March 18, 2022
Ecommerce shipping strategies

Becoming a digital entrepreneur in today’s ecommerce-driven economy isn’t for the faint of heart. To stand out in a sea of online businesses, it’s essential to offer a one-of-a-kind product and build an engaging, intuitive website that delivers a unique brand experience.

Even that’s not always enough to draw customers in, though.

Many online businesses also must implement omnichannel marketing and advertising strategies that capture the attention of their target audience and drive customers to their shop. From learning the nuances of all the social platforms to reviewing 404 page examples for inspiration, there’s a ton you’ll have to consider.

Whew. Who knew so much goes into starting an ecommerce business?

We hate being the bearer of bad news, but there’s another really important component of starting an ecommerce business that’s often overlooked — and it could make or break the success of your online operations.

It’s your ecommerce shipping strategy.

Your online store could offer the most innovative product out there and feature the best design on the block. But if your shipping strategy isn’t on point, your customers will likely abandon their shopping carts and say “sayonara” for good.

As a new ecommerce business owner, hitting a bullseye with your shipping strategy on the first go-around can be difficult. From the fees you charge to the promotions you offer, there’s more than meets the eye when it comes to optimizing one of the last ecommerce customer touchpoints before they convert.

In this ecommerce shipping guide, we’ll walk you through how to take shipping into your own hands to ensure your customers’ experience is a positive one — and that you’re shipping costs aren’t eating into your bottom line.

Not only will we break down a few common ecommerce shipping strategies and best practices, but we’ll fill you in on some handy shipping solutions that can help streamline the process.

But first, let’s look at the main reason why shipping plays such a significant role in a customers’ online shopping experience.

How Your Ecommerce Shipping Strategy Affects Business Success

Today’s average online shopping cart abandonment rate is roughly 70%.

Shocked? We were, too.

Due to the nature of ecommerce sites, a large portion of this abandonment rate can be attributed to users simply browsing or “window shopping.” However, if we look at the reasons for cart abandonment outside of this more browsing-oriented fact, 49% of U.S. adults surveyed by the Baymard Institute claimed to have ditched their carts due to extra costs — including shipping, taxes, and fees — being too high.

When shipping costs are too expensive, customers are deterred from completing their purchases. This means how much you charge for shipping plays one of the most critical roles in customer conversion rates. While shipping speed is primarily affected by the carrier, offering the correct shipping prices and options can help you boost sales and satisfy customer demands.

With the proper shipping prices and options in place, you can:

Now that you understand how influential shipping prices can be in the customer conversion process, let’s look at a few of the most common shipping strategies you can utilize for your online store.

4 Common Ecommerce Shipping Solutions for Online Stores

Several factors influence the success of your shipping strategy. These include the shipping carriers you choose, how you package your products, and any delivery insurance you include with higher-value items (more on these three factors later).

But the most influential is how much the customer will have to pay — and how this affects your business’s bottom line. Below, we will break down four common ecommerce shipping strategies related to the shipping costs you charge your customers:

  1. Offering free shipping
  2. Charging real-time carrier rates
  3. Providing flat-rate shipping
  4. Offering free in-store pickup or local delivery

1. Offering Free Shipping

According to the latest Consumer View survey conducted by the National Retail Federation, 83% of consumers say convenience while shopping is more important now than it was five years ago. What’s more, 52% say that half or more of their purchases are influenced by convenience — and offering free shipping in your ecommerce store provides the ultimate online shopping convenience.

Is Free Shipping Really Free?

Free shipping is not really free — not for your business, that is.

Offering free shipping means that delivery costs are put on you, which means you’ll need to take a closer look at your profit margins (i.e., the average cost to ship a product and the profit you’d make selling that product). You’ll also need to learn more about your customers and analyze your competition to uncover if this shipping strategy is right for the products you offer.

In general, free shipping is best for high-margin products that you can easily roll shipping costs into.

How Do I Get Started with Free Shipping?

For new digital entrepreneurs interested in offering free shipping with their products, it’s best to start by applying this incentive under specific conditions.

