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Questions & Answers

Posted by Ryan Mulligan on 2014-05-18 15:19:52
Title: What is the fastest and cheapest way to send your product in Canada and the U.S. when someone places...
Category: Operations

What is the fastest and cheapest way to send your product in Canada and the U.S. when someone places an online order?

Answer:

Sunil Godse
2014-05-22 16:34:41

There is considerable information you need to have with you before you begin to price shop between shipping carriers. What you need to know are the sizes of the packages, weight, destination postal codes and how fast is "fast.” For example, sending envelopes or books for a 2-day guaranteed delivery to a residential address in Canada is better using Canada Post. What is "fast" in terms of timing? All carriers will offer next day delivery, but your rates will go up significantly with distance and weight and/or size (generally one of these two are chosen to price the package). If shipping across the border, there will be customs and brokerage charges you will need to think about, which eats into your profits. If you are buying the product in the US, you may want to find a shipper in the US rather than carrying inventory in Canada and doubling up on delivery charges. However, this depends upon your business model. Can you source in both Canada and the US?

You have to realize that fastest is generally not synonymous with cheapest. This is a trade off you need to make based on the promise you have made to customers and/or customer expectation.

What I would do is take three typical products you are selling, get all of the information and call each carrier to find out their pricing. If you are expecting a certain volume level, ask for volume discounts. Make sure you make these volume levels as, if you don't within a certain period of time, the shipping charges will go up, which may make another carrier cheaper.

Hope that helps.
Sunil Godse, President, Radical Solutions Group 


Ryan Mulligan
2014-05-22 19:24:48
Followup question:
My products will be coming from Canada and shipped across Canada and into the U.S. initially with plans eventually ship world wide. Do you have any recommendations other than Canada Post, UPS, and UPS? Also, do you think I should make my products available world wide right from launch date or stick to North America to start?

Answer:

Sunil Godse
2014-05-30 16:40:23

There are other shipping options such as air, rail and ground transportation (trucking) as well as other local carriers but you need to keep in mind once again the cost versus benefit which will affect your margins. These choices are generally not very good for smaller items and are better suited where time of delivery is an issue.

 As mentioned before, I would suggest looking at what a customer would reasonably expect to have your product delivered to them in terms of time and the associated cost. Do the apples to apples comparison with three or four products to find out which of those options would be better.

One other option is to set up fulfillment centers across the country but I would not suggest you do this until you are confident that there is a level of sales volume that you will see. If not, there are a lot of minimum costs that will eat into your profits and significantly hamper the start up capital that you have.

You can also contact other distributors that will carry your inventory and take care of delivery for you but then you will have to make your profits on a wholesale price, not retail price, and this will significantly affect your profits.

Making your products available worldwide is a very desirable option but you need to think about the logistics of how you're going to get that product across to the other countries and if there are any restrictions from one country to another. There may be increased tariffs or higher taxes that you need your customer to pay or you subsume in your pricing depending upon what your product is. if you transfer the extra cost to the consumer, this affects the overall price of your item and your product may not be as desirable anymore. If you subsume the extra cost in the pricing then you are going to be playing with your per-unit profits once again.

As you can see, there is a lot of effort required on your end but once it gets going, you can look at other options once you begin to increase your sales volumes.

Sunil Godse, President, Radical Solutions Group