Similar to UPS, you will have to pay a fee to schedule pickup directly from your place of business, and you can print shipping labels directly on the FedEx website.
All FedEx shipments are insured up to $100 and FedEx offers shipment tracking services that rival UPS. Like UPS, FedEx offers a suite of services for ecommerce business owners that allow FedEx to integrate with an ecommerce platform for optimized order fulfillment.
One benefit that FedEx offers that UPS does not is Saturday delivery, which can cut down significantly on your delivery times.
If you’re a small business owner who ships internationally, DHL may be the best shipping services option for you. With more than 2.6 million customers and deliveries to more than 220 countries and territories, it’s not surprising why they’re so well known for shipping internationally. They have a quote generator online available for business owners who want to know how much shipping a package is going to cost them before they do it.
Due to the fact that the items DHL ships for their consumers vary so greatly, the pricing is hard to nail down exactly. Your shipping costs will depend on the dimension and weight of the package and where it’s going. You can then pay for the shipping online, even without a DHL account, and schedule a pickup or order supplies if you need them.
They have brokerage offices to help your packages navigate customs and clearance so your items can get where they need to go. Depending on how you’re shipping items, you might need to purchase different insurance options. They offer freight insurance along with cargo insurance, depending on the shipment.
DHL’s speed is one of their standout features considering they’re shipping all around the globe and aiming to get packages where they need to go in just days. The average is three to eight business days worldwide.
If choosing just one shipping services provider seems like too big of a commitment, you may decide to choose a shipping rate comparison software provider instead. These solutions are best for businesses that ship in volume, as you’ll be eligible for discounted shipping rates depending on how many items you ship on a weekly or monthly basis. With comparison software, you’ll be able to—as the name implies—compare the rates of different shipping services (like the ones mentioned above) to find which ones offer the best deals for your particular shipments.
Shipping rate comparison software typically integrates directly into your ecommerce platform and allows you to easily ship and track shipments, print labels, process returns, and gather analytics to highlight trends and generate reports.
We hope the parameters we have provided come in handy when you are figuring out which shipping services to use for your small business. Keep in mind, shipping is the type of service where it makes sense not to limit yourself to one provider. It’s actually quite common for merchants to use a combination of two or three providers, depending on where they can get the best deal. This is where a shipping rate comparison software especially comes in handy, but you may find using a combination of traditional shipping services meets your needs.
No matter how you ship, it is important that you make your shipping policies clear to your customers by listing them on your company website, particularly your policy around returning deliveries. With a good shipping strategy in place, your business will be able to service your customers more effectively while bringing your products to new corners of the world.
Matthew Speiser is a former staff writer at Fundera.
He has written extensively about ecommerce, marketing and sales, and payroll and HR solutions, but is particularly knowledgeable about merchant services. Prior to Fundera, Matthew was an editorial lead at Google and an intern reporter at Business Insider. Matthew was also a co-author for Startup Guide—a series of guidebooks designed to assist entrepreneurs in different cities around the world.