Shipping: Where Your eCommerce Store Really Delivers*
Once your online store is set up and ready to trade there’s a real danger that shipping is left as an afterthought. But it can be the difference between make or break for your business.
Done right, shipping can give you a competitive advantage that sees customers eagerly returning for those valuable repeat purchases.
What happens after they click 'Buy'?
First, let’s get familiarised with some common terms to do with delivery and how they differ - carriers, methods, and fulfilment.
A shipping carrier is a company that physically delivers your products to your customers’ doorsteps, like DHL, FedEx, and UPS.
Shipping methods are the different delivery options offered at purchase, and the associated rates. For instance, $5.00 three-day shipping, or $15.00 next-day delivery. These methods and costs are usually determined by the carriers you work with and you need to factor in how you pass them on.
Shipping fulfilment is the entire delivery process: it starts with determining costs, printing labels and choosing packaging, and then there’s tracking and status updates, final delivery, and everything in between.
How much should you charge for shipping?
There are many factors to consider when calculating your shipping rates, including…
What You Are Shipping
Weight If you are selling physical products, you should obviously know the weight of each item and list it with any other dimensions in the product description.
Packaging You can order free packaging from some carriers, or consider investing in branded packaging. (People will share anything on social media that catches their eye – send them a groovy enough shipping box and *bingo* - free publicity!)
How You Are Shipping
Free shipping can mean happier customers - but lower margins. Do you include the cost of shipping in your product’s price? Or keep your pricing low and shipping free in the hope it generates increased sales?
Live rates calculate shipping fees based on size, weight, and distance, which are synced in real time with your carrier based on what they charge. This can be a popular choice because it offers a combination of choice and transparency. Customers can see the range of shipping options from delivery times to costs.
Incidentally, FedEx, USPS, and UPS charge by dimensional weight (DIM) for their services.
This is based on the package size (Length x Width x Height) rather than its actual weight. So, you’ll be charged more for large, light parcels and less for smaller, heavier parcels.
Table rates are where you create your own range of shipping charges based on variables like product prices, size and weight, order totals, and destinations. This way you control the most efficient and cost-effective methods for you and the customer. And you can customise attractive offers like free shipping for large or local purchases.
Flat rate shipping works best when you have a fairly standard product line of items that have similar sizes and weights. It can become complicated and less effective though if you sell a wide variety of products with different sizes and weights.
Other Fulfilment Factors
Insurance Depending on what you’re selling and its value, shipping insurance can offer a great deal of security.
With most carriers, insurance and tracking is relatively inexpensive and offers compensation if one of your packages get lost or damaged. Some shipping services like UPS and USPS Priority Mail include complimentary coverage for up to $100, and that coverage can be up to $200 in some cases.
Have you calculated your margins?
Your profit margins are a pivotal point – some would say the only point – for success in eCommerce. Because shipping represents such a significant expense, if you don’t tot up your figures, you could end up losing money.
Here's a quick example of how you could calculate your total price to include the cost of shipping.
Cost of product: $10
Shipping costs: $7.50
Credit card fee: $2.50
Profit margin: 50%
Total price: $30.75
We bet a lot of eCommerce start-ups are surprised by how quickly those little charges add up.
And ponder this: Most customers will check your returns policy before buying
Because your customer can’t see and touch your product, they feel a sense of risk in the purchase decision.
It’ll pay to reduce this risk with a customer-focused returns policy and increase their likelihood of becoming repeat customers.
Whew! There’s more to this than meets the eye, isn’t there?
So far, we’ve just talked about things that affect costs – but there are a few other questions you’ll need to ask yourself when shipping your product, such as:
· Is a guaranteed delivery or delivery commitment required?
· Is tracking required?
· Is the recipient address commercial or residential?
· Is signature confirmation or any other service add-on required?
· Are you shipping alcohol or hazardous materials?
Are you selling internationally? You may be up for additional charges and requirements like Value Added Tax, duties and tariffs, and customs declarations. (Did you know it is illegal to ship clocks to Italy?)
These are all things that you should consider and their need will vary depending on your business. So, a bit of research on these topics is wise so you can start to ship with confidence.
For example, tracking is probably now considered to be an essential part of the customer experience. Buyers have come to expect estimated delivery dates, and frequent updates on the order status such as notification of any delays.
Again, major carriers generally offer this service or you can shop around for your own shipment tracking software.
The Big Takeout: Have your shipping wrapped up* from the word ‘Go’
We can’t stress enough how important it is to have a shipping fulfilment strategy that delights customers all the way through your sales funnel, from the time they add your product to their cart to its arrival on their doorstep.
Be ready to adapt as you go and make changes as you learn about your customers. You’ll soon settle on the options that are both good for continued customer relations and your bottom line.
*Sorry, those are terrible puns…
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