You might say that eCommerce is flourishing more than it has ever done. Businesses must stay on top of shipping best practices as technology develops and the COVID-19 pandemic continues to influence consumer behavior. shipping strategy.
According to our poll, more than half of customers find in-store shopping unpleasant and have switched to online shopping as a consequence of the pandemic. Long-lasting behavioral changes are being produced by this transition.
Shipping is one issue that comes with increasing eCommerce transactions. It’s typical for a business owner to have reservations regarding shipping and delivery. Even if you may do all in your power to choose, pack, and send your product as soon as a transaction is made, you are still depending on a shipping company to deliver a shipment on time and in excellent shape.
The courier you choose has an impact on how clients perceive your business and how they ultimately feel. But there are steps you may do to control your shipping strategy.
Why you need to choose the right shipping strategies
It’s an all-too-common tale. A new client visits your online shop, discovers a product they want at a price they like, and adds it to their shopping cart. As soon as they reach the checkout page, the shipping price causes them to second-guess their decision.
Suddenly, a product they believed to be reasonably priced seemed to be a little pricey. Next, one of two things takes place:
- They abandon their cart and leave your store
- They decide to continue, despite the increased costs
They often give up on their cart. Unexpected shipping fees are the main cause of shopping cart abandonment, according to a ground-breaking Baymard Institute study.
Because of this, shipping is more than simply a necessary expense for running a business; it also has the potential to have an impact on your company as a whole. With the appropriate shipping strategy in place, you can:
- Create a better customer experience. With your shipping strategy, you can guarantee that customers have a consistent and satisfying shopping experience by establishing clear expectations. Keep in mind to be open and honest about any factors that may cause shipping delays for your customers’ products, including COVID, natural disasters, carrier delays, the effects of high traffic, and other factors.
- Increase your average order value (AOV). Promotions and deals related to shipping are great strategies to get customers to spend more money and can significantly raise the average order value. For instance, you may provide free shipping with a minimum purchase for a certain period or on specific goods.
- Expand your business. You may expand your business by selling to more people in more locations across the world if you have a strategy in place for international shipping.
- Increase your conversions. Customers are more likely to finish their purchase when they know what to anticipate at a price that seems fair. Giving customers choices also increases the likelihood that they will make a purchase; you may let them choose the carrier, the time of delivery, and even the mode of fulfillment, including curbside pickup and local delivery.
💡 TIP: It may assist to increase cart conversion, give clarity and transparency, and boost customer trust by informing customers about shipping speeds at the time of purchase. Find out more about adding shipping speeds from your Shopify admin.
Make price a core component of your shipping strategy
Your shipping strategy’s most important element is how you charge customers for shipping, which has a direct impact on your conversion rate and profit margins. Let’s examine some of the most often-used methods for determining the cost of your e-commerce shipping:
- Offer free shipping. While some retailers offer free shipping on all orders, others have restrictions. For instance, any orders over $100 qualify for free shipping.
- Charge exact costs. Usually, this entails using shipping carrier prices that are correct in real-time and to the cent (for instance, $8.36).
- Provide flat-rate shipping. Every order may have a single flat shipping price applied to it. $10, for instance, for any order delivered anywhere in the United States.
💡 Tip: Use our Beginner’s Guide to Ecommerce Shipping and Fulfillment to assist you in making a few more choices before deciding how you will bill customers. The packing of the goods, the carrier you choose, the necessity for insurance, and tracking may all significantly alter and affect the shipping price.
21% of small and medium-sized online shops in the US offer free shipping on all orders. Free shipping never really is “free,” as it shifts the shipping expense to the customer.
Offering free shipping could or might not make sense for your business, and you may need more customer customers before you can comfortably use this strategy. Free shipping without restrictions is often excellent for high-margin products when you can include shipping costs in the final price of your products.
Free shipping is never truly “free,” as it means the shipping cost has shifted to you.
If you offer a newer retailer, consider your profit margins and price strategy as well as what your rivals are offering. While you don’t have to adopt their shipping strategy, it’s still crucial to offer and provide what makes you feel profitable and at ease as a company owner. Offer free shipping with a need for a minimum purchase to try it out.
