Delivery cost is biggest expense for SME retailers

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With Christmas and the peak selling season behind us, now is a good time of year to review your arrangements with carriers and consider if your delivery cost could be reduced by making alternative arrangements either with renegotiation of your rates or by switching carrier.

A recent study by Royal Mail revealed that the biggest costs that SME retailers expect in 2018 are purchasing (34%), logistics/delivery (32%) and advertising (27%). Reducing you cost of stock is probably more difficult as you have to have products to sell and advertising rates (at least on marketplaces and search engines) are set rates, but at this time of year when carriers are traditionally quieter it may be the optimum time to negotiate reduce rates.

Sadly as is often the case you may find that switching carrier is the simplest way to reduce your carriage rates. Your existing carrier already has your business and winning a new account is always a more attractive proposition than giving away margin to an existing customer. Plus of course your volumes since Christmas have probably dropped giving your incumbent supplier even less incentive to lower your rate.

Other ways to reduce your delivery costs are to consider the services that you use and offer your customers. Many retailers have in recent years lowered their standard service to an economy offering. Whilst there is often little difference in cost between a 24 and 48 hour service, if you’re shipping thousands of parcels per year the pennies do add up. If you add on a day or so in handling time you may even be able to mitigate the slower courier delivery that comes with a 48 hour courier by speeding up despatch time in your warehouse.

Perhaps the best way to reduce rates is to increase volumes which gives more power to your negotiations with your chosen carrier and on that front Royal Mail’s study revealed that 70% of SMEs say they experienced an uplift in sales in 2017 compared to the previous year and 74% expressed confidence that sales will increase further in 2018. The main concerns for UK SME online retailers, with 69% of retailers expect costs to be higher in 2018, are the ability to make a profit (27%), increase sales (26%) and reduce costs (23%).

If you’ve found a courier with better rates than your existing supplier we’d love to hear who has the best offers for new customers at the moment. You’ll also find a selection of carriers in the Tamebay Guide.

31 Responses

  1. In the UK I can’t find anyone cheaper than Royal Mail for large letter INCLUDING delivery confirmation.
    The rest of the world I would have to say DHL global mail for the convenience of free collections and value compared to RM. WITH THE EXCEPTION of the USA.

    For price and value Etail-USA wins hands down for me.
    [email protected]
    I used them for around 2 years and the only reason I stopped was that they went to USA only, previously world wide.
    They used to charge me £2.99 for a large letter to the USA.

    It goes from them UPS to New York, from memory, and then “Injected” as they called it, in to USPS with USPS tracking to delivery.

    As it has tracking, it complies with Amazon and ebay and paypal.

    I was VERY sceptical at first but sometimes you take a risk and they bent over backwards to adjust their software to send me tracking and all that sort of stuff.
    I still have people asking me about some of the comments I have left and if they are true and certainly were for me.

  2. RM large letter only has delivery confirmation,
    its invisible otherwise, which tends to upset buyers ,when delayed or missing,
    the first thing they think of is to blame the seller,
    there are a number of alternative couriers
    for a few pence more , you can double the weight and size of a package
    plus increase tracking by 100%,
    as were ebay only on line, from a sellers perspective
    we cant find any better than ebay shipping for international sales,

  3. Parcel 2 go
    via my hermes drop off shop
    1.99 , plus vat
    costs as around 13p more than basic LL signed for
    and a £1 or so less than the 750g LL option

  4. of course if your doing the ebay top rated seller selling assault course of next day , no late delivery etc etc its not much use,

  5. For me you can’t beat Royal mail for service, cost and reliability.

    We are Top Seller rated, with eBay, and do not find putting an item into an envelope, putting a label on it and then putting it in a Royal mail sack to go to the delivery office an assault course, I can probably do it quicker than I can type it.

    UK Rates

    £0.65 + VAT for a large letter <100grms
    £2.10 + VAT for a parcel <20kg

    Why would you use anybody else?

  6. why would anyone use anyone else?
    because they have a package of more than 100g.?
    they require tracking,?
    they require more than one delivery attempt?

  7. of course we use royal mail too,
    but theirnot without fault
    the one thing that really gets our goat is on the odd occasion a package is undelivered
    we never see it again ,
    returns just never happen despite a return address ,as the signature is not acquired we presume its not buyer fraud

  8. royal mail do a reasonable job for which they receive payment.
    their faults and mistakes should not be glossed over just because
    of the name Royal mail,
    they are no better than many other delivery firms in many cases

  9. We use RMG for most our delivery, 90% of what we sell is large letter and we have to have it out next day. As they have a monopoly there is no real competition in this sector at all, if their was any very sure we would use it. Parcels of any value or weight like Consoles we use DPD, they offer genuine tracking and service. We actually get better deals with Parcel force but they are “hopeless” and simply like RMG are not interested in dealing with issues, 4 x ps4 consoles destroyed and the most shocking service you could get and enough was enough. The 2d thing has saved us from so much mail theft however on eBay and lately on GAME the ONE big plus of last year.
    Christmas 2017 they were shocking 24 hour mail taking 7 days. We are actually writing to the regulator about this. End of the day you pay them and they do not provide the service, and Amazon will scoop all the business up now from disappointed customers.

    Our main issue is the service from Royal Mail, they charge for a service and when they do not deliver they are not interested. We actually had a agent LIE to us with a claim saying item was restricted to Brazil on a tracked and signed (it was not) we had to go to the regulator to get paid out with all the hassle, the item never left Glasgow, at least that got a scan
    As right now we have a tracked and sing to the States (never even got scanned at the sort office, totally not interested), customer service staff hang up on you and everything honest they are with the Ryan Air level of customer service.
    The main issue is Green, she is not investing in the business and we understand there is staff who still think it is 1984, but her and her board are not interested in nothing but paying themselves more and the dividend. (and it is good, but I would rather they invested in the network). When it comes to the shareholder vote Green will not be getting ours this year we want her out.

  10. We have stopped using Royal Mail International Signed For Service- it’s in complete chaos. Pass the parcel in America, watch it disappear in Italy. 7 yes SEVEN weeks delivery time to France,,,,,, just quoting a handful of problems from what’s become a complete joke of a service.
    And another thing for missing UK parcels- why are they never returned? Our parcels have return address inside and out. We avoid the post office whenever possible, even if it costs us money.

  11. royal mail seen to have the ethos that they are doing you the favour similar to bank managers of the past
    for instance
    royal mail have the technology to issue knuckle rapping letters when restricted items are wrongly labeled
    yet often have no clue where a missing package is

  12. once you grasp the nettle ,deal with the perception and method change,
    for ebay international sales
    the ebay GSP service just makes us feel smug, off it goes with hardly a care in the world

  13. I think it is about time that eBay realised that many Letter and LL through RM are not getting delivered at all and more are delivered late. This is not the sellers fault yet eBay puts a fault against the seller for late delivery.
    On low value items sent via LL through RM it is not viable to track them or even pay a signed for fee.


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