Delivery cost is biggest expense for SME retailers

By Chris Dawson January 26, 2018 - 9:00 am

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.

  • Simon E
    4 years ago

    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.
    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.

  • northumbrian
    4 years ago

    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,

    • Simon E
      4 years ago

      Hi Northumbrian,
      would you mind sharing a LL alternative with “Tracking” for a few pence more.
      Id love to ditch them if it would work for me.

  • northumbrian
    3 years ago

    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

  • northumbrian
    3 years ago

    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,

  • 3 years ago

    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?

  • northumbrian
    3 years ago

    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?

  • northumbrian
    3 years ago

    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

    • 3 years ago

      Do other couriers never lose an item?

      With Royal Mail you get a delivery scan to say that the item has been delivered, but that is not 100% reliable.

      But are other couriers 100% reliable?

      I am not against switching to another courier service but for us RM seem to be doing a very good job.

    • alan paterson
      3 years ago

      At least with Hermes – when they loose a parcel they generally give compensation without much fuss. Not so with RM and other competitors.

    • 3 years ago

      @alan paterson What is the cost per parcel with MyHermes?

      But who wants crushed parcels delivered?

  • northumbrian
    3 years ago

    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

    • 3 years ago

      Of course they receive payment, is there a delivery service that does it for nothing?

      I would be interested in hearing of a better service, I will be talking with MyHermes at the IRX show but it will take some doing to move my business away from RM

      I am sure there are faults with most services.

  • northumbrian
    3 years ago

    exactly of course they receive payment?
    so why the pat on the back for doing a job they are paid to do,
    royal mail needs to stop thinking their special ,and realise the Germans are coming

    • 3 years ago

      You seem very anti towards RM, but I am interested to know what service you consider better and why.

      My personal experience of RM is very good and greatly improved now they offer 2d scan on parcels & large letters, but there are still issues and I fail to see how they will ever get 100% with the amount of items they handle.

      As I said, I will be talking to MyHermes at the IRX show and will look at what service they have to offer against what I already get.

    • northumbrian
      3 years ago

      we use royal mail because their convenient, / competitive, for large letter,
      for anything else
      we use and consider just about any other courier we find them as good or not better ,usually cheaper, just as reliable, with one caveat My Hermes seem quite good at damaging delicate items,
      were with sam
      concerning royal mail customer services,
      we just dont contact them these days, as they often add to the problem rather than solve it

    • 3 years ago

      So best not to be talking to MyHermes then unless we want damaged parcels.

      Totally agree about customer support @RM, absolutely hopeless, but then so is Amazon / eBay, so not something that we are not used to.

      On our contract we get zero compensation, so pointless contacting CS about lost items, although I do always put in a report just to highlight it happened.

      We get so little in the way of Non Delivered items (3/1000) it does not effect us.

    • Rob
      3 years ago

      @Tyler, damaged parcels usually mean they are not packed correctly. I have shipped glasses and many other fragile items with MyHermes and only had the odd one get broken but that is down to me not packing them well enough. There was a great video on here last year where they were at a MyHermes facility watching them unload a trailer full of parcels which showed them getting thrown around.
      It was soon removed as Hermes did not want everyone to see it. Thought it was great to see as you know what happens to your parcels when they move through the various warehouses. If customers could see it, that would be great as often get sent returns in a bin bag all mangled up.

    • 3 years ago

      @Rob – I know what you mean and I have seen the way some items are packed.

      I have also seen the way items are handled, much the same as if you watch your luggage being loaded on and off a plane.

      Our damaged items with Royal mail is not even worth mentioning, but everything is packed in boxes with lots of “biodegradable”void fill.

      We have had the occasional complaint about the amount of packaging used, but I would rather the goods arrived in once piece than disappoint or have to re send / refund

  • SAM
    3 years ago

    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.

    • northumbrian
      3 years ago

      its ROYAL MAIL
      they are a national asset and institution ,
      complainers will be sent to the tower

  • Jonah
    3 years ago

    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.

    • Tom
      3 years ago

      That sounds similar to some of the international parcels that I have sent over the past few months, I end up consulting Parcel2Go for internation parcels these days. I try to not send with Hermes if I can help it.

  • northumbrian
    3 years ago

    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

    • 3 years ago

      Personally I found bank managers of old very accommodating & approachable, its the new approach that I don’t like.

      I don’t send restricted items so have no idea how that works, do they scan them or how do they know what is in a parcel?

      Not knowing where a parcel is can be a pain, but as they seem to lose so few it is not a great problem.

      Tell me, when another company loses a parcel, do they know where it is? Or do they never lose an item?

    • northumbrian
      3 years ago

      yes other company’s quit often know where the package is or where it was last if lost
      its called tracking
      we are not talking about lost packages we are talking about undelivered packages that we suspect are knowingly not returned,
      and its Tuesday today try and find someway of contradicting that

    • 3 years ago

      I thought if an item was lost nobody knew where it was and that knowing where it was last was about as good as not knowing where the item was.

      Bottom line is the item is lost and your not getting it back / delivered.

      Undelivered items are tracked with Royal Mail, they are returned to the Delivery Office for collection and then after 18 days of the buyer failing to collect or contact us, the items are returned to us. Never had a problem with that, all items are always returned.

      Like I said, you seem very anti Royal Mail and nothing you have said makes any other delivery company look better than them.

      Putting aside RM Customer / Business Support, which I think we all agree is useless, I have found the UK delivery service very good.

      There are things that could be improved upon:

      1. In the Click & Drop portal it would be good to see which items had been delivered and which were being held for collection by the buyer.

      2. I would rather they did not deliver to neighbours, but if they insist on doing it, they should enter into their system what house it was left with and it would be easy to indicate that delivery had been to the actual address.

      But with only 3/1000 items going missing I can live with such small losses, especially at such competitive prices for the speed of delivery & reliability.

  • northumbrian
    3 years ago

    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

    • 3 years ago

      Tried grasping the nettle before Christmas but did not work out, can not have set up the GSP service right, will need to look at it again.

      What is the perception and method change you talk about?

      I thought it was much like sending items for Click & Collect, you just sent them to the address they told you with the reference number on the label, which prints out as part of the address.

    • northumbrian
      3 years ago

      perception is ,
      many buyers cant get their head round that it is not you that is shipping internationally,
      it is ebay and its 3rd party shipper at their request ,
      another buyers perception its the seller setting the cost and delivery time ,

  • AWAN
    3 years ago

    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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