Keeping a Lid on Shipping Costs

There are a lot of variables in the online shopping experience, both for you as the merchant and for the individuals shopping in your e-store. Yet, the one variable that can have the greatest impact on your sales success is shipping. Ecommerce is about convenience and getting a good deal, but shipping choices and costs can ruin this experience. Creating a quality experience is important for encouraging customers to shop on your website. Especially, because 79 percent of Americans make purchases online. That’s roughly eight in ten people shopping online

Opciones de Envío

Shipping is complicated because there are so many variables, all of which may impact the cost of getting your box from point A to point B. You have to factor in quantity, size, weight, contents, packing requirements, destination address, speed, insurance, tracking, and carrier. Change one of these variables, and the shipping cost changes.
Here are a few ways you can approach it:
  • Flat rates. If your products are limited or fairly uniform in size and weight, you can set a flat rate for the entire order. Customers may be encouraged to buy more if they know it won’t cost more in shipping. You may lose money on some orders but make a little more on others. If you calculate correctly, your costs will balance out over time.
  • Tiered rates. You can offer several rates based on certain variables, such as weight limits or total order cost. This provides more flexibility to charge shipping rates closer to your actual cost.
  • Live rates. Even more accurate than tiered rates, live rates capture actual rates from your shipping provider based on order details. The downside is your customer doesn’t know how much shipping will be until they are almost finished with their purchase. If the cost is deemed too high, they might abandon their cart.
  • Free shipping. More and more consumers are expecting free shipping. According to FedEx, 75% of consumers are likely to abandon their online carts if they can’t get free shipping. If you can swing it by building average shipping costs into your product pricing, free shipping may increase your sales volume.

Shipping Tips

  • Limit shipping options. Too many options will be confusing to your customers and unnecessarily complicate the checkout process. Try to limit your shipping choices to no more than three options.
  • Be transparent. Give customers a sense of what shipping will cost before they start the checkout process. Remember, shipping costs are a major reason for cart abandonment so manage expectations as early in the process as possible.
  • Offer delivery time estimates. Once a shopper buys something, they want to know when they will get it. Just make sure to err on the side of underestimating.
  • Consider the U.S. Postal Service. USPS often has lower rates than UPS or FedEx, and they still deliver on Saturday for no extra cost. Their flat rate boxes can be a great way to ship heavy items.
  • Be fast. Shipping that takes more than a week will cause many shoppers to think twice before purchasing. If you have a retail location, offer the option for in-store pickup.

Game Plan

  • Retailers can make money, lose money and break even when it comes to shipping costs. Try to find that break-even balance that covers your costs and doesn’t drive customers away.
  • Research your online competitors to see what types of shipping options they are offering and what they are charging.
  • Leverage your own online shopping experiences and make a list of your shipping likes and dislikes. There’s a good chance that what you think of as a good shipping experience will be similar to what your customers want.
  • You can compare shipping rates online at USPS, UPS, FedEx and other shippers. Just put in your box dimensions and weights, and try different address destinations and speeds to build a quick comparison chart. Periodically update this chart, as shipping rates can change over time.
Need Business Insurance?

Need Business Insurance?

For more than 200 years businesses have trusted The Hartford. We can help you get the right coverage with an online quote.
The content displayed is for information only and does not constitute an endorsement by, or represent the view of, The Hartford.