Starting a Business

Ecommerce Practices: Choosing a Shipping Strategy

Written by Dan Radak

Every ecommerce business owner is familiar with this story: a new customer visits your website, finds a product they want at a fair price and adds it to their shopping cart. When proceed to checkout, they see the shipping rate they don’t like and suddenly abandon their shopping cart, and probably go looking for a similar product elsewhere.

According to SaleCycle, the global cart abandonment rate for the second quarter in 2017 is 76.9%. The reasons behind this can be different, but slow delivery, additional shipping costs and other freight-related issues are at the top of the list. To minimize the shopping cart abandonment rate on your online store, you need to organize your shipping process better. Luckily, there are some effective strategies that can help you do better business and rise in the eyes of your customers.

1. Free shipping

Offering free shipping can be a double-edged blade – you’ll definitely get your customer’s attention, but it can cut into your profits (depending on your margins). Most people abandon their carts because they find shipping fees to be too high. By offering free shipping (just make sure you offer it just for domestic orders), you’ll definitely persuade your customers to proceed with their purchases. You’ll eventually see an increase in sales and profit after adding a free shipping banner on your website.

In order to determine whether it would be a good choice to offer free shipping or not depends on your margins and the niche you are operating in. If you conclude that you’re not in a position to offer free shipping for all orders, set the minimum number of items or minimum order amount a customer needs to buy to be awarded free shipping.

2. Flat rates

The next online store shipping strategy is offering flat rates for weight ranges and order totals, or for every package. However, since you’ll have to determine the average cost of shipping a package, this method requires some additional preparation. By determining the average cost, you’ll define the ideal shipping price and not under- or over-charge the customer. USPS is often the choice of many ecommerce businesses, because their services are quite affordable and allow them to send multiple items for one flat rate (no matter the overall weight).

3. Live rates

Consider opting for live rates directly from a carrier service if you want to offer the best possible rates to your customers and still be able to cover your costs. As you’ll charge your customer the same amount you are charged by the carrier, this might not be the best promotional tool. The rates may vary depending on the customer’s order and their distance from the warehouse. So, if your storage is located in Sydney, you should research all the possible Sydney freight services to get the best shipping rates. If you’re operating in a competitive market, it’s an effective strategy.

4. Table rates

Shipping at table rates is more complex than flat rates because it allows you to set complex rules for your shipping (globally). You’ll be able to define multiple shipping rates based on the product, weight, price, class, zone and destination. Depending on your storage location, customers who live in the area will be charged a certain fee and the shipping rate will get higher the further they live from the fulfillment center.

Every business is different, and in order to find the best shipping strategy for your ecommerce business, you need to find the statistics on your products, explore all the possible strategies, and find out what works best for you through testing. It is of utmost importance for you as a store owner to find the most adequate way to organize your shipping process. Whether it will include flat rates or be completely free depends on the niche you’re operating in and the competitiveness of that marketplace.

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Dan Radak

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Great blog that I enjoyed reading.

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