When selling online, simply offering the lowest shipping carrier is not always the best choice for your company, especially when shipping internationally. Of all the carriers, I’ve found that UPS is usually the cheapest. So, how does UPS compete with the other major carriers when making international shipments? The answer is hidden fees to your buyer.
Let’s take an example order to begin. Pretend the customer has paid $25 for an item plus $10 shipping to Canada via UPS. The customer has selected UPS because it was the cheapest option they were given compared to USPS and FedEx. The package gets shipped to Canada, Canadian Customs tacks on duty and taxes equaling $7.50 (18% duty plus 12% HST), then UPS charges a brokerage fee equal to the duty and taxes ($7.50) plus an additional $5 COD fee for having to collect money. The $10 shipping has now become $30 and is even more than the price of the items, which could have weighed less than 1 lb. Obviously, this would make the customer furious and either never shop with you again or return the package to sender and receive a refund (which you’ll have to pay out of pocket since the package was never received). Regardless, your relationship with the customer has been destroyed and the likelihood of them ordering again is very small. Additionally, the likelihood of the customer sharing their bad experience with other possible customers is probably pretty high.
Okay, what about the other carriers? Well, USPS wouldn’t have charged a brokerage fee at all for such a small package so the customer would have just paid $7.50 in addition to the shipping costs. FedEx and other couriers are similar to UPS but do not charge a rate equal to the duty and taxes so there aren’t as many hidden fees for the customer.
So, to conclude, make sure you offer a shipping service that isn’t going to pass on the real costs to the unsuspecting customer. It’ll help protect your fragile customer-business relationship and improve the likelihood of a repeat sale. With companies like UPS, the cheapest shipping option can often be the most expensive shipping option for both you and your customers.