For example, you could begin by offering free shipping on all orders of $50 or more. But make sure you understand the average cost to ship your items and your AOV before establishing this minimum. Once your ecommerce store receives a good chunk of orders, you can better calculate your AOV and set your free shipping minimum based on that amount.

If your ecommerce store sells higher-end or “luxury” products, it will likely be easier for you to roll shipping costs directly into the higher prices of your products.

However, if you’re selling products in a highly competitive niche where several of your competitors offer low product costs and free shipping, rolling shipping costs into your products might scare off customers.

Customize Your Free Shipping Options

You can customize your free shipping strategy based on the products you sell and the sustainability of absorbing shipping costs.

For example, you can offer free shipping for shorter promotional windows to boost sales during slower times or when clearing out older inventory. You can also only offer free shipping on certain products, particularly those that aren’t larger, heavier items that would cost more to ship.

Related reading: How to Ship Large and Heavy Items >>

Free Shipping and Delivery Timelines

When absorbing shipping fees for your customers, you’ll likely choose the most economical shipping options with the carriers you select. This means that delivery timelines could be extended, which means customers would have to wait longer to receive their products.

Fortunately, most of today’s online shoppers appear to have patience when waiting longer for product delivery rather than paying for shipping.

According to a 2021 BOXpoll survey conducted by Pitney Bowes regarding shipping expectations, 72% of consumers would rather wait 5-7 days for free shipping than pay to upgrade to 2-4 day shipping.

However, if the delivery timeline exceeds seven days, the number of consumers willing to purchase tapers off. This is important to consider if the most economical shipping options take longer than seven days, on average.

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2. Charging Real-Time Carrier Rates

This strategy is where giving your customers options comes into play. When charging real-time carrier rates, customers will typically pay the exact price carriers charge to ship their orders and choose their delivery timeline.

For example, if a customer wanted to expedite shipping with your chosen carrier, they could select this option and agree to pay higher shipping costs. If another customer isn’t worried about the delivery timeline, they could choose the most economical choice and pay the lowest price.

When offering real-time carrier rates, it’s essential to have a real-time shipping calculator on your site that breaks down the current fees associated with each delivery option. This transparency can help you earn trust with your customers, as it lets them know you aren’t charging prices that are higher than the current standard carrier rate.

If need be, you can include shipping surcharges on top of the standard carrier rates to account for any fees you pay associated with fulfillment, such as packaging.

3. Providing Flat-Rate Shipping

Flat-rate shipping can be another effective shipping strategy for your online business. Unlike standard shipping, flat-rate shipping means that the costs associated with delivery aren’t directly tied to individual package dimensions or weight. This means you can offer flat-rate shipping based on specific rules or stipulations you set, such as how far a package needs to travel, the maximum size or weight a package can be, or order totals.

This shipping strategy offers an uncomplicated shipping option to your customers — but much like offering free shipping, it’s important to understand the average cost of shipping a package before implementing it. Understanding this average will help to ensure you’re not cutting into your bottom line by charging too little for flat-rate shipping.

It’s important to note that flat-rate shipping can be a great option if your ecommerce business sells products on the heavier side, as long as they fit within weight limitations set by the carrier.

Note: If your products or customer order totals exceed the standard weight limitations set by carriers, less-than-truckload (LTL) freight shipping could be the best shipping option for you. LTL freight shipping enables you to deliver products that weigh more than 150 pounds via truck and trailer — and shipping costs are based on the portion of the trailer used to hold your products.

4. Offering Free Local Pickup or Local Delivery

You can avoid third-party carriers by offering free local pickup or delivering your products to customers yourself. Sometimes referred to as “click and collect,” buy online, pickup in-store (BOPIS) continues to entice online shoppers. According to estimates from Insider Intelligence, U.S. click-and-collect sales are expected to reach $140.96 billion by 2024.

