Shipping is one of the last pieces of the ecommerce fulfillment cycle, but some would argue the most important. Shipping ranks as one of the number one complaints sellers receive from customers. And if online retailers aren’t careful, the cost to ship products can eat into profits in no time. While there is no clear cut solution when it comes to shipping carriers and pricing, there are strategies to consider in order to optimize your shipping process:
1. Continually evaluate carriers
If there’s one constant in the world of ecommerce it’s that things are always changing. That includes shipping options and strategies. In order to get the best prices and services, it’s important to continually evaluate the right mix of shipping carriers. Rates and plans change often, so the weight and size that was most cost effective one month could change the next. In fact, UPS and FedEx both plan on changing how they charge for ground shipped packages by the end of this year. The carriers will soon begin to charge based on size, not just weight, what they call ‘dimensional pricing’.
2. Test shipping options
Testing different shipping options allows you to measure which option converts more buyers at the point-of-sale and which approach results in a higher profit margin. Testing should be run independently and for the same amount of time. Options can include:
- Free shipping – You’ll need to decide whether you will absorb the costs and bank on volume or increase the price of your product.
- Free shipping on a minimum order amount – Can help you offset the cost of offering free shipping.
- Flat Rate – Provides the benefit of known costs and is easy to set up.
- Real time carrier rates – All carriers base shipping rates on a variety of factors. Check out the shipping calculators offered by three of the main carriers to help determine the best option.
3. Keep Customers Informed
Shipping and handling rates are often ranked as the number one reason for cart abandonment. Throughout every step of the shopping and purchasing process, keep your customers informed on the status of the order and the price of shipping. Surveys show keeping buyers in the loop once the product is shipped translates to higher customer satisfaction. If you can, provide tracking information and links for your customers to see exactly where there package is and it’s estimated delivery time.
It’s not easy, but finding out how to ship profitably often determines the success of ecommerce companies. So do your research and remember, even when you think you have it figured out, it’s always a good idea to tweak and re-evaluate along the way.