You’ll be able to collect information to help you develop your future shipping strategy when you sell your products at this rate: Just who are your customers? What location are they in? They purchase what? The AOV you have is Which products need more money to ship?
It’s time to examine the effect on AOV at this point. The new free shipping promotion caused an offer? If so, check your profit margins to make sure you’re still bringing in money. If not, you could explore increasing product pricing, using a different order minimum, or changing your shipping strategy.
How to offer free shipping and stay profitable
Know your margins
Knowing two numbers—the cost of the shipping order and your profit margins—will enable you to offer free shipping. You may look at your existing AOV and the cost to ship your most popular products and orders even if it’s tough to anticipate this for every future order. You may gauge the likelihood of delivering free shipping based on those projections. Naturally, the expenses will vary from domestic shipping if you depend mostly on it, so be sure to account for it when determining your margins.
💡 Note: To see the profit margin for each product, add the product cost directly to each one if you’re using Shopify. You may use that knowledge to guide your strategic choices on shipping, marketing, and other issues.
Incorporate it into your pricing strategy
Plan for the cost of free shipping when setting your product prices if it is a necessary competitive requirement in your niche. Remember that paying shipping expenses is only one of many factors that might affect your price strategy. You should also think about your market niche, the level of competition, and, once again, how often you want to ship worldwide.
Use free shipping to increase your average order value
The most popular method for providing free shipping above a particular amount is to make a few sales, figure out your average order value, and then provide free shipping on any orders that are X% more than your average order value.
Let’s imagine, for example, that you already have some orders for the following sums:
$86, $112, $71, $65, $105
You may calculate your AOV by adding up all of the transactions and dividing that total (in this example, five) by their sum. That comes to 87.90 dollars. You could wish to offer free shipping on all orders above $100 with this specific example. By increasing your average order size, you’ll be able to make more profit and somewhat offset the cost of free shipping.
One hair and beauty brand company had an $80 minimum purchase requirement to get free shipping. It was discovered that more than half of individuals would get through the shipping step but abandon it at the payment stage—likely as a result of expensive shipping. Since the average cart size for abandoned checkouts was $45, it was decided to change the requirement for free shipping. The brand’s sales virtually quadrupled and its income almost doubled as a consequence.
Optimize your packaging
Fortunately, one aspect of your shipping expenses that you can partially manage is the weight of your packaging. Take into account how much packaging you’ll need to make sure your items reach their destination undamaged.
While you may require bulkier packaging, such as cardboard, to protect sensitive items, you may use lighter packaging, such as a poly mailer, for items like apparel to save money on shipping. Additionally, free packaging offered by carriers like USPS might be advantageous to retailers.
Get competitive shipping rates
Reducing the cost of each shipment when you offer free shipping is a method to make it more financially viable for your company. After all, for more than half of online sellers, shipping is the biggest expenditure. To accomplish so, look into local shipping choices to see if you can find methods to save money by receiving the postal classes and services you need at prices cheaper than retail.
💡 Note: Whether you are providing free shipping, Shopify Shipping provides negotiated rates to assist in offsetting the cost of shipping if you are selling in the US, Canada, or Australia. Study up on Shopify Shipping.
Offer short-term free shipping promotions
Consider using free shipping as a promotional tool to increase sales if it cannot be offered continuously. Use it as a promotion to sell off older goods at full price at a slower time of year, for instance, if you are unable to offer free shipping during your busiest periods. Additionally, many carriers tack on extra fees during the holidays, so you may cancel the deal in time to avoid bearing that extra shipping cost.
Offer free shipping on some products, but not all products
As shipping on items like these may be quite costly and severely reduce your profits, large or especially heavy products like furniture could not fit in with your entire shipping strategy. Make the best choice for your company by doing your research on how much it truly costs to ship each of your products, how your rivals manage shipping, your average order size, and your profit margin.
Your margins, the niche you serve, and what your rivals are doing will determine whether you should provide free shipping on all orders or offer a minimum amount. Your customers’ expectations have a direct influence on your shipping strategy. Free shipping may not be a deal breaker in certain sectors, but it could be anticipated for other products.
Consider using free shipping as a promotional tool to increase sales if it cannot be offered continuously.
