Monday 28 April, 2014
Establishing your shipping strategy is one of the key considerations in setting up an ecommerce store. You need to set shipping rates that cut into your profit margin as little as possible while also offering value and options for your customers. This is a tricky balancing act to walk and here are some ideas on where to get started.
Things to Consider First
You have lots of options when it comes to creating your shipping strategy. Start by considering:
* Your Finances. Whatever shipping options you offer, make sure you can afford them. The ideal shipping strategy is to offer free shipping but this isn’t possible for every ecommerce store.
* Your Customers. Your shipping strategy depends largely on your customers’ demographics and tastes. The more you know about your target market, the better.
* Your Order Volume. One major determiner is how much you expect to sell. This is a factor in determining your shipping strategy.
Shipping Strategy Options
There are a number of types of shipping strategies that you can choose from:
* Free Shipping – As I said, this is the best deal for your customers and many people have come to expect it online. The key to making this work is to cover shipping costs in your product prices.
* Flat Rate Shipping – This is a convenient option for your customers because they can calculate shipping themselves as they shop. Although simple for them, it can be complicated for you. You’ll lose out on large, heavy orders.
* Price-Based Shipping – This option uses prices as the basis of shipping. For example, you can use a simple percentage.
* Weight-Based Shipping – This is the most accurate option for you because it reflects exactly how much you’re actually paying, but it’s tough for your customers to understand.
Shipping Rates and Customer Experience
As you can see from the above options, the two considerations are the behavior and expectations of your customers, and the price for you. You need to create a balance between the two.
As far as customer experience is concerned, it’s best to offer easy-to-calculate shipping. Otherwise, people will go all the way to the checkout screen before they know the actual total. This will cause many to abandon their shopping carts. If you’ve shopped on Amazon, you know how this works.
On the other hand, if they have a way to calculate shipping as they go, this provides a better shopping experience for them. There are also tools that allow you to show them the price in real-time as they shop.
Surveys show that across the board people like options. The more different shipping options you can offer, the better. If you can give your customers things like online tracking and the ability to choose delivery date, this is even better. All of this creates a better shopping experience, which is just as important to many online shoppers as prices or other factors.
Wherever possible, rely on real objective data for your shipping strategy. Come right out and ask your current customers which they prefer and track analytics to see how they behave, making changes where necessary.