Shipping isn’t just about moving packages from point A to point B. It’s a direct reflection of your business’s efficiency and dedication to customer service. For Baltic e-commerce businesses, where cross-border sales are common and customers demand fast, affordable delivery, managing shipping costs effectively can make or break your bottom line.
Whether you’re delivering to Vilnius, Riga, or Tallinn, customers expect transparent shipping options and seamless delivery experiences. High shipping costs or long delays? That’s a fast track to cart abandonment or negative reviews, and no e-commerce business can afford that. The reality is, your shipping strategy is a core part of your customer service and your financial success.
Let’s dive into how you can take control of your shipping costs and drive long-term profitability.
What contributes to shipping costs?
There’s a lot more to shipping costs than meets the eye. To truly understand how to optimise them, we need to break them down into their constituent parts.
Weight and dimensions
One of the first things that impacts your shipping bill is the size and weight of your package. Most of the big carriers, like UPS and FedEx, use something called dimensional weight pricing. This means that even if your package is light, if it’s large and takes up a lot of space on the delivery truck, you’ll be charged as though it weighs more. So, while a lightweight item may seem cheap to ship, if it’s in a bulky box, it could still cost you a pretty penny. Choosing the right-sized packaging can help you avoid paying for air.
Distance and shipping zones
Another big factor is distance. Carriers break down regions into shipping zones, and the farther your package has to travel, especially across borders, the more expensive it gets. For Baltic e-commerce businesses that frequently deal with cross-border sales, this becomes especially important. Shipping within Estonia or Lithuania is one thing; sending a package to the U.K. or France adds a layer of complexity and cost.
Shipping speed
Your customer’s patience (or lack thereof) also plays a role in the cost. Standard shipping is the most economical option, but as soon as your customers expect expedited or same-day delivery, you’re looking at significantly higher fees. Offering customers flexible shipping options while keeping costs in check is key to balancing service and profitability.
Additional charges
It doesn’t end there. Carriers often tack on surcharges like handling fees for fragile items, fuel surcharges that fluctuate with market conditions, or insurance for high-value goods. Each of these can chip away at your profit margins if not carefully managed.
Now that we understand what contributes to shipping costs, how can you minimise them? Let’s explore the different types of shipping rates and how you can choose the most cost-effective options for your business.
Types of shipping rates and their impact
Shipping rates are not one-size-fits-all, and choosing the right structure can significantly affect your business’s costs and customer satisfaction. Here’s a breakdown of the most common types of shipping rates and when to use them:
Flat shipping rates
Flat rates are simple: you charge the same shipping cost regardless of the package’s weight or destination. This can work well for businesses shipping products of similar size and weight, such as clothing or accessories. It also provides predictability at checkout, reducing surprises for customers. For instance, offering a flat €5 shipping fee keeps things straightforward, but you risk overpaying if the actual shipping cost is much lower for certain orders. Montonio allows you to set flat rates easily, giving you full control over the customer experience while balancing your own costs.
Price-based rates
With price-based rates, shipping fees are tied to the total value of the customer’s cart. For example, you could offer free shipping for orders over €100 or charge a higher fee for smaller purchases. This strategy encourages customers to spend more to qualify for free shipping, increasing your average order value.
Weight-based rates
If your products vary significantly in size and weight, weight-based shipping rates are an effective way to pass on accurate shipping costs to your customers. This method is especially useful for businesses shipping heavy or bulky items. For example, you might charge €7 for packages under 5kg and €15 for those over 5kg.
Calculated shipping rates
Calculated rates are based on real-time data from carriers, taking into account the package’s weight, dimensions, shipping destination, and delivery speed. This approach is ideal for businesses that want full transparency and accuracy in shipping costs. With Montonio, you can integrate real-time rates from multiple carriers like DPD and Omniva, ensuring your customers are only charged what the carrier will actually bill you—no hidden costs, no guesswork.
Case study: Montonio in action
Let’s say you run an online shop in Latvia selling custom-made home décor. You have a variety of items, from lightweight wall art to heavier furniture. By using Montonio’s platform, you can set price-based rates to encourage larger orders, apply calculated rates for real-time shipping accuracy on bulky items, and still offer flat-rate shipping on smaller packages. This flexibility helps you optimise costs without compromising customer satisfaction.
Hidden costs of shipping: What to watch for
Beyond standard rates, several hidden costs can chip away at your profit margins if not properly managed.
Handling and packaging costs
How you pack your products plays a significant role in your shipping expenses. Large or unnecessarily bulky packaging increases dimensional weight, leading to higher costs. Using the right-sized boxes and minimising excess filler not only reduces costs but also creates a better customer experience. Montonio helps automate label creation based on package size, ensuring you only pay for what you need.
Accessorial fees
Carriers often apply additional fees for extra services. These accessorial fees can include things like requiring a signature on delivery, delivering to remote areas, or international shipments where customs duties or taxes apply. These unexpected charges can add up quickly, so it’s essential to factor them into your overall shipping strategy.
Insurance
While insurance adds an extra cost to shipping, it can be a necessary investment when shipping high-value items. Damaged or lost packages can quickly erode profits, especially for expensive products. Deciding when to include insurance depends on the risk tolerance of your business and the product value.
Practical tips to reduce shipping costs
Now it’s time to think about making smart, strategic decisions that can significantly impact your bottom line.
Negotiate with carriers
For high-volume merchants, negotiating directly with shipping carriers can lead to better rates. If you’re shipping a large number of packages each month, use your volume as leverage to secure discounts. Montonio provides insights into carrier options and helps you compare rates, making it easier to start these negotiations from an informed position.
Optimise packaging
Small changes in how you pack products can make a big difference. Minimising package size, reducing unnecessary weight, and using cost-effective materials can help lower dimensional weight charges. Montonio’s shipping platform can automatically calculate dimensional weight, ensuring you don’t pay more than necessary. Plus, smaller, optimised packages reduce the risk of damage, improving customer satisfaction.
Consolidate shipments
If possible, consolidating orders into fewer shipments can save on both shipping and handling costs. For instance, instead of sending out two separate shipments for multiple items, bundle them together. Montonio’s system makes it easy to manage orders and group them efficiently, minimising the number of shipments and associated fees.
Local pickup or delivery options
For businesses located in densely populated areas, offering local delivery or pickup is an excellent way to reduce shipping costs entirely. This approach also fosters a stronger local customer base. Montonio supports local delivery options through its shipping partners, making it easy for customers to choose the pickup option at checkout.
Automate shipping processes
Automation is key to reducing shipping errors and saving time. Montonio’s platform automates label printing, shipment tracking, and order management, ensuring that every step of the shipping process runs smoothly. This reduces manual input, saving both time and money while minimising costly errors.
How Montonio simplifies ecommerce shipping
Montonio’s platform is tailored to the needs of Baltic e-commerce businesses, integrating seamlessly with carriers like Omniva, DPD, and Itella to create an all-in-one shipping solution. By automating key tasks such as label printing, shipment creation, and offering real-time rate comparisons, Montonio helps businesses minimise shipping errors, lower costs, and ensure timely deliveries.
Additionally, Montonio’s integrations with popular e-commerce platforms like WooCommerce streamline the entire checkout and fulfilment process. Businesses can efficiently manage local and international shipments, offering customers transparent and reliable shipping options without getting bogged down in logistics.
This end-to-end shipping solution is designed to scale alongside your business, allowing you to focus on growth while maintaining customer satisfaction. Whether you need to reduce shipping costs, optimise logistics, or improve delivery experiences, Montonio equips you with the tools you need to thrive in a competitive e-commerce landscape.