How much does shipping really cost us?

I'm a millennial and shop online almost every day. But there's one thing I really hate. High shipping costs.

It frustrates me when I make an order for 25 euros and have to pay another seven. I finish the order, but I always grind my teeth as I do so.

To me it is a sign that:

• a large e-shop tries to make money at every step of the ordering process,
• The e-shop does not have a capable process and does everything manually,
• The e-shop does not have economies of scale and it is its real cost.

In this article, I will try to look at it through the lens of the person sitting on the other side.

The owner of the e-shop.

Since we don't want to do what we don't like, we readily admit:

We subsidize transport from our own pocket for a long time

It turned out that people are willing to pay for transportation. But not to overpay. That's why we asked our customers how much is an acceptable amount for:

• Personal collection
• Post office
• Courier
• Local delivery by cycle courier

And we set the price accordingly. We ended up like this:

• FREE personal collection
• Post office 2.90 euros
• Courier 3.90 euros
• Local delivery by cycle courier 3.90 euros
• Shipping to the Czech Republic 3.90 euros
• Shipping abroad 3.90 euros

In addition, we have set up free shipping for everyone who buys for more than 30 euros.

And we overshot it a bit.

How much does it really cost us?

What you pay for shipping, postage and packaging is actually the price for:

• operation of the warehouse system
• product handling,
• order processing and product packaging,
• packaging material,
• transport company.

Let's go over it step by step.

#1: Warehouse system operation

Our e-shop works on Shopify, which, together with plugins for keeping stock records and printing labels for carriers, costs us about $500 a month.

This means that with roughly 500 shipments per month, we pay roughly 1 euro just for keeping warehouse records in Shopify and making them exports for carriers.

#2: Handling the product

We pay roughly 5 cents per item for warehouse receipt. The item also includes packaging or attachments, so on average it costs 20 cents per shipment. Roughly 10 cents for storage must be added to this. So the whole item makes about 0.30 euros .

#3: Order processing and product packaging

Here the system is simple, as it is a variable cost depending on the number of items in the order. The more items, the more we pay.

We usually have 4-5 items in our order, including attachments, so we pay an average of 1.30 euros for administration and packaging.

#4: Cost of packaging material

We have made a commitment to completely get rid of all plastics by 2021. Well, we didn't expect to limit the number of available options so much. As soon as we applied this filter, we dropped 80% of suppliers.

To prevent damage, we have chosen a high-quality 3-layer cardboard box. It recycles well and is minimalist like our products. We had a custom paper tape made for it.

Our decision was also reflected in the costs, as they doubled due to this alone. And the average price of the packaging rose to 60 cents .

#5: Shipping company costs

The fact that it is the largest item in the budget will probably not surprise you. We often complain about this topic with other entrepreneurs in design markets.

But until we are at the level of Martinus or other great players, we have to accept the rules of the game.

And they are determined as follows:

• Personal collection at Cyklokurier ... 1 euro
• Bicycle courier ... 2.98 euros
• Courier DPD or SPS ... 2.98 euros
• Pick-up point Post office ... 2.50 euros
• Shipping costs to the Czech Republic ... 4 euros
• Shipping costs abroad - Mostly in the range of 6 - 10 euros. And many of you don't even know that such a shipment to Norway or Switzerland costs us 15 euros.

And I'm not even commenting on the price increase by all transport companies due to the Christmas premium of roughly 1 euro.

On average, 60% of you will choose a courier. And our cost will be roughly 4 euros in the next two months at least.

Guys, it doesn't work for me...

We know. Not even us.

That's why we decided to take a step that we should have taken a long time ago.

Increase postage.

What are the new rates?

• Personal collection remains FREE
• Post office 3.90 euros
• Local delivery by cycle courier 3.90 euros
• Courier 4.90 euros
• Shipping to the Czech Republic 5.90 euros
• Shipping abroad - 10 euros

In this way, we support the most ecological alternatives at the expense of the courier who has the biggest carbon footprint.

We are still under the price, but the difference doesn't hurt that much anymore.

Even with such a setup, we will process more than 10,000 euros per year on transport.

A few words at the end

If we had a different set of values, we would have asked 7 euros for transport a long time ago.

We are still not a big e-shop, we don't have economies of scale like the big players.

The problem is that we have all gotten used to free or 3 euro shipping.
And also with delivery within 24 hours.

It's that time. We will not change the consumer's purchasing expectations.

But we want to be the one to point out how today's times and demands for fulfillment are pressing on small e-shops.

And how we're underpriced for a long time just to get us millennials to complete our order.

So the next time you look at the shopping cart in another small e-shop and they ask for less than 7 euros for shipping, don't close the website. But contribute to them. It will probably help them a lot more than you think.

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There will be more articles like this in the near future.

We believe that we can also change your point of view.