Logistics is one of the main expenses for any e-commerce company. You can have great products at the best price on the market, but it’s your shipping that eventually enables your customers to try what you offer.
Shipping is an essential part of the customer experience you provide, and it directly influences the sales funnel on your site. Unsatisfactory delivery options are one of the key reasons why prospects do not proceed to checkout. The sooner you can fix this problem the better your conversion rate will be. Why is it important to have control over your shipping storefront?
- According to eMarketer more than 86% of cart abandonment is related to high shipping costs and inconvenience
- 93% of consumers say shipping options are an important factor in their online shopping experience (Pitneybowes.com)
- 88% said that free shipping with 5-7 day delivery time is more attractive than paying a fee for 1-2 day faster delivery (Pitneybowes.com)
- Temando states that 84% of online shoppers perceive shipping costs as too high, with 65% abandoning their carts due to expensive shipping, and even 40% abandoning their carts if no free shipping is offered
- 41% of online shoppers are willing to pay for the convenience of hyper-local, same-day delivery services according to Temando
So, how can E-commerce businesses make their shipping more cost-effective? In the nutshell, shipping software will help you to ship bulk packages in the most cost-efficient way. The good shipping software will help you to diminish the costs of shipping on your and customers’ side to find the perfect balance. Here is the list of items that can greatly reduce your shipping costs:
Carriers will always take care of cutting their costs by saving room in a truck for more profitability. The bigger the parcel, the more space it takes up, and the less capacity there is for other packages. This also means that the carrier needs to charge more.
Unless you’re using a flat-rate plan, delivery carriers charge you based on either the actual weight of your parcel or DIM (dimensional, or volumetric) weight, which is defined by its size. You pay for whichever is greater. Thus, it can happen you are simply transporting air at your own expense if the box that you place your product in is substantially larger than necessary.
The shipping destination is another key factor that influences the shipping costs. The farther away the destination is, the more expensive and slower it is to deliver. If you ship only domestically, then a small local carrier might be your best choice. These companies are often more cost-convenient and responsive than bigger ones. If you ship internationally, then a major carrier would be your choice. Rates, regulations, fees, taxes, and other conditions may vary drastically even in neighboring countries, and you don’t want to fall into that cross-border logistical black hole. Delegating this to a large trusted transportation partner will save you both your nerves and money.
This may come as a surprise but there are many ways to make money by offering free shipping. For example, you can set the purchase value threshold (normally slightly above the average order value) after which your customer can count on free delivery. As a result, half of the shoppers will add items to a cart to qualify for such a good deal.
Alternatively, you can exclude some merchandise that is too heavy or large for you to offer free shipping on. Providing free delivery under the loyalty program may also be a smart move as, if done correctly, it contributes to establishing long-lasting relationships with customers.
Avoid the expedited shipping
Expedited shipping cost is higher than standard shipping. The best way to avoid expedited costs is to process the order more efficiently and quicker. Oftentimes this might be the fault of the carrier you ship with. If this is the case, make sure you process orders quickly so that they are processed fast. Otherwise, you will need to use a faster delivery service to make up for the time. Expedited shipping is only worth it when there is a freight shipment that needs to be delivered within a specific time frame. Many e-commerce companies spend money on overnight air delivery without realizing that the truck might get to its destination just on time as well.
Mind the Gap
There are two types of shipping costs: the estimated one, which you show to your customer before checkout, and your real payment afterward. As a merchant, you want to make the gap between those two as narrow as possible. You can do so by using specific shipping storefront software that allows you getting real-time rates from the carriers you ship with, applying dimensional shipping calculations, setting up your custom shipping methods with advanced rates calculation algorithms, setting up shipping rules and restrictions in order to customize your shipping methods and rates depending on multiple conditions, offering delivery dates options.