Oh! My product price seems less compared to the shipping rate!!
This is the exact reaction when a customer enters your payment gateway.
Increased shipping rate!!
Shipping cost has become the prime factor to consider for most eCommerce companies. It can be quite tricky in order to optimize and save money month over month.
Good news!! Do not worry about your shipping costs further. Many simple things stand together with you to suppress your shipping costs and make more profit today.
Many teams after having exposure with other eCommerce clients conclude that shipping is a relatively fixed expense. On the contrary, it seems to a false hope! It may not be the most exciting area of your business to investigate.
According to a recent study , around 28% of shoppers abandon their carts due to unexpected shipping costs. Whilst standing as a buyer, you need to consider it. At the same end, as an eCommerce store owner, it is necessary to take action against the bulging shipping cost that hinders your store’s growth.
Here comes an introduction to a new approach, “ Set it and Forget it”. It means you are losing money. So, how do the shipping rates differ? What is happening behind the shipping cost calculation.
Let us discuss it more.
Table of Contents
How are shipping costs for your eCommerce/Shopify store calculated?
No magic! Shipping costs for your eCommerce/Shopify store has been calculated through specific factors. The final price arrives after passing through the enlisted categories.
Let us dive in to know more about the factors that influence the shipping costs of the products ordered in an eCommerce or Shopify store.
Delivery speed of the product
Shipping costs vary rapidly depending on the delivery speed of the items. Urgent items would have urgent pickups and require active status monitoring. In turn, it would directly increase your shipping costs.
This turns out to be the reason why overnight shipping costs are way higher than the normal shipping costs. The percentage of efforts seems high which is directly proportional to the expense.
Companies offer preferences to the customers who are about to concern about a new shipping category. The category may also include standard or delayed shipping. The shipping costs for the mentioned categories also varies accordingly.
Merchandise origin and its destination
A major chunk of shipping costs for a business depends on the location of the warehouse. It also includes the delivery region. For business, it is necessary to note down the shipping costs as it directly relates to the distance of the warehouse and the delivery area.
You can come across many companies who have been accomodating the shipping costs and are displaying a shipping calculator to the customers at their checkout page.
Weight and dimension of the package
The weight of the package is an important criterion for increased shipping costs. While talking about the importance of shipping cost calculation, the weight refers to the synergic effect of the packaging and the original weight of the product.
The bulkier package seems to increase shipping costs. The utility-based packaging will also drive traffic to your online store.
Similar to the weight, dimensions, and other rudiment, it helps to determine the shipping costs. As a hefty packaging, more will be your shipping costs.
As a fact, many shipping companies ask for the package weight and dimensions while calculating your shipping costs. This is why you must have a minimum shipping cost.
Special handling and associated fees
Sometimes it is necessary to observe special handling charges in your shipping expenses. In the nature of shipping, there are few unavoidable costs that cater to have special charges to your package.
Pickup charges: it involves collecting costs from the shipper’s warehouse.
Insurance: Irrespective of your courier service’s reliability, things might turn awry at any time. So, it is necessary to purchase insurance. Particularly, businesses have to get insurance for their products that help during any mishaps.
Tariffs and shipping taxes for international shipping
International shipping seems an inevitable expense that plays a huge role to determine the shipping costs. Shipping tariffs may not always have a downfall for your costs. Instead, many countries have been offering different policies in order to give customers relief to their shipping.
Say, in Canada, an agreement named “North American Free Trade Agreement (NAFTA) helps the importers to save a lot of money. At the same end, duty drawbacks seem to be the smartest way to save money on customs. Duty drawbacks help in recovering money spent on imported and exported products.
Proven strategies to reduce shipping costs to increase the profit of your Shopify store
Shipping, an important part of the business, has been forced to close for the foreseeable future. It is also necessary to make it comfortable for the buyers and be sure as heck to keep it affordable.
In fact, shipping costs have become the biggest challenge for more than half of the online sellers. If you wish to reduce your shipping costs, then make yourself firm with the strategies enlisted here.
Factoring shipping costs
When charging shipping costs, it is necessary to tell the customers. As it is not a poker game, there is no need to hide the charges. Just tell them in the period.
As mentioned earlier, around 28% of cart abandonment falls due to the increased shipping costs. Informing them prior will help you to reduce the cart abandonment rate for your Shopify store.
In doing so, your customers will also know about the reason behind the shipping charges. It also helps the customers to save down their checkout funnel and thus reduces cart abandonment and the burden of your shipping costs.
