Running an eCommerce business in 2021 is no easy feat.
You spend hours reviewing your website, creating customer emails, sourcing products, managing social media accounts, the list goes on.
But how much time have you given to reviewing your shipping strategy?
A solid shipping strategy can be incredibly useful for an eCommerce company. Not only will it reduce your costs, but it can also provide a better service to your customers.
In this article, we’re going to look at this in more detail, reviewing the best practices for eCommerce shipping and the steps you can take to reduce your shipping costs.
Before we dive in, let’s cover the basics.
The basics of eCommerce shipping
To create an effective eCommerce shipping strategy, you need to understand the basics.
So let’s start from the top: What is eCommerce shipping?
What is eCommerce shipping?
eCommerce shipping is the process of getting products sourcing to your customers once they’ve made a purchase. The delivery method you choose will determine how quickly the package arrives and how much you charge for shipping.
Why is eCommerce delivery important?
A recent study found that 62% of U.S. customers value “fast shipping speed” as the most important factor when defining a positive experience with an online retailer. An “easy delivery process” (54%) closely follows this.
These figures show that online shoppers have high expectations regarding delivery. They’re looking for fast, safe, and cost-efficient options. So what you offer can impact their decision to buy.
So while shipping and delivery might not seem all that important to the growth of your business, it undoubtedly is.
5 shipping rates for eCommerce
There’s a variety of shipping rate options for you to choose from. Ideally, you’d offer your customers a few of these options so they can choose what works best for them.
Let’s take a look at what they are:
1. Free shipping
A lot of eCommerce businesses offer free shipping as a way to reduce cart abandonment and increase conversions.
But free shipping isn’t exactly free.
To be able to offer free shipping, you have a few options to choose from:
- Increase product prices: This means that the customer covers shipping costs by paying extra for the product itself.
- You pay for the shipping: You cover shipping costs out of your margins.
- Set a minimum order amount: You offer free shipping when customers spend over a certain amount. This offsets the shipping costs by increasing your average order, but you’ll still have to pay for shipping out of your margins.
2. Real-time carrier rates
Real-time carrier rates provide customers with live shipping options and prices from various carriers. Based on their location and delivery preferences, customers can choose the delivery option that is suitable for them.
This option provides customers with total transparency and flexibility over their delivery options.
Your platform needs to integrate with a shipping carrier such as USPS, FedEx, or DHL to use real-time carrier rates.
3. Flat-rate shipping
Flat-rate shipping involves offering the same shipping price no matter what the product is or how much the customer spends.
But you can also offer multiple flat rates, which is a great way to make sure that you can cover costs for postage without losing money.
By categorizing your flat rates by order value, weight range, or delivery location, you should be able to break even on postage costs.
For example, your customers will pay the same amount, but the amount you pay for postage will change with each delivery. So sometimes you’ll pay less than you’ve charged your customer, and sometimes you’ll pay more.
4. Expedited shipping
Expedited shipping provides customers with a quicker delivery time. It gives the customer a specific delivery date and time, so they know exactly when to expect its arrival.
For this reason, it’s more expensive than other shipping methods. But it does allow you to meet the demands of customers who want their products delivered as fast as possible.
It’s certainly not as common as other options, but it’s a good idea to offer. Even if you have to charge more, some customers will be grateful for the option.
5. Local delivery
Local delivery is exactly what you think it is — delivering products locally, whether that’s delivering them yourself or hiring a driver to deliver for you.
With local delivery, you can offer a special rate for customers who live within a certain radius or in a particular area. It’s a great way to build customer loyalty and raise brand awareness in your local area.
Best practices for eCommerce shipping
Now that we understand the different shipping rates, let’s look at some of the best practices for eCommerce shipping.
Offer free shipping
We’ve already touched on free shipping and the different ways you can offer this to your customer.
And our advice about free shipping is to offer it wherever you can.
Research shows that 41% of digital shoppers abandoned their shopping cart when the delivery turned out to be more than they expected.
And 72% of online shoppers state that free shipping is one of the main reasons they shop online.
It’s safe to say that free shipping is a winning feature for most consumers out there. So wherever you can, make sure you offer this option.
Display shipping costs
As we’ve already mentioned, unexpected shipping costs are one of the main reasons consumers abandon their shopping cart.