It won’t be difficult for consumers to notice if you charge an additional proportion for shipping and handling if you offer high-end or handcrafted one-of-a-kind items.
However, marking up your products to pay to ship may not be the greatest option if you’re in a highly competitive industry where free shipping and the lowest prices are the standards. consumers will notice the higher product cost right away. This is the cost when you must decide between choosing a new alternative or paying for shipping on the majority of your items.
💡 Note: Using shipping profiles in Shopify simplifies this strategy considerably. You may specify shipping prices that will alter automatically for you for certain products, shipping destinations, and shipping zones.
Shipping strategy #2: Charge exact shipping costs
Charge your customers the precise amount it will cost you to ship their order if free shipping isn’t possible or isn’t a choice for every shipment. This will provide your customers with the ability to choose the shipping option that best suits their requirements.
For instance, a customer who needs their order to arrive by a certain date might be willing to pay $20 for expedited shipping, but a customer who would prefer to save money and wait a few extra days might be more likely to convert if they can select a $5 shipping option that will take a little longer.
Brand of hot sauce Queen Majesty uses this strategy. The customer chooses where they want their order sent to once they reach the checkout page, and the calculator handles the rest.
Gaining your clients’ confidence may be accomplished by using a real-time calculator. The calculator serves as proof that you aren’t exaggerating the claimed shipping costs or increasing the cost of your items to meet the expenses.
Additionally, this is a fantastic choice for huge or hefty items that you can’t or don’t want to ship for free.
However, shipping may be expensive, and if a customer can order an identical product from a rival for a higher price that includes shipping, they could do so. It’s crucial to bargain for the greatest prices and work with organizations that can provide you with the finest shipping savings.
To streamline your shipping process and get the best deals from USPS, UPS, or DHL Express in the United States, Canada Post in Canada, and Sendle in Australia, use Shopify Shipping. You can order shipping labels directly on Shopify.
Shipping strategy #3: Offer flat rates
As a third option, you may charge a flat rate for each package or offer flat rates based on order size and weight ranges. One firm that charges a flat rate for shipping is The Sill, a retailer of houseplants. Depending on the order value, the rates change.
To get your average shipping cost for a package using this flat-rate way of billing for shipping, some planning is necessary. In any case, you want to follow this best practice to avoid dramatically undercharging or overcharging your customers.
You’ll probably be a bit over—or under—the real shipping cost when you find the proper flat-rate shipping price, but it should balance out in the end.
Finding the flat rate that works for you is a crucial aspect of flat-rate shipping. It will be necessary to test this to see whether you should base it on order totals, weight ranges, or anything else.
Add alternative delivery methods
Third-party carriers are no longer the exclusive options for e-commerce shipping. With cutting-edge choices like curbside pickup and local delivery, among others, you can control your own shipping. These strategies are a terrific approach to interacting with your local customer base and may draw in nearby customers.
Businesses used physical barriers to prevent person-to-person interaction in the COVID-19 economy. A convenient solution for consumers to keep supporting small companies was required.
Local and curbside pickup
Local and curbside pickup, which removes restrictions on eating out and in-store purchasing, enables customers to buy your products online and visit your store for a speedy pickup—in some cases, they never even have to get out of their car. And because of how convenient they are, they will probably continue to be available after the epidemic.
For online purchases made during the first three months of the epidemic, 40% of shoppers chose curbside pickup.
This capitalizes on the purchase online, pick up in-store (BOPIS) craze. According to a Signifyd study, BOPIS accounted for up to 30% of certain retailers’ online sales in 2018 and 28% of businesses predicted that internet orders picked up in-store may account for up to 20% of all online sales. 40% of shoppers choose a curbside pickup for online purchases in the first three months of the COVID-19 pandemic, and 38% want to do so in the future, according to our consumer trends research on how shopping preferences have evolved throughout the pandemic.
💡 Note: In your Shopify POS, if you choose local pickup, the shipping rate is already set to Free. One approach to offer “free shipping” without bearing the cost is in this fashion.
Another approach to deliver orders directly to nearby customers without employing a third-party shipping provider is via local delivery. According to the results of our poll, 31% of shoppers used local delivery services during the first three months of the epidemic, and this pattern isn’t about to change any time soon.