Whilst talking about the shipping costs, you need to practice the unique practices that increase the understanding between you and your customers. It improves brand visibility at the same end.
You might have your eyes upon multiple costs including fuel surcharge, special changes, weekend delivery fee, etc. In order to factorize your shipping costs, understand their options, and make decisions based on it.
Work with multiple suppliers
There are no rules that define dropshipping in your business. Diversification seems an excellent strategy to find the best products at the best rates. The same rings are affirmative for the shipping costs.
As a buyer, you might have experienced receiving goods/products from different suppliers. For instance, if you find a product from Amazon to sell, snag for a better deal and search for the best shipping price to increase your ROI.
I will give you a useful tip here. You might have come across Oberlo. They have special features that let their customers switch over the suppliers without redoing their product catalog. Such an amazing and useful feature!! Try innovative like this and grab your customers.
Luckily, when you have a diversified supplier pool, you can tap into any one of the resources that seem to ship products at a considerable cost. Pick the one who neglects to receive high-end commissions.
Set Default shipping methods
When you indulge in sorting out the shipping methods, you would turn pale. Make it easy with the customized shipping settings for every supplier.
For example, let us consider a product. A supplier offers the best shipping rate under a particular platform. You can choose to make a shipment under the supplier. At the same time, you are finding a supplier who offers free standard shipping. In that case, you have to assign shipment accordingly. So, prioritize and customize your shipping methods and make it default.
It eliminates a huge manual process and gives a clear route for your further proceedings. Set it, forget it, and get back to your work to increase your store’s profit. Come back only when you wish to reassess your shipment charges.
Educate customers about additional shipping costs
Have you ever been aware that customers 60% of cart abandonment takes place due to high shipping rates?
Out of the 60%, around 20% of cart abandonment can be reduced when you stick towards the right email marketing campaigns, educating your customers about the shipment process, and flexible checkout process.
When you try to reduce your shipping costs, educate your customers about the reason behind the increased shipping rates. You are not new in this way! Around 20% of the merchants have been providing feature information and shipping policy on their home page.
Remember that the customers feel bad to accept the increased shipping costs during their checkout. If you are charging them for shipping, make sure to give them an explanation prior to their shipping.
Stick to the utility-based packing
Utility-based packaging tries to minimize the packaging costs and reduces the packaging size too. Make sure to keep it simple for shipping and ensure whether the product has been delivered to the right destination or not.
On the contrary to your imagination, utility-based packaging seems highly affordable and can be adopted by anyone who wishes to start their own eCommerce or Shopify store.
Added, here are some more tips to reduce your dimensional product packing.
- Use the smallest box to fit your product
- Do not overfit your product in a smaller box
- Try using light-weight packaging boxes like Tybek bags
As an additional saver, here is the tip to save costs on building a brand through packaging. Try adding stickers of your company’s logo on the utility package. Such a cool marketing idea!!
Choose the right shipping platform
Few eCommerce platforms access discounted shipping rates to the merchants who come up with international carriers. In this case, Shopify deserves it. They have been providing multiple discounts to their international merchants who are based in the U.S. and Canada. They ship with USPS, UPS, DHL Express, and Canada Post.
The shopping software providers also tend to negotiate with the rates directly without any subordinates. It will also pass through the right discounts to the merchants.
Try longer delivery windows
Nearly a quarter of customers wish to get their products within 4 to 7 business days. Not all customers rush upon their orders!! Platforms like Instacart and Shipt would up the products ordered and deliver them on the same day according to their shipping norms. But not every online shopper needs same-day delivery. Many customers wish to make the delivery a bit longer for a perfect product.
When you take a prolonged period to deliver your products, typically it would become an inexpensive product. So, it is necessary to pay an arm and a leg to make it deliver overnight. This may be the reason why many eCommerce companies like Amazon incentivize a longer delivery time.
Implement the ways in your Shopify store now
Shipping costs seem to be a pesky expense for the customers to cut down at your bottom line. Take a little extra time to research and lower these costs to reinvest them in something more important for your business.
As an online retailer/eCommerce store owner, it is extremely important to remain competitive in how tough the race is. So, increase your profit margins through a smart and innovative move. Optimize your shipping costs and pay attention to your customer’s requirements.
Though shipping seems to be a tricky area in the business to conquer, you can make your moves unique and effective. In order to do that, indulge in studying your customer personas and plan your strategy accordingly. It helps you to grow your business and your brand visibility too.