Click-and-collect enables consumers to combine the ease of online shopping with the convenience of same-day delivery. While BOPIS typically entails customers navigating to a designated in-store or curbside pick-up area, ecommerce business owners are beginning to use secure smart retail lockers for order fulfillment, as well.

Outside of click-and-collect, offering local delivery can set you apart from your competitors while increasing sales. By delivering your products directly to your customers’ doorsteps yourself, you can save money by avoiding third-party carrier fees and even avoid increased shipping delays due to COVID-19.

Ecommerce Shipping Best Practices

As you develop your ecommerce shipping strategy, it’s important to keep these ecommerce shipping best practices in mind to ensure your delivery options meet customer demands and that your profit margins remain strong.

  1. Choose a trusted shipping carrier
  2. Package your products well
  3. Include insurance on high-value items
  4. Establish a return shipping strategy

Choose a Trusted Shipping Carrier

The shipping carrier (or multiple carriers) you choose plays an integral role in your shipping strategy.

When searching for carriers, it’s essential to consider shipping factors such as the types of products you’re shipping, where you plan on shipping to (e.g., nationally or internationally), the average weights and sizes of your packages, and how much you’re selling your products for. These factors will be your baseline when you start researching which carrier to use. A few of the most major carriers to consider include:

  • USPS
  • FedEx
  • UPS
  • DHL

As you compare the pros and cons of different carriers, pay close attention to the costs they charge and delivery timelines or guarantees they offer. It’s also important to consider their reputability, the supply chain technology they use, and any promotions they offer to business owners.

Package Your Products Well

The packaging you choose influences the prices you or your customers will pay to deliver products via third-party carriers. Carefully consider how much and what type of packaging you need based on the size and weight of your products.

More delicate items might need heavier-duty packaging, while less-fragile or smaller items could use more lightweight packaging. Some carriers even offer free packaging solutions, such as USPS’s flat-rate packaging.

Include Insurance on High-Value Items

While some carriers automatically include insurance on shipments, they often have limitations.

If your products are valued higher than those limitations, it’s vital to add shipping insurance to safeguard them from loss, theft, or damage during the shipping process. This ensures the customer experience remains seamless, even if any issues occur during the delivery.

Establish a Return Shipping Strategy

Your product return shipping strategy is nearly as influential as your product delivery strategy. If a customer needs to return a product (regardless of the reason), the return process should be effortless.

According to a survey conducted by Power Reviews, 79% of consumers consider free returns the most important option to have when shopping online.

As a new ecommerce business owner, choosing a flat-rate return shipping fee could be an excellent place to start. It doesn’t take from your bottom line as much as offering free return shipping does, as it splits the financial burden between you and your customer.

Determining your return shipping strategy is a mixture of understanding your profit margins, what your competitors are doing, and what type of customer service you want to offer.

Available Ecommerce Shipping Solutions

Establishing a rock-solid ecommerce shipping strategy can sometimes feel overwhelming, but thankfully you don’t have to go at it alone. There are several ecommerce shipping solutions out there that can help you automate the process.

Many of the solutions listed below enable you to print shipping labels on-demand, compare shipping rates, track packages, and earn discounts with major shipping carriers.

  • Shippo
  • ShippingEasy
  • Ordoro
  • ShipStation
  • 2Ship
  • Veeqo
  • OrderCup
  • PayPal Shipping

If you use WordPress with WooCommerce, you can also use several plugins to expedite the shipping process. WooCommerce comes standard with WooCommerce Shipping, which connects directly to USPS and enables you to compare rates, purchase postage and print labels, and ship internationally. There are also several single-carrier WooCommerce plugins (e.g., UPS and FedEx) you can find from sources like PluginHive.

Build Your Ecommerce Site and Start Shipping with Help from Nexcess

The ecommerce strategy you choose influences both the customer experience and your business’s bottom line.

As you begin to build out your strategy, pay close attention to your product prices, profit margins, AOVs, average package dimensions and weight, and what shipping programs your closest competitors offer. All five of these factors will be instrumental in deciding the best shipping strategy for your business and what carrier you’ll choose.

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