Delivering orders personally, if you can, may stimulate more local sales by luring customers with the promise of free or discounted delivery, in addition to being an excellent method to save shipping expenses and take shipping into your own hands. You may even use a warehouse and distribute around the neighborhood around it if you don’t have a storefront site.
💡 Note: Want to arrange for local delivery of your online orders? To set up local delivery or local pickup under Admin > Shipping and delivery of your Shopify store, first, confirm that you are eligible to offer local delivery.
Prepare your ecommerce business with a return shipping strategy
No matter the market or niche, a customer may determine after receiving a product that it is not the appropriate fit for them, even with the finest product pages in the world. You must be prepared to handle returns even if the grounds for the return have nothing to do with you or your product.
There is no one ideal way to price return shipping, but there are a few common possibilities you may consider. These options mirror the three primary shipping pricing options you considered when figuring out how much it would cost to ship something out.
- You can offer free return shipping
- You can offer flat-rate return shipping
- You can offer exact cost pricing for return shipping
Our study shows that 36% of consumers want free returns. But for younger firms or those with a high return rate, it isn’t cost-effective and is sometimes impractical.
To obtain a professional opinion on how to handle your return shipping strategy, we chatted with Sharon Reeds, co-founder of Intuitive Shipping. According to Sharon, a flat-rate strategy may be a wonderful way for younger firms or those just beginning to understand how returns will operate to establish expectations and give customers confidence in their returns without requiring them to bear the whole cost.
It’s akin to flat-rate shipping to offer a flat rate for return shipping, but for returns, “says Sharon. “By using this strategy, you may offer a return shipping choice in which the cost is shared equally between the two parties, rather than being borne by either. Your customers will appreciate the reasonable compromise, and they will know upfront how much a return will cost them.
The following questions can help you choose which return shipping option is ideal for your business:
- Which options are financially feasible? This comprises typical information about your margins and shipping expenses as well as how often you anticipate receiving returns. You’ll probably get more returns if you have a lax return policy.
- Which option do you want to offer? Within the group of competitive possibilities you just selected, this is concentrated on the market competition and your customer service strategy.
You may start developing your process for accepting a return after you’ve decided how much you want to price for return shipping. This might include how you interact with your customers about return shipping and how, if at all, you provide them with access to the shipping labels.
💡 Note: Use Shopify to conveniently handle returns from a single location. If you’re a US-based retailer, you may produce USPS return labels for domestic orders and send them to your customers either before or after you’ve filled the order.
However, you should include a step to ensure that everything is understood before customers send their items back when you’re dividing or sharing the cost of return shipping with them.
“I would advise having an email step in place if you are submitting a subsidised refund. Since many consumers, says Sharon, “won’t notice the conditions of the return while they’re purchasing an item,” that is the reason. “Consider it like this: If you send the return label pre-printed, your customer will probably notice it and believe that the shipping is free. They’ll be asking, “Why is there money missing?,” when they submit their return and discover that money has been subtracted from their total.
In this case, more communication may help you provide a better, clearer experience overall.
“In the additional step, you may warn them that the rate of return shipping will be deducted from their overall refund. In this situation, taking an additional step might really ensure that you’re providing a better customer experience”.
Make sure your shipping strategy is right for your business.
Your conversion rates and overall profitability may be significantly impacted by the shipping charges you decide to impose on your customers. You’ll need to choose what will work best for your brand, business, and customers, and you’ll probably need to try out a few different approaches before deciding which is ideal for your business.
Shipping Strategies FAQ
During busy periods like the Christmas season, delivery delays are to be anticipated. However, generally speaking, shipping delays, according to UPS, are often caused by senders attempting to transport illegal products, missing/incomplete/inaccurate paperwork, or big or overweight shipments.
Diversify your shipping providers to reduce shipping delays. Additionally, it’s a good idea to be open and forthcoming when shipping delays happen. Any changes to an order should be promptly communicated to your customers. Create prefabricated replies that your support staff may use when customers contact them and for email or SMS order updates that are delivered automatically.
In general, no business can benefit from a universal shipping strategy. Here are a few of the top shipping options you should take into account.
1. Same-day delivery
2. Overnight shipping
3. Two- to three-day shipping.
4. Ground shipping at a reduced cost