Weighing Your Costs: The Delivery Cost Comparison Guide
Globally, annual online consumer shopping will reach $4.8 trillion by the year 2021. In just a few years, analysts forecast that e-commerce will be the largest retail shopping channel on the planet.
Today, people aren’t only spending more time shopping online – they’re spending more during each session. Resultantly, businesses are competing fiercely to attract their share of the estimated 1.92 billion people who will shop online in 2019.
Studies show that 85% of all shoppers browse online reviews when trying to make a buying decision. Of those, 77% go on to make a purchase.
The delivery cost is one part of the shopping experience that consumers write about frequently. Even if you offer free shipping, excessive costs to deliver goods can eat away your profits.
Because of this, business owners must do a carrier cost comparison to understand shipping rates for different packages. This way, they can save money while carving out their share of the $4.8 trillion online shopping pie.
Why Delivery Cost Matters
Unchecked shipping costs can become expensive. Still, there are times when consumers need goods right away. This can range from last minute gifts to parts needed to repair a vital household appliance.
The three major United States shippers – USPS, UPS and FedEx – offer similar services. These are the main shippers for same-day, overnight and today delivery. Still, packaging guidelines and pricing vary somewhat.
Same-day delivery service bodes well with consumers. It can create a seemingly seamless shopping experience. As more consumers come to expect same-day shipping, retailers will be compelled to deliver.
When it comes to attracting and retaining buyers, it’s all about consumer convenience. Same-day shipping has emerged as a way to make shopping more convenient and closer to an in-store experience.
Now, with the click of a mouse, consumers can have goods arrive at their doorstep anywhere from a few hours to a few days. For retailers, the trick is to keep shipping costs under 7% to 8% of consumers’ total shopping cart total.
Cost of Delivery By USPS
For guaranteed overnight delivery, the United States Postal Service offers Priority Mail Express. The service is available seven days a week.
Priority Mail Express is the cheapest option for shipping flat, lightweight goods. USPS offers the service for $24.70. You can ship anything that fits in the Mail Express envelope to anywhere in the U.S.
The USPS also ships packages overnight. For example, a:
- 1-pound shipment costs $39.40
- 5-pound shipment costs $63.20
- 10-pound shipment costs $93.15
- 50-pound shipment costs $288.45
The United States Postal Service is the most cost-effective choice for shipping items that weigh less than a pound.
For a long time, reliability was a big issue for the government-run service. Relatively recently, however, they have redeemed themselves as a dependable carrier by delivering parcels more consistently.
One advantage of using USPS is that they provide free boxes. You can even have shipping boxes delivered to your business.
Delivery Pricing for FedEx
FedEx offers First Overnight for next morning delivery. FedEx Priority Overnight, however, is available for next day delivery before 10:30 a.m. or in the same afternoon for rural areas. The carrier also offers FedEx Standard Overnight for delivery to rural areas between 3:00 p.m. and 4:30 p.m. and private residences before 8:00 p.m. the next day.
Starting at $46.30, you can ship overnight packages using FedEx Standard Overnight. FedEx First Overnight comes with a heftier price tag, starting at $81.69.
FedEx next day package shipping rates are higher than USPS. Comparing similar packages, a:
- 1-pound shipment costs $81.11 to $123.05
- 5-pound shipment costs $102.99 to $141.08
- 10-pound shipment costs $141.83 to $175.05
- 50-pound shipment costs $390.12 to $429.71
However, there is a relatively new caveat with FedEx shipping.
You want to avoid getting charged with a “Ground Unauthorized Package” fee. Starting September 03, 2018, FedEx rolled out new fees for oversized shipments along with additional handling surcharges. The new penalty is a hefty $675 fine.
FedEx laid out several criteria for Ground Unauthorized Packages. These include packages that are:
- A combined length, width and depth of 165 inches
- More than 108 inches long
- Weigh more than 150 pounds
If FedEx pinpoints one of your shipments as a Ground Unauthorized Package, they may refuse or return it. In other words, adding insult to injury, they will charge you the fee and refuse to accept your shipment.
UPS Delivery Options
When you need to move items in a hurry, UPS offers Next Day Air for $46.58. You can use the service to ship items that weigh less than 8 ounces. The next tier of service, UPS Day Air Early costs $80.98.
UPS overnight package options are similar compared to FedEx for lighter packages but are less for shipping more substantial items. For example, a:
- 1-pound shipment costs $81.47 to $122.52
- 5-pound shipment costs $103.47 to $140.63
- 10-pound shipment costs $142.45 to $174.77
- 50-pound shipment costs $208.42 to $240.80
If you’re not careful, however, you can also face fines if you don’t choose your shipping options carefully.
Starting June 2018, UPS rolled out a penalty system that’s similar to the FedEx Ground Unauthorized Package fine. The UPS version, however, is less punitive.
UPS will penalize shippers if weekly charge corrections total more than $5. The Audit Fee is $1 per package correction or 6% of the total amount of corrections, whichever is higher. Accordingly, you’ll want to double check every shipment to make sure that your items comply with UPS guidelines.
Putting It All in Perspective
It’s important to note that overnight shipping services guarantee that your goods will arrive when indicated. In reality, however, a 100% success rate is impossible. What the guarantee means that if the carrier cannot fulfill their promise, you’ll receive a refund for the shipping fee.
As more consumers shop online, delivery cost will become more critical for retailers. It’s essential to keep shipping costs down for the benefit of both consumers and your business.
If you have questions about shipping best practices and optimization, contact us today to speak with a friendly representative. Ask about our free app that you can use to arrange same-day and next-day shipping across the United States.