Welcome to this episode of Woman Powering e-Commerce. Join me every Tuesday and Thursday as I take you behind the scenes of my journey as a female e-commerce entrepreneur. Together we'll explore the highs, the lows inspiring you to take action and achieve your own business goals. So let's get started.
So what are we going to talk about today? I really want to talk about shipping costs and that's because when I started my e-commerce business, we started shipping internationally and we realized that shipping can become an issue pretty quickly. For example, we were shipping from Canada to Australia. So let's say we were shipping a $30 bottle and we're in the pet health industry, so of course our customers, when their pet has a health issue, well of course they want to have something to solve their pet's problems very quickly. This means they were willing to pay up to $70 in shipping for a product as low as $30 of value.
So that's a lot. I mean, that just shows you how much they valued the quick shipping. And here's what happened. It arrived late sometimes our customers, made us responsible for it because I mean, that makes sense. They're not going to blame the carrier, they're going to really make the company responsible for it, which is normal. So as a company, put it this way, you have a $30 sale. A customer paid $70 shipping, so it arrived late. What do you think they asked for? Since they made us responsible, they asked us for a refund for the shipping they paid, the extra shipping to get it faster, which is totally fine and of course we refunded that shipping, but that really puts us, really the bottom line is definitely negative there. So that just became a problem and we were seeing that more and more frequently.
So we just decided to see is there anything that we can do with it? Is there a solution to our problem? We cannot be a viable company if we're going to have to refund high shipping fees like that for a very small product that we sold. I mean, that will not, definitely not make us profitable. So that's when we did some research and learn about the late delivery guarantees. So what this is, is that carriers will allow you to claim a refund for a package that was delivered late. So, we were really excited to know that. And honestly, after speaking to a lot of e-commerce businesses at the time, not a lot of them knew about this. And still today, I'm talking about this being like five years or more ago, I think more than that. And even today a lot of businesses don't even know about this, but it's getting a little bit more known.
So that's what we started doing. We started asking for refunds to the carrier directly for not having delivered a package in the time they promised. That way if a customer asked us to refund a shipping fee they paid for extra to get it more quickly, then we could just go back, turn back to the carrier and ask them for the refund. So we started doing that, and then we learned that there are actually many more other saving opportunities with shipping. So I don't know where you're listening from, but in Canada, the shipping fees are really, really high. If we're going to compare, for example, to the US, it's not even competitive.
So if we're going to want to grow as a business but have to put so much money and inject so much money in shipping, that just doesn't leave us this whole other budget for marketing. We can re-inject a lot of money that we would use in shipping elsewhere, maybe in the US, the US companies have that maybe luxury, I would say, that we don't have for this portion. But that doesn't mean there is not a solution. And we found that. We actually found the solution. There were so many saving opportunities with shipping. Businesses need to learn this. They really do. So like I said, when we learned about this, we were over the top so much that we decided to create a whole company out of this just because we realized that so many businesses could benefit from knowing this. We felt that we needed to educate other businesses. And while doing that, why not make it... Turn it into a company?
So why is what I'm saying important to you? Why do I really want to share this with you today? And make sure you understand this. It's because every penny that you do not spend on shipping, you can reinvest in something far more beneficial, for example, marketing or sales or a new employee that you really need to grow your business okay? So putting more money in shipping will not do anything more for you and cost you more money. But if you can take that, anything you can save from shipping and re-inject it somewhere else, then you've got this. You're definitely winning at the end of the day. So what I want to share with you today is four ways you can save on shipping and I feel that those four ways are actually the four best and easiest ways to save on shipping, and that has helped us up till now.
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So number one, the one I first discovered, the one that we first starting doing for other businesses too, and the one that's the most common, I would say, is late delivered packages. So many entrepreneurs just don't realize how much of their shipping costs they can claim for a refund if delivered late. So some businesses will try and track their late packages, but on their own. So they'll take all the tracking numbers and see which ones arrive late, and if one package arrived late, they can actually claim the refund. But do you have an idea how long this takes? This is very, very... It takes an employee on its own full-time to do this. So it really has to be worth it. And the thing is that if you have a human that does it, there will be mistakes. They will miss out on some opportunities they didn't even know.
