Your methods and costs can be a deciding factor for customers choosing your company over a competitor. 80% of online shoppers consider price and shipping costs to be deciding factors, and 66% have decided not to buy an item online due to delivery costs.
Online shoppers want their purchases to be delivered as quickly as possible, for as cheap as possible.
There are several standard shipping options you can offer your customers, including free, flat rate, and real-cost, or same-day delivery. The method you choose will depend on how much you want to spend and what your competitors are doing.
If you charge too much, you risk pricing yourself out of the market. If you charge too little, however, you risk cutting into your profit margins.
You have several methods to choose from, including ground and air. Ground is usually the cheapest option, but air is usually the fastest.
When you’re determining how much it’ll cost to ship, the actual weight and dimensional weight of the package will be determining factors.
The actual weight is the weight of the package, rounded up to the next pound.
The dimensional weight is the density. You can calculate the dimensional weight of your package by multiplying the length by the width by the height, then dividing that by 166 for domestic packages (you’ll divide by 139 for international packages). Your measurements should all be in inches.
The billable weight of your package is whichever is greater, actual weight or dimensional weight.
Choosing a Shipping Service Provider
When you’re choosing a shipping service provider, don’t just accept the prices listed on the company’s website. UPS, FedEx, and USPS have small business representatives who can help you get the best price. Don’t assume that you’re too small to ask for a discount.
Create an online account for whichever service provider you choose to track how much you ship. The more you ship, the more leverage you have to negotiate. An online account will also help you schedule pick-ups to save you from having to bring packages to a store or drop-off location.
Many service providers will offer flat rate boxes for free, which can save you money on fees and supplies.
Shop around and choose the service provider who will deliver your packages the fastest for the lowest cost.
Free Shipping Best Practices
If you can’t afford to offer free shipping for all your customers, you can still take steps to offer it for free or low cost on most orders.
Set Minimum Thresholds
Instead of offering free shipping on every order, set a minimum order value to qualify. This encourages your customers to make larger orders to reach the free shipping price point.
You can also consider offering it only when certain items are purchased.
Offer Seasonal Free Shipping
Instead of offering free shipping year-round, offer it only during peak seasons. 40% of online sales happen during the fourth quarter, making online shopping more competitive during the holidays. To set yourself apart from your competitors, offer free shipping during the holidays.
Free Shipping for Loyal Customers
Instead of offering free shipping for all your customers, only offer it only to loyal customers. Ask customers to pay a small annual fee to become a loyalty member. The annual fee will help you offset your costs.
Amazon Prime is a great example of offering free shipping only to loyalty members.
Embed Shipping Costs into Your Product Costs
If you embed shipping costs into your product costs, your customers will think they’re getting it for free, but you won’t have to absorb the shipping cost.
If you choose to do this, be careful because consumers can easily track product prices across several different stores.
Offer Flat Rate Shipping
An alternative to offering free shipping is offering flat rate. Customers often feel that shipping costs are randomly generated, so offering flat rate makes it easy for customers to determine how much their order will cost before checking out.
Like free shipping minimums, flat rate encourages your customers to place larger orders to take advantage of the low rate. On the other hand, flat rate discourages customers who only want to purchase one item or place a small order.