Why is Shipping so Expensive in Canada?
“Shipping is so affordable in Canada” - a sentence I can guarantee you’ve never heard from a Canadian business owner.
Yes, it’s costly and annoying but it’s understandable. Canada is the 2nd largest country in the world by total area but has a population of only 38 million people. What this means for the carriers is that they have to cover a very large area to deliver to people. You can argue that the US (3rd largest) is almost as big as Canada so rates should be higher there too. Keep in mind that their population is 8x bigger (330,000,000) compared to Canada meaning higher shipping volumes allowing resources to be well distributed and ultimately resulting in a lower operational and delivery cost for the carriers.
Just like customers want cheaper products, sellers want cheaper shipping. If you are a Canadian business that ships products to customers, you are probably well aware of the high shipping costs we pay compared to the rest of the world. Even compared to our neighbours south of the border, we are paying a lot more. This is especially true for those sellers who are shipping “small items”.
Let’s take an example of somebody who sells Earphones.
Most earphones weigh around 1 oz or 28 grams.
If you are shipping earphones from Toronto to Toronto, it will cost$11.50 CAD
If you are shipping the same earphones from New York to New York, it will cost ~$4 CAD
That’s a difference of $7.50. That’s a lot! This can make the difference between having a business and not having a business.
Luckily, we’re going to explore an option in the next section helping you bring this cost from $11.50 to $2 (regardless of where you are shipping in Canada) saving you a lot of money.
How to Ship for Cheap with Canada Post
As a seller, you can’t ignore the shipping cost and you have to account for it somehow. You can charge your customer for shipping or you can add it into the selling price of the item. Either way, it’s something that needs to be addressed.
We all know letters and packages can be sent via Canada Post but not everyone knows about Oversize Lettermail.
Oversize Lettermail is a lettermail (stamped postage) category that lets you ship items that fit within the following range:
Now, isn’t this interesting. Pay attention to the Height/Depth limit (0.8 inches OR 2cm). According to Canada Post, any item that you can fit that’s under 0.8 in or 2cm in depth/height, you can ship as Oversize Lettermail!
What does this mean?
If you were shipping earphones inside an envelope instead of a box, you would only have to pay ~$2 for shipping compared to $11.50. That’s savings of $9.50 per order. That’s a pretty big deal if you ask me.
I know what you’re thinking, an envelope doesn’t look that good and I agree. The good news is that it doesn’t have to be an envelope. You can also use other packaging such as a kraft or poly bubble mailer. The only rule is that you CAN NOT exceed 0.8 inches or 2cm in depth.
If you choose to use a bubble mailer, keep in mind that it will have its own depth which you need to account for when calculating the size. Envelopes on the other hand are very thin and don’t interfere with the size requirement.
There’s a tradeoff between package appeal and size and ultimately, you have to make the choice between which kind of packaging suits your product/business.
With oversize lettermail, there is a weight limit of 500 grams. There are different prices for each of the following weight ranges:
- Up to 100g = $1.94
- 101-200g = $3.19
- 201-300g = $4.44
- 301-400g = $5.09
- 401-500g = $5.47
I think this is pretty fair. Most small items should fit within that weight limit.
Some examples of items this will work for:
- Phone Accessories
- Makeup Items
- Flash Drives
- Plus 1000s of other items (as long as it doesn’t exceed the size)
What happens if I go over the size limit?
If you go over the size limit, you can not ship using oversize lettermail. At that point, you will have to use a parcel service.
If you decide to ship even when you know you’re exceeding the size limit, you could probably get away with a few but Canada Post will return your shipments eventually and that will result in a lot of unhappy customers.
I can’t stress it enough, it’s important to make sure you do not exceed the size limit.
How to be sure your item fits?
There’s a couple of ways to make sure your item fits the guidelines.
- Use a ruler/measuring tape
- Ask Canada Post
- Invest in a Size Checker
Use a Ruler/Measuring Tape
This one is pretty straight forward. You probably have these lying around your house somewhere. If not, just go to the nearest Dollar Store.
Ask Canada Post
Canada Post has a size checker for lettermail. When they are unsure if a package is eligible, they pass it through the slot. If it passes, they’ll ship it. If it doesn’t they’ll send it back to the sender. When going to drop off your orders, you can ask them to use the checker to ensure your package fits.
Invest in a Oversize Checker - $15
Canada Post doesn’t sell the tool they use but luckily I found someone who does. Check out this listing on Etsy: https://www.etsy.com/ca/listing/608643075/slot-of-doom-lettermail-sizer-for?ga_order=most_relevant&ga_search_type=all&ga_view_type=gallery&ga_search_query=slot+of+doom&ref=sr_gallery-1-1&organic_search_click=1&bes=1
You can be sure if the item fits before taking it to the Post Office and even before packaging it.
