Australia Post is raising its delivery prices this month, in what many are calling a blow to small retail businesses.

Even though it feels like SMBs are facing the full brunt of this increase, it doesn’t have to be that way, according to Shippit co-founder and co-CEO, Rob Hango-Zada, who believes retailers must think agnostically and rely on multiple carriers in their network to mitigate disruptions in the delivery process.

So how can small retailers navigate their way out of these price increases? 

“All businesses have been affected by inflationary pressures in the current economic climate – and delivery services are no different. The domino effect of increased cost often comes at the detriment to retailers, who have to choose between swallowing the increase against already tight margins or passing the cost onto the consumer and potentially impacting demand,” Hango-Zada told Retailbiz.

“At Shippit, we believe a retailer’s delivery proposition is the most effective way to drive customer loyalty and repeat purchases outside of selling great products. Because of this, it is crucial that retailers deeply understand their delivery experience and how to price it effectively.”

Hango-Zada says there are two primary strategies to reduce shipping costs – either renegotiate terms with the current carrier or adopt a multi-carrier approach to take advantage of various rate structures.

“Placing all your trust in one provider during times of high inflation can expose your operations to significant risks. Based on Shippit’s observations, retailers who embrace a multi-carrier service experience two times accelerated growth and save up to 20% on freight costs while maintaining service quality,” he said.

“The distance between the seller and customer, along with the uncertainty surrounding timely deliveries, contribute to increased delivery expenses. As a result, retailers have been relocating their inventory closer to customers through physical stores or micro-fulfilment hubs. Small businesses that cannot afford this approach can consider offering a click-and-collect option through PUDO (Pick-Up Drop-Off) providers as a cost-effective alternative.

“Moreover, it is becoming more common to recover shipping fees by adopting a portfolio-based pricing strategy. This may involve charging for on-demand delivery or implementing fees for customers residing in regional or rural areas, while offering free and expedited delivery for specific order thresholds.

“With the rise of foreign marketplaces and their focus on free, fast and reliable delivery, we are urging all Australian retailers to start obsessing with their delivery experience in this era of uncertainty.”