It’s not all that difficult to create an e-commerce business – but owners know there is more that goes into it than what meets the eye. E-commerce shipping is one of those big things that many startup founders overlook in the early stages.
There are a lot of important decisions that need to be made before you can really get your store up and running. One of the most crucial things you need to figure out is how you will get your products into the hands of customers – in the most financially savvy way.
In addition to finding a manufacturing service, you need to choose your shipment offerings. Your e-commerce shipping options are a major determining factor in conversions.
It’s tough for smaller e-commerce companies to compete with giants like Amazon providing free two-day shipping to Prime members. Even tougher to contend with is the fact that more than half of retailers offer same-day delivery.
So, how do you meet customer expectations and determine the best shipping method for your online store? Let’s discuss some of the best options out there.
Real-Time E-commerce Shipping Quotes
How annoying is it when you go through an entire checkout process only to be dinged by hidden fees at the very end? It’s the worst!
If you don’t show the final shipping costs until the shopper has completed the checkout form, you are likely going to lose that customer. Offering real-time shipping quotes that adjust depending on the estimated weight and packaging size can eliminate this issue.
However, there are some downsides to this e-commerce website flow. First of all, it means that the customer will have to pay for shipping – which will get more expensive the more they buy. This could potentially deter larger orders.
You will also need to find a platform or plugin that has these capabilities built in.
There are lots of factors that play into e-commerce shipping costs, such as the weight of the package and how far it will need to travel. Therefore, it is far better to use an automated system that uses the latest shipping cost data for the most accurate estimates.
Table Rate Shipping
Another option to consider is table rate shipping, which offers basic calculations based solely on the weight of an order. For instance, shipments under 5 lbs. will ship for $5, orders from 5-10 lbs. will be $10, and so on.
One of the clearest advantages of this shipment option is it’s incredibly simple to understand – as long as the weight of the person’s shipment is pre-calculated. You can make this easier for customers to calculate by organizing your items into certain shipment classes, like small, medium, or large.
Another benefit to this e-commerce shipping option is you are in control of the prices you set. They are not solely based on the rates that carriers offer. As a result, you could be making a slight profit if you are charging more than what the shipment actually costs.
However, there are some downsides to using table shipments.
First of all, you will need to add some terms and conditions to make the shipment rate fair. If a customer is buying something small and light (such as a poster or single t-shirt), they will likely be upset if they have to pay the same amount in shipping as they would with a 5 lb. order.
This can obviously complicate matters. Furthermore, if shipment rates from your carrier change and costs go up, you could wind up losing money or having to reset shipping costs. You will need to first calculate all shipment cost averages and update the numbers if those requirements change.
If your online store offers large or heavy items – like furniture pieces, you may want to offer freight shipping rates as well. This can help to lower the costs, and this service also takes a bit more care with fragile items. Many shipment services like FedEx, UPS, and USPS offer overnight or priority shipment as well.
Free Shipping
Free e-commerce shipping typically makes customers feel most at ease. They do not have to calculate costs or feel like they are “losing” money on shipments.
According to a 2021 Consumer Trends Report, roughly 80% of shoppers expect free shipping when ordering a certain dollar amount of products. Up to 66% of consumers expect free shipping for all online orders.
Many customers also expect to be able to “qualify” for free shipping if they spend more. For example, Sephora calculates the exact amount that customers will need to spend in order to earn free shipping. This can certainly push someone to add another item or two – even if their new total far exceeds the original amount with paid shipping.
Free shipping is obviously the option that customers tend to prefer – and most people expect this these days from online stores thanks to Amazon. However, it is not always possible for e-commerce stores to offer this unless they are already earning a fairly high margin from their products.
Say a product costs you $4.50 to manufacture and $5.95 to ship. If you can retail the item for $19.95 with free shipping, then you are earning $9.50 – so free shipping could be a viable option. However, if profit margins are slim, free shipping may not be possible.
Typically, it is best to calculate the cost tier when you are making enough of a profit to offer free e-commerce shipping, such as for orders of $25, $50, or $100.
But remember: larger items might be heavier and require more packaging materials, which could cost you more than expected. If a customer purchases two small items and one large, very heavy item to earn free shipping, you could end up on the losing end.
Flat-Rate Shipping
If most of your products are of a similar size and weight – or you want to encourage people to buy multiple items per order – flat-rate e-commerce shipping could be your best option.
For instance, the online furniture store Article offers flat-rate shipping within the US and Canada, with additional costs for international shipments. This means customers pay the same amount to ship a throw pillow as they would with a dining room table.
This obviously encourages people to add more to their cart since they know the costs will not change. You can also combine this with an option for free shipping once they reach a certain amount.
Of course, the disadvantage here is that you cannot charge too high of a price. Otherwise, people who just need a few items will go elsewhere. However, you need to charge enough to make up for shipment costs on larger, heavier orders.
This option really depends on your business model and your shipment provider. USPS offers flat-rate shipping based on dimensions as opposed to package weights. They also offer additional discounts for commercial shipments. UPS also offers a similar program with shipping speed options.
The flat-rate e-commerce shipping route could be a smart financial choice for some businesses, depending on the average dimensions of their orders.
The Wrap-Up
It is important to offer shipment services to keep your customers (and your bottom line) happy. Nearly every e-commerce shipping option has its pros and cons, so it really depends on your specific profit margins and the items you sell.
Remember that at the end of the day, running a good business requires you to make money and keep your customers happy. You need to get your products to customers in a timely manner without eating into your profits. Choosing the right shipment options can make a big difference in the success of your e-commerce store.
Have any questions about getting your e-commerce website up and running? Reach out to our experts at Ayokay! We’re always happy to help.
Jack Shepler is a Marketing and Search Engine Optimization expert. He founded Ayokay, award-winning marketing, and web design firm in Indianapolis, Indiana that has built brands, increased sales for businesses, and helped nonprofit organizations fulfill their missions since 2011. He uses his decades of experience to educate through the Ayokay blog and through public speaking. You can follow him on LinkedIn.