So if you can’t offer free shipping, make sure it’s clear from the start how much the delivery cost will be.
For example, NYX has a clear banner along the top of its homepage that tells users delivery is free if over a certain amount.
This banner informs visitors that anything under $30 will come with a delivery charge. The site also clearly outlines its shipping policy.
Both of these elements provide consumers with transparency surrounding shipping costs, so they won’t be surprised when they get to the checkout.
Estimate expected delivery times
People like to know when their order will be delivered, so make sure you provide them with an expected delivery date.
You could notify them when the product is on its way and tell them when to expect the order, or you can provide the information on your website.
Here’s an example from ASOS:
The company clearly outlines when customers can expect to receive deliveries based on their chosen shipping option.
Provide customers with shipping updates
As well as letting them know how long their delivery will take, it’s good practice to tell your customer when their item is en route. Whether that’s via email or text, let them know it’s on its way.
Depending on the shipping option they’ve chosen, you can also include the tracking number. This allows the customer to track the item during transit and keep up-to-date with its whereabouts.
This email from Lululemon is the perfect example of a shipping notification that includes tracking information and expected delivery date:
Keep your products safe and secure
Although this doesn’t directly relate to shipping, it’s an important element of the shipping process that you need to consider.
Did you know that of all the cargo theft that took place in 2020, 25% were from a warehouse or storage facility?
To make sure you keep your shipping warehouse as safe as possible, consider using a building automation system or hire on-site security.
The last thing you want is to lose stock and disappoint your customers when you can’t deliver what they’ve ordered.
How to reduce shipping costs
With so many consumers looking for low shipping costs, what can you do to make sure you keep your costs low?
Let’s take a look.
Keep packaging light
The smaller the packaging, the less money you have to spend on it.
So when it comes to deciding which packaging to use for your products, think about the following:
- Choose wrapping material that’s light: Lighter packaging is less expensive than large and heavy packaging. Of course, if you have some heavy-duty items, you’ll need something sturdier. But for the smaller and less fragile items, light packaging can save you some money.
- Choose the right size: How many times have you ordered something tiny, only for it to arrive in a giant box filled with unnecessary wrapping and bubble wrap? Take this hydrating serum, for example. It’s pretty small, so a large box would be a waste of packaging and a waste of your money. To avoid throwing money away, make sure that your packaging is the right size for your products.
- Talk to your shipping provider: Some shipping providers offer free packaging. Carriers such as USPS, UPS, and DHL certainly do. So make sure you find out if this is something you can get hold of.
Buy bulk
A simple yet efficient way to reduce costs: buy your packaging in bulk.
Think about when you do your grocery shopping. How often is the bigger pack of peppers cheaper than the loose individual peppers? Research says that a 10% larger package translates to a 5% decrease in price, so it’s clear that bulk buying can save you money.
Just make sure that your inventory matches the amount of packaging you buy and get the right size.
Accurately measure product size and weight
To make sure you’re charging customers the right amount for shipping, measure the weight and size of your packages.
These measurements will give you a better idea of your total costs, which reduces the number of discrepancies with shipping costs. In the long run, this could save you some money.
Don’t forget to consider additional costs, such as tracking and insurance.
Review carrier options
There are many companies out there to choose from, so spend some time reviewing who can provide you with the best service for the best price.
Some carriers will even offer a free trial or freemium experience so you can test their services before you commit, like this route planning software is doing. But make sure you familiarize yourself with the difference between freemium and free trial, as they’re not quite the same thing.
Consider investments
Depending on the products you’re shipping, delivery costs will vary.
For example, if you’re shipping heavy and bulky items — such as furniture — the cost will inevitably be higher.
If your eCommerce business is relatively new, setting up a cost-efficient shipping operation might be harder than you thought.
As a result, you might want to think about whether you should reach out to investors. The investment will allow you to cover the initial capital required to set up the shipping operation and save you money in the long run.
Here’s an example of an investor outreach template that you can use.
What next?
Now you have a solid understanding of how to maximize your eCommerce shipping strategy. You know the steps you can take to reduce costs and provide your customers with a better service.
If you’re thinking about using a new eCommerce provider to streamline your delivery service, take a look at LitExtenstion’s all-in-one migration service. With our help, your shopping cart migration will be smooth sailing.