, Retail
A candle maker in Norwich worked out her delivery cost from the kitchen scales. A boxed three-wick candle weighed 640g, the rate card said under 1kg, and she built her prices on that. Her first carrier invoice came back with surcharges on roughly a fifth of her consignments. The box was 30cm by 30cm by 12cm, packed with paper, and the carrier was not charging her for the weight. It was charging her for the space on the van.
She had also promised free delivery over £40 on a product with a £12 average order value, which meant the customers taking her up on it were the ones she made least on.
Carriers charge for space, not for weight
Every parcel carrier calculates a volumetric weight alongside the actual weight and bills the greater of the two. The formula is length times width times height in centimetres, divided by a divisor that the carrier sets. Divisors differ between carriers and between services, and they get revised, so take the divisor off your own contract rather than from a blog.
The consequence is simple. A large light parcel is charged as though it were a small heavy one. Cutting 5cm off each dimension of a box can move it down a price band without removing a gram.
This makes packaging a pricing decision rather than a stationery decision. Boxes that fit the product, void fill that is not air, and a small range of standard box sizes you can quote accurately. If a product can go in a letterbox-sized package rather than a parcel, the difference in cost per order is usually larger than your margin on a small item.
Zones are the second variable. A national rate card is rarely national. Expect surcharges for the Scottish Highlands and islands, the Isle of Man, the Isles of Scilly, and Northern Ireland, and expect some carriers to treat parts of that list as a different service altogether with longer transit times. If a meaningful share of your orders go to those postcodes and you charge one flat delivery rate to everyone, those orders are subsidised by everyone else.
Then there are the accessorials: fuel surcharge, which moves monthly, remote area fees, redelivery, address correction, oversize, and a peak surcharge in the run-up to Christmas. Ask for the full schedule of surcharges before you sign, not just the headline rate.
The law makes the delivery your problem, not the customer's
Two rules matter here and both sit in consumer legislation rather than in your carrier contract.
Under the Consumer Rights Act 2015, where you sell to a consumer, the goods remain at your risk until they come into the physical possession of the consumer or a person they have identified to take delivery. If the courier loses it, damages it, or leaves it in a bin that is then emptied, that is your loss to make good to the customer. The customer's contract is with you. Yours is with the carrier, and the two are separate arguments.
The same Act sets a default delivery period: without undue delay and in any event within 30 days, unless you have agreed something else. Your published delivery promise is part of that agreement, which is a reason to publish a promise you can keep in a bad week rather than one that describes a good one.
Separately, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require you to set out delivery costs and arrangements before the order is placed, and they give most consumers 14 days from receipt to cancel. Your delivery cost is generally refundable on cancellation at your basic rate, though the return carriage can be the customer's if you have said so clearly.
A claim is won or lost when you pack the parcel
Carriers refuse claims for predictable reasons, and most of them are things you control.
Packaging is the first. Carrier conditions almost always exclude damage where the packaging was inadequate for a parcel handling network, and their definition of adequate is stricter than yours. Photograph how you pack a fragile item and keep the images. If you can describe a documented packing standard, you argue from a stronger position.
The second is evidence of value. A claim pays your cost, not your retail price, and you will be asked to prove it with a purchase invoice or a costed bill of materials. Some categories are excluded outright: glass, alcohol, electronics, jewellery, perishables and anything on the carrier's prohibited list, which is longer than most people read.
The third is time. Claims windows are short, often a matter of days after the expected delivery date for a loss and sometimes 24 hours to report visible damage. Diary them.
The fourth is liability limits. Standard carrier liability per parcel is typically low and is usually tied to weight, not value. If you are shipping items worth more than the default cover, you either buy enhanced cover per consignment, insure the risk yourself and accept the occasional write-off, or do not ship that item by that service. Working out which is cheaper is a straightforward arithmetic exercise, and for most retailers self-insuring the mid-value range is the right answer because per-parcel cover is priced to be profitable for the carrier.
A practical point that saves arguments: most consumer parcel services now capture a photograph at the doorstep rather than a signature. That photograph is your evidence in a not-received dispute, and it is also the thing a customer will dispute. Keep the tracking data, because a chargeback is decided on documentation.
Free delivery works when it moves the basket, not when it moves the order
Free delivery over a threshold is not generosity. It is a mechanism to raise average order value, and it only works if the threshold is set above where people naturally stop.
Take your average order value and your gross margin percentage. The threshold needs to be high enough that reaching it requires adding an item, and the margin on that added item needs to cover the delivery cost you have absorbed. If your average order is £28 and your margin is 45%, a threshold of £30 hands away delivery on orders you were getting anyway. A threshold of £45 asks the customer to add roughly £17 of goods, which earns you around £7.65 of gross margin against a delivery cost of perhaps £4. That works.
The other half is the promise. A slower service that arrives when you said it would beats a next-day service that misses once a fortnight, because the second one generates support contacts, refunds and reviews. Offer a paid upgrade for people in a hurry and make the standard option honest.
Two carriers is worth the administrative cost once you are past a few hundred parcels a month. Not to split volume evenly, but so that a depot problem or a strike is a bad week rather than a closed business.
Where this shows up in the game
E-commerce is one of the five business types in Business Baron's free game, so you can sell online at no cost. Every trade is simulated as that trade, and for an online shop the cost of getting a parcel to the door is part of the margin rather than an afterthought. A refund for a parcel that never arrived comes out of the same bank account as everything else.