Shipping is crucial to your e-commerce brand’s success. If you get it right, you can attract and retain more customers, reduce cart abandonment rates, increase revenues, boost brand value, and get an edge over your competitors.
Many shipping options are available for e-commerce businesses. So how do you select the best option for your brand and customers? Your choice would depend on the factors that affect your shipping costs. Understand these factors to better understand how much shipping will cost you and then select the option that’s best for both you and your customers. Let’s explore these factors in detail.
Package Size and Weight
One crucial factor that directly impacts shipping costs is package size (dimensions) and weight. In general, the larger and heavier your package, the more it will cost to ship. If your products are relatively uniform in size, ask the carrier for a shipping price that varies by customer location rather than size or weight. This option can be affordable for you and your customers. Ensure that your products have accurate weights and dimensions to get the most accurate billable rates from carriers. But if you sell products with non-uniform dimensions, negotiate with the carrier to give the best possible rate and discounts.
Before shipping, make sure that the package is big enough to hold your product and ensure its safety during transit, but also small enough to minimize the dimensions and avoid inflating shipping costs. You can also reduce shipping costs by working with a third-party logistics (3PL) provider. With a 3PL, you can leverage shipping discounts. Plus, their network of fulfillment centers can help reduce transit times so you can deliver products faster and make customers happier.
Country of Origin and Destination
E-commerce makes borderless shopping possible. However, not all e-commerce companies can serve international buyers because of another factor that affects shipping costs: country of origin and country of destination.
If you ship internationally, it’s best to get a rate straight from the carrier because you may not be able to set the best rates in countries other than your own. However, if you only ship domestically, you can go for flat-rate or free shipping options, as long as they don’t eat into your margins. Flat rate shipping means you will charge the same fixed rate, regardless of product size, weight, order value, etc.
If you offer free shipping, you can please customers and remain profitable either by including the shipping cost in the product price or specifying a spend threshold that buyers will have to meet to get free shipping. But do keep in mind that even for domestic shipping, the cost of shipping tends to increase the further the package travels.
Product Packaging
Product packaging will affect how customers view your brand so it’s important to get it right. However, if you spend too much on packaging, it will affect your shipping costs and ultimately, your bottom line. So how can you make a great first impression on customers with packaging without breaking the bank?
To start with, choose the right packaging material based on product type, shape, size, and weight. Also, think about product fragility or durability. Fragile products typically need extra padding so you will spend more on the packaging. Non-fragile products don’t require such special considerations so you can save money on shipping these products.
If you offer custom packaging to make your brand stand out, it will increase costs so try not to offer it for every product. You can also tone down customization by adding only a few unique elements to the package, such as your brand’s logo on the box or a branded sticker on top of the wrapping.
Tracking and Insurance Costs
Insurance and tracking offer a lot of security to your brand (and customers) but also increase total shipping costs. Tracking is essential to ensure positive customer experiences throughout the purchase, order fulfillment, shipping, and delivery process. Insurance provides protection in case a product is lost or damaged.
Many larger carriers provide inexpensive insurance for lost or damaged products. Others only cover merchandise up to a certain amount. Before selecting a carrier, be aware of these realities so there are no unpleasant surprises later. If you sell high-value, fragile, or perishable products, consider purchasing additional insurance that will cover and protect all your packages.
Also consider investing in an order management system (OMS) to streamline the fulfillment process, reduce inventory issues, and track each order. Finally, give all customers a tracking number for their packages, regardless of whether you ship orders in-house or through a 3PL provider.
Shipping Costs: Other Important Factors to Keep in Mind
Apart from the factors highlighted here, there are other considerations you should keep in mind when calculating shipping costs and selecting a shipping method. One is the carrier cost, which is the amount carriers charge to transport packages to their destinations. Last-mile carrier costs in particular can be pretty high in some locations so do your research when selecting a logistics partner for your requirements.
Customs and duties can also add to shipping costs if you sell across international borders. To ensure that customers are prepared, clearly state on your website that they are responsible for these charges. Include this information on your FAQ page or shipping policy page.
Finally, shipping costs can also include fulfillment costs, i.e. the cost of labor to pick up, pack, and ship packages, and overhead/fixed costs such as equipment, electricity, warehouse lease, warehouse management software, etc. Keep these factors in mind when selecting a shipping method.
Conclusion
Shipping costs can be a complex matter for e-commerce companies. It’s not easy to calculate these costs and even harder to figure out how to minimize them. If you are currently facing these challenges, contact us. Team Ergode will help you minimize your shipping costs while maximizing revenues and delivering amazing customer experiences.
