The Ecommerce Business Shipping GuideBy Mike Reilly, January 7th 2020
In this guide, we walk you through the main parts of your shipping strategy: what decides your shipping rates, how to decide what to charge and how Despatch Bay can improve the shipping experience for both you and your customers.
Your Shipping Rates
There are many variables that couriers use to decide your rate. Depending on the courier and the service you use, the variables differ. The most common variables you need to be aware of are:
- Size – How big are your parcels?
- Weight – How heavy are your parcels?
- Destination – Where are your parcels going?
- Speed – How quickly do your parcels need to get to their destination?
- Shipping Volume – How many parcels are you sending? Generally, the more you send, the better your rates.
You may choose to purchase add-ons like cover for your deliveries which will increase the total delivery price. It's important you look for any hidden costs; for example, some couriers may add fuel surcharges and some might charge for leaving "we missed you cards", impacting your profit margins.
Despatch Bay is totally transparent, there are no hidden fees. The price you see is the price you pay.
What To Charge
Now you understand what couriers consider when charging you, you can calculate what you're going to charge – if you're going to charge your customers. But, whichever route you take, you need to strike the right balance for your business.
Generally, there are three key strategies to be aware of:
A free shipping strategy is a great way to grab attention and stand out from your competition, if they don't already offer it.
"Orders with free shipping average around 30% higher in value."
Shipping isn't free, there will be a cost to somebody along the line. Here are a few financial factors to consider:
- Increasing your products' price to cover the full or partial cost of shipping.
- You pay the delivery fee out of your profit margins.
- Only offer free shipping to customers that meet certain criteria.
"93% of online buyers are encouraged to buy more products if free shipping options are available."
When giving free shipping to customers, you need to evaluate its impacts like increase of returns and marketing efforts, and set yourself goals e.g. increase average order value and increase the number of orders.
Flat Rate Shipping
Flat rate shipping is when a single rate is charged for a parcel, regardless of its weight or size. This could make it a great option for businesses that sell products that are similar sizes and weights.
It doesn't work well if you sell a variety of products, you don't want to massively undercharge or overcharge your customers – the price needs to even out towards the end.
Flat rate shipping can be a great upselling tool to encourage your customers to spend more, for the same delivery fee.
"50% choose the slowest shipping option because it is free."
Real-time rates means charging your customers the exact amount the courier charges you. If you have the opportunity to use several delivery services, give your customers the opportunity to choose which service they want, after all they'll be the ones paying for it.
Just like many other parts of your business, your shipping strategy will need to be A/B tested to make sure it's as effective as possible. This also applies to the way it's displayed on your website. As your business grows, your strategy could change.
When purchasing online, people have a greater opportunity to compare prices. If your product's price is lower than your competitors, you could show your shipping rates separately to make you look even more competitive, giving you the edge. You should A/B test your pricing strategy to prove which is more successful.
Every courier and their services have different strengths and weaknesses. The key to making sure you, and your customers are happy with shipping is using a multi-courier service – mixing and matching couriers and services where necessary.
All of the large letters, parcels and pallets you send counts towards your final shipping volume at the end of the month, no matter which courier's service you use. The more you send the more you save, but one thing is for sure, you're always on our best rate!
As well as a multi-courier service, Despatch Bay also provides you with marketplace integrations, great automation features and support, under one roof, and there's no monthly fee - only ever pay for what you send.
In this guide, we've walked you through the variables couriers look at to charge you, different shipping strategies, and touched on a few of Despatch Bay's own features to create a great shipping experience for your business and customers.
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