CHOOSING A SHIPPING STRATEGY FOR YOUR ONLINE STORE

Shipping charges can be expensive, especially for large or fragile items - and when customers see a number that's higher than expected in their checkout cart, they might just start to second-guess their decision to purchase something. With that in mind, what options are there for choosing your shipping strategy?

CHOOSING YOUR STRATEGY

With free shipping, customers know that they'll only pay the price of the item, plus any applicable tax, and that can drastically improve their willingness to buy... especially if what they're ordering is expensive to start with and they don't want to spend any more money than they have to. There are several ways of offering free shipping, and each has its advantages and disadvantages.

#1 OFFER FREE SHIPPING

» Truly Free Shipping: All orders, all the time. This is guaranteed to lower your profit margins, but customers will come to you knowing that they're going to get the best possible deal. This type of offer tends to work best for stores selling luxury goods, whose higher profit margins make it easier to absorb the costs. It's less sensible for stores that have low profit margins.» Free Shipping Past A Threshold: In this setup, free shipping is available for any order past a certain dollar amount. This encourages customers to make larger orders, and can help protect you from orders where you're actually losing money by making the sale. The key here is to have the threshold at a low enough point that it's commonly reached, but not so low that you start to lose out on profits you could be having.» Free Shipping on Select Items: Some items have larger profit margins than others - this setup will allow you to offer free shipping only on the items where it makes financial sense.

#1 OFFER FREE SHIPPING

Many customers worry about the bill for shipping being padded - an extra five or ten percent charge for shipping could wind up being a lot of money for the company over time. Fortunately, there are ways to help build customer trust when it comes to shipping, and it all comes back to the shipping calculator.

Getting an estimate from the postal carrier - rather than the website - can help people recognize the reality of shipping options. It can also help to show them the lowest price first, and ask customers to select a faster, more expensive option if that's what they really want to use.

#2 DIRECT CHARGING

This shipping strategy is something of a balance between the other two - you'll make a profit on some orders and a loss on others, but it should be possible to set a rate where you'll come out more-or-less even. However, there are a few things to keep in mind:» If you need to ship from multiple warehouses, you'll effectively be paying twice as much for shipping. That can be very difficult to avoid taking a loss on if you offer flat-rate shipping.» Parcel carriers may not offer flat-rate options for smaller packages (envelopes, etc.), and you'll need to take the varying weights of orders into account when deciding on the flat-rate price you offer.» Shipping prices should reflect the average value of the orders you get - search for the balance between what you can afford and what customers will pay.

#3 FLAT RATE SHIPPING

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