Rising shipping costs threaten ecommerce business profits across the UK

Running an ecommerce business today can be tough, especially with high competition and supply chain volatility.

However, new research from technology platform Fulfilment.com reveals that rising shipping costs are becoming the real threat to online stores in 2026.

The increasing rates from major carriers are turning delivery costs into a growing hidden threat for SMEs, ultimately impacting profitability, customer loyalty, and long-term growth.

From last-mile delivery spikes to global trade disruptions, understanding these cost pressures and adapting to them could mean the difference between staying competitive and losing market share.

What’s driving shipping costs higher?

For ecommerce businesses, higher shipping costs are eating into profit margins, affecting pricing strategies, and even influencing customer satisfaction.

According to data from Fulfillment.com, shipping costs now make up a significantly larger share of ecommerce expenses, representing 15%-25% of total operational costs.

A notable part of this is last mile delivery cost, which accounts for 53% of total shipping costs. According to Parcel and Postal Technology, 84% of UK and Europe-based businesses faced a cost increase of over 10% for last mile delivery in 2025.

There are several factors that are causing this significant increase. Most notably, with US President Donald Trump threatening to impose tariffs of up to 25% on a range of imported goods, businesses are facing higher expenses that are being passed down the supply chain. 

Moreover, for online stores exporting to the US, new taxes on sending low-value parcels (under $100) mean that businesses are paying higher costs for even modest shipments, making it harder to maintain healthy profit margins.

Brexit has also added to the rising costs, with IPE reporting that 32.7% of retailers and 25.6% of manufacturers say that exporting to the EU has become more expensive since the UK left the European Union.

The impact of price hikes on SMEs and customer experience

Unsurprisingly, the ongoing increase in shipping costs has had a knock-on effect for ecommerce businesses and online retailers across the UK.

According to a survey reported by Insider Media, 38% of small businesses have reduced or stopped shipping internationally completely, with rising costs cited as the main reason. It also found that 40% of SMEs reported “increasing cost of goods and services” as the most significant financial challenge they currently face.

These price hikes are also having a significant impact on customer experience, as 58% of consumers cite high delivery costs as their biggest frustration when shopping online. Additionally, a report by Sendcloud found that 78.5% of UK shoppers admit to abandoning their carts because of high shipping prices.

James Olson, Ecommerce and Logistics Expert at Fulfilment.com, says: “Rising shipping costs are one of the quiet crises facing small online sellers in 2026. Retailers can’t ignore pricing changes that chip away at profitability.

“But the good news is that there are proactive strategies to reduce fulfilment costs without slowing delivery or degrading customer experience.”

How can SMEs cut costs without slowing down on delivery?

Customer expectations continue to favour free delivery, with Sendcloud reporting that 85.3% of shoppers would choose free shipping over faster delivery.

But how can sellers meet this demand without sacrificing profit margins?

A good approach is not to rely on a single carrier, but to negotiate across multiple networks to secure the best rates for each parcel type, weight tier, and destination. 

Rate shopping software like EasyPost and ShipperHQ also lets you compare live shipping rates from multiple carriers, choose the most cost-effective option, and find the fastest or cheapest service for each order.

Additionally, with many shipping charges now coming from dimensional weight pricing, ecommerce businesses can compromise by keeping packaging as compact as possible (while still protecting your products) and use certified measuring tools or software to get accurate dimensions so they can challenge any incorrect charges.

Placing inventory closer to your main customers can also cut time and costs. This can be done by using multiple warehouses to send goods, partnering with 3PL fulfilment centres near major markets, or using marketplace fulfilment services (such as Fulfilment by Amazon) to take advantage of their networks.

“Today’s successful sellers think in terms of fulfilment economics, not just order fulfilment,” Olsen adds. “That means integrating fulfilment cost into product pricing, customer segmentation, and channel strategy. When fulfilment is optimised, retailers can protect margins and deliver the experiences customers expect.”