Rising shipping costs is the new challenge for small biz

As the eCommerce boom continues, shipping costs have become an ongoing concern for small businesses. The latest State of Shipping report highlights significant changes in shipping prices, delivery times, and customer expectations making it harder for small businesses to compete in 2024.

Shipping costs are up but so are customer expectations

According to the report, shipping costs have surged by 15 per cent over the past year, largely due to increased fuel prices and labour shortages. This rise in costs has forced many small businesses to reassess their shipping strategies. Unfortunately, passing these costs onto customers isn’t always an option, as the report found that customer expectations for fast and free shipping are higher than ever.

One key finding is that 70 per cent of customers now expect free shipping on orders over $50, a steep increase from just 50 per cent the previous year. This shift puts small businesses in a tricky position, balancing the need to stay competitive with the rising costs of fulfilment.

The battle for fast delivery: the Amazon effect

While costs are rising, so too are customer expectations around delivery times. The report reveals that consumers are not just looking for free shipping; they want it fast. Nearly 60 per cent of customers now expect their online orders to arrive within two days, a benchmark set by major eCommerce players like Amazon.

For small businesses, this means rethinking logistics. Faster shipping options may come at a premium, but they could be crucial for customer satisfaction and retention. The report suggests that offering multiple shipping options, including expedited services, could be a way for small businesses to meet these expectations without completely absorbing the costs.

The rise of sustainable shipping

Another trend highlighted in the report is the growing demand for sustainable shipping options. As consumers become more environmentally conscious, businesses are under increasing pressure to reduce their carbon footprint. The report indicates that 40 per cent of consumers are willing to pay more for eco-friendly shipping, a figure that has doubled since last year.

For small businesses, this presents both a challenge and an opportunity. While sustainable shipping options can be more expensive, they also offer a way to differentiate from competitors and attract eco-conscious customers.

What small businesses can do

The State of Shipping report offers several strategies for small businesses to manage these challenges:

Negotiate with Carriers: With shipping costs on the rise, negotiating better rates with carriers can be crucial. Many carriers offer discounts for businesses that ship in higher volumes or have long-term contracts.

Optimise Packaging: Reducing package size and weight can lead to significant savings in shipping costs. The report suggests investing in smart packaging solutions that minimize waste while protecting products.

Communicate with Customers: Transparency is key. If shipping costs or times are likely to increase, communicating this clearly to customers can help manage expectations and maintain trust.

Explore Fulfilment Options: Outsourcing fulfilment to third-party logistics providers can be a cost-effective way to manage increased shipping demands without overextending your resources.

Read the full report

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