And let me add to that, holidays. So if a package, you think a package was delivered late but you forgot to... that it was, today we're actually Labor Day. It was Labor Day so that adds an extra day to the official delivery date, and so you're just wasting some time. Your employee might think, okay, well it's arrived late, then you'll get a response back saying it wasn't. So you can see it can get very complex and long for no reason. So that's why we delivered a delivery tracking system that is far more effective and we learn as we go. We'll learn some exceptions. So we add that to our system. So we have a whole team of developers optimizing our system every day so we are not missing out on a lot of opportunities this way. We're just constantly optimizing and getting better and better results.
So you have no control over delivery timelines. However, you have control over refund claims that you are entitled to for each late delivery. So please, please, please do me a favor track those. You can do it on your own. Yes, but I'm telling you, it's going to take a long time, but it's still worth it to a certain point. But it's definitely something that if you're not doing, you're losing money.
Now number two is paid, but unused shipping labels. Okay, so let me explain what I mean by this. You have an employee, they actually print out their shipping labels daily to package the orders that came in. And for whatever the reason, sometimes it'll happen that we print out a label and for whatever the reason, we do not use it, we just throw it on in the garbage thinking that because we did not actually bring it to the Post Office, didn't get it picked up by the carrier that we will not be charged. Untrue. That is false. As soon as you print out your shipping label, you will be charged. So the best way to avoid this type of loss is to ensure that a package is shipped every time a label is generated. So if a label is generated for testing or as another example, or if a customer modifies an order, it is crucial to add this in your procedures. It is crucial to cancel your shipping label.
So for example, we use ShipStation if, for whatever the reason, we decide not to ship out a package with a certain shipping label, we made sure to void the actual label. And for example, in ShipStation, when you void the label, then you will not be charged. But it's a myth, a misconception that if you do not use your label and just throw it out in your trash and not cancel it in your shipping software, then you will be charged. So that's important to know.
So number three is lost packages. The solution to this issue is actually quite simple. For every lost package, file a claim. Just make sure you put that into your processes, your procedures, your SOPs, as soon as you have a lost package, file the claim, because usually there's always a basic entrance for lost packages that are included for every shipping label. So usually it's about $100. So use it. I mean you pay for it already. So just make sure you include that into your procedures. So here's the thing. If you're filing a lost package, this means that the customer probably called you to tell you, "Hey, my package is lost. What's happening?" And most of the time, because we want to serve the customer really well, we'll just resend them a package. So here's what you got to know.
When you file the claim the carrier, we'll investigate and call the customer and ask them "Did she receive the package?" It's really important to specify in advance to your customer that when the carrier will probably call them or contact them and ask them if they received the package. Please be sure to tell them that it's not because they received the replacement package, that they received the package. You should really specify to the customer that the carrier is actually asking about the original package. So even if they've received the replacement package in the meantime, you want to make sure that they mention that no, they did not receive the original one. That way it'll allow you to get what you requested, which is your claim for the lost package. All right, so that's number three.
Now, last point. Number four, volume metric equivalent. That's a huge term. What does it mean? It took me a while to understand it and I'll try and do my best to explain it and in the end, it's very simple. So it's the dimensional weight, or like I said, volumetric equivalent. So it's basically the space that a box will take up. It's not the weight as in pounds, but it's actually the space that the box will take in the plane or in the actual truck, the FedEx, UPS, DHL truck. This system calculates the space a package takes up. That's what it is. That's what volumetric equivalent means. And this is actually very misunderstood by a lot of e-commerce companies, which means it leads to higher shipping costs. They'll really up your prices. So for example, only a two or three centimeters gap between the product and the box that you did not take into account can increase your shipping fees by almost 10%.
So for example, if you ship out a very small product 2 x 2 x 2 inches and you ship it in a box that's 4 x 4 x 4, I'm just making up boxes, I'm sure it exists, but you're doubling the space that your product really needs almost. So just doing that mistake, it can actually be a very costly mistake. You really want to make sure that you keep the box as small as possible just to what your product really needs, okay, because you will just pay higher shipping costs for no reason. All right, so as a wrap up summary, doing this has definitely saved me a lot of money on shipping. And if you want to start saving money on your shipping costs and you want to learn more about all those opportunities, then I'll just drop a link in the podcast description for you to learn how you can do that for your company without adding more extra tasks to your to-do list or any extra time, it's really a no-brainer. Please do it. Please, please do it.
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