This wasn’t around when I used to sell products online but lucky for you, you can invest in something like this if you’re a fan of saving time.
The Drawbacks of Oversized Lettermail
The benefit is huge and obvious - $10 saved per order. Who wouldn’t want that?
Well everyone would want that but oversize may not be the best fit for all items. Let’s start by discussing some of the most common problems:
- Size & Weight Limits
- Fragile Items
- No Tracking
Size & Weight Limits
This one is pretty obvious and has been discussed earlier. The size limitation will not allow for big items to be shipped with OS lettermail. Items over 500 grams can not be shipped either.
Items that can easily break shouldn’t be shipped with Oversize Lettermail. They can easily break as Canada Post will have it mixed in with other letters and sometimes they struggle to fit items together.
If you’re selling items that can easily break if bent, I’d stay away.
This is the biggest problem with Oversize Lettermail. You will not be able to track orders because you are using stamped postage instead of a shipping label. Stamps do not come with tracking information lol.
You will have to let your customers know that tracking information is not available if they place orders with you. Further, if customers say they did not get the package, you have no way to provide it and will likely have to reimburse them or provide a replacement.
When I was selling items online, if the order was less than $50, I would ship it without tracking.
If it was $50 or more, I’d ship it with tracking.
Is it worth paying $10 extra and getting tracking information or is it worth saving $10 and having no tracking? This is a decision you have to make.
How I used Oversize Lettermail to Start my Business
I got started with eCommerce in Spring of 2013. At the time, I was selling iPhone cases on eBay. This was before the iPhone 5S came out (so yes, Dinosaur times)
At the time, I was buying cases for $4 and selling them for $15. Even though I was selling for a gross margin of $11, I was only pocketing about $5 per case sold. The reason is because there’s a lot of hidden costs. Aside from the case, I also had to pay:
- eBay Fees ~$3/case
- PayPal Fees ~ $1/case
- Packaging Cost (Bubble Mailers) - ~0.20/package
- Shipping Cost!!!! ~$1.50 (yes it was a bit cheaper back then)
- Additional Cost = ~$6
- Total Cost = $10
- Net Profit = $15 - $6 - $4 = $5
There were some cases which were making me $1/sale and some that were making me $7/sale as well. Either way, I was happy because I was averaging 50 orders per day and the small profits do add up.
If oversize lettermail did not exist, I would be paying $10 in shipping cost. Considering this same calculation, if my shipping cost increases from $1.50 to $10, I would suffer a loss of $4 for each item sold. An alternate solution would be increasing the price or charging the customer for the shipping but that also comes with problems.
To make $5, I would need to increase the sale price by $10. At $15/case, customers were buying but it would be a much harder sale at $25/case. I’m sure I would’ve still got orders but the number of orders would have dropped significantly. I rather be selling more units because that gives me added benefits such as purchasing power with my supplier helping me negotiate better rates.
Because I was using Oversize Lettermail, I was not able to provide my customers with tracking information.If someone said they didn’t get their package, I would have to take the hit on that. I made the executive decision to continue selling for the cheaper price rather than increasing the cost. If somebody claimed they didn’t get their package, I would provide them a replacement free of charge.
Oversize Lettermail is not a good fit for everyone. I was extremely lucky because I was selling a non-expensive, small item that wasn’t fragile. If it wasn’t for me using Canada Post Oversize Lettermail, I would not have been able to sell cases at all.
How To Get Started with Oversize Lettermail?
It’s really easy to get started with oversize lettermail. You don’t need to create an account anywhere and the only thing you need to do is purchase stamps. You can purchase stamps at any Canada Post location. You can either purchase individual stamps or purchase a coil. The advantage of purchasing stamps beforehand is that you don’t need to stand in line every time you visit the post office.
Once your item is packaged inside an envelope or bubble mailer with the address labels, put the stamp on and drop it off to a Canada Post location.
How to Ship Items using Stamps?
I find following this order the most efficient:
- Print address labels
- Spread address labels on table
- Put items sold on top of address labels
- Put promotional Inserts (optional) on top of address label
- Add item sold and promotional insert into packaging (use envelope or bubble mailer)
- Use slot checker to make sure you don’t go over the size
- Weigh package to make sure you don’t go over the weight
- Close the package
- Paste address label on package
- Add stamp on package
Once your items are all packed and stamped, simply drop off to a Canada Post location or drop-off bin.