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12/02/2016
Everyone dislikes shipping costs. Customers dislike it. Companies dislike it. Despite rising postal prices, most consumers expect shipping discounts or promotions when they make an online purchase. Dissatisfaction with shipping cost is one of the primary causes of shopping cart abandonment. Shipping makes up a sizable percentage of the cost for each item sold; therefore, defining a smart ecommerce shipping policy is crucial to maximizing profits.
Shopping cart email is one of the highest return on investment marketing actions online retailers can take, yet most make common mistakes like not incenting customers to opt in to their email campaigns, or not providing information or an offer to pre-sale site visitors to sign up for further promotion.
How To Maximize YoureCommerce Shipping Effectiveness
There are multiple variables to consider when determining ecommerce shipping fees. Before cementing your policy, research all shipping options: USPS, FedEx, UPS, and DHL and make shipping alliances judiciously, for example:
Limit USPS Use
Many ecommerce businesses avoid using USPS unless they are shipping small items that fit into envelopes or priority packages, or the customer expects a long delivery time. Although USPS may offer cheaper rates, their delivery times are less consistent, and they charge extra fees for tracking.
Consult with a Professional
Meet with a vendor's small business specialist to discuss ecommerce shipping options. The USPS offers over-the-phone advice, and all shipping agencies have sales representatives who are willing to negotiate prices with businesses.
eCommerce Shipping Fees Shouldn't Be Your Profit Center
Many customers are willing to pay higher product costs for discounted shipping rates. High shipping costs make them feel deceived when they reach the shopping cart shipping calculator and fees are significantly higher than they expect (particularly if this features is later in the checkout process). Keep your shipping low enough to cover your bottom line, or your customers will resent it. You'll also do yourself a favor if shipping costs spike due to volume or fuel cost adjustments.
Charge by Weight, Not Item Cost
For general, non-promotional sales, make weight the shipping variable in order to cover your expenses since that is one of the primary determinants of shipping costs.
When To Offer Free eCommerce Shipping
Free shipping can be a powerful sales force if used with caution. The absence of hidden costs pleases consumers and activates a psychological motivation to buy. However, you must evaluate which ecommerce shipping situations remain profitable. Be aware that retracting a well-publicized free shipping policy can destroy sales momentum, even if it was only a temporary promotion. Try these solutions on for size instead:
Offer Free Shipping for Items with a Large Profit Margin
If you are already making a hefty profit from the sale of an item, free shipping won't put you in the red for that particular item, and the extra sales incentive will produce a number of profit-making products. This technique works especially well with smaller, high-profit items that are relatively cheap to ship. If the profit-margin on an item is scarce, it is likely you will lose money on a free shipping offer (and no you can't make it up in volume).
Other Free Shipping Policies
There are plenty of free shipping policies to consider. Price thresholds for free shipping increase an order size. You could offer free shipping to members only (like Amazon Prime does), in other words, to those who are likely to be repeat customers and pay annual fees for extra promotions. Also, free site-to-store shipping is a relatively standard ecommerce shipping practice now.
Ultracart's item-level shipping control is an example of an important online shopping cart feature that helps you manage eCommerce shipping Costs. It allows you to customize shipping options to support specific products down to the item level. This ensures you maintain your delivery commitments. Ultracart also offers price calculators for a variety of different items whether your ecommerce shipping is based on product type, weight, or region, ect.
Make Your Policies Transparent
No matter the specifics of your ecommerce shipping policies, your customers should have the option to preview them before purchases. Here are some keys to this process:
Include a Shipping Policies Page
Make this an easy-to-find link on several of your webpages. Also, if your ecommerce shipping rules vary for each product, provide a link to the shipping page from the product pages. Your shipping page should give a more detailed explanation about costs specific to each product and estimate delivery dates by region.
Post Shipping Fees Next to the Product Prices
This practice communicates to the consumer that your company has nothing to hide. It augments a relationship of trust between you and your customers. Prominent eCommerce shipping rates thwart confusion, shock, or anger at check-out. If you charge variable shipping costs depending upon region, allow users to insert a zip code for an estimate or if your shopping cart isn't capable of displaying a "live" shipping cost like UltraCart, you can use a "sample shipping cost" table.
Simplify Tracking
Email order status information to your customers with product tracking numbers. Include in the email a direct link to the tracking page so they don't have to reenter account information or tracking IDs to determine where their shipment is.
Never advertise promotions you don't have the resources to deliver.
Overpromising and underdelivering never grew a business, so why succumb to the urge to "bait and switch" a customer base that can go somewhere else with the click of a (mouse) button. Use the following reality checks when instituting a promotion that involves shipping:
Honestly Assess Your eCommerce Shipping Capabilities
Customers will be pleasantly surprised if they receive a package early, but they will never forget if it arrives late. When possible, ship the day an order is received, regardless of the expectations outlined on your ecommerce shipping policies page.
Avoid Overnight Shipping Costs
Next-day delivery is expensive. Unless the customer is paying for this cost, avoid it. If you are having difficulty keeping up with your ecommerce shipping demands, temporarily push back mailing deadlines to prevent overnight delivery costs necessary to meet customer expectations. Ideally, if it is cost-effective, hire more employees to keep up with the demand of your growing business so you can return to the ecommerce shipping policies you believe define effective customer service.
Gather eCommerce Shipping Data, Evaluate Results, and Revise
Regardless of the ecommerce shipping policies you formulate, it is necessary to gather data to determine which are most effective. Test out promotions one at a time to isolate variables and collect consumer data for each. Collect information on:
- The percentage of users leaving your check-out page without completing payment (Google Analytics can record this)
- The increase in revenue against the cost of shipping fees
- Repeat-usage levels (Increases indicate your changes had a positive effect on collecting repeat customers
- Customer opinions
Email a survey or call them. Ask about their different shipping preferences and how alternate policies would have impacted their purchasing behaviors.
Your ecommerce shipping strategy should maximize customer profits without sacrificing quality customer service. Solidify a positive business relationship with your customers by following up with them after a purchase. Confirm that they received their orders and take responsibility for lost items, regardless of where the guilt lies. Encourage repeat business by labeling packaging with your company logo and offering special discounts and promotions after a purchase. These tips promise a successful ecommerce shipping solution.