A complete guide to shipping strategy
So, you’re an online store looking to set up your effective shipping strategy. Here are some foundational questions you’ll need ask yourself before you start.
What are your shipping costs and how will you ship?
You’ll need to decide how much of the shipping costs you will absorb and how much the customer will bear. Many companies offer free or flat-rate shipping for purchases over a certain about to mitigate some of the costs. So how do you decide?
How much does your product weigh?
If you don’t already do this, make sure that you have measured and weighed each of your products. Leave some wiggle room for packaging because this will help you avoid unexpected costs. Once you’ve done that, you will have a general idea of your total shipping costs. Based on your expected profit, you can then decide how much of the shipping cost you’ll need to pass on to your customers.
While there is something to be said about the psychology of packaging (and you can read our previous article about it), you’ll also need to decide on what’s appropriate. For example, if you’re shipping liquids, you want to make sure it won’t leak through the packaging! Or, if it’s something fragile, your packaging will need to be padded against damage. While you can buy your own packaging, some shippers can provide packaging at a discounted price!
Set your shipping rates and methods
Now that you’ve got the basic questions down, you can set your shipping rates based on your potential costs.
So, now you need a pricing strategy dependent on your underlying business financials.
Can you swing free shipping?
Lots of customers add products to their cart but hesitate when it comes to completing the order as soon as shipping costs appear. Offering free shipping is one of the most effective ways to ensure those orders get completed. However, shipping costs are inevitable and must be borne by someone. If you want to offer free shipping, there are a few ways you can do that:
* You can up product prices to cover shipping costs. However, this essentially means that you pass on all or some of the cost to the customer.
* If you’ve got comfortable margins, you could pay the full price of shipping. This could lead to better sales because you keep your prices low and finishing checkout a breeze.
Why not reward your customers?
Many companies employ strategies to reward loyal or new customers with a free shipping discount code. However, this can translate into some background work to make sure these discount codes work and customer support.
What about free shipping flash promotions?
One way to avoid the potential technical issues with selective discounts, is to offer a flash promotion on all products for a limited time! However, you’ll need to have an existing customer base and sufficient online traffic for this to really be useful.
Have you implemented minimum orders?
Offering free shipping on a minimum order amount can help offset shipping costs by increasing your average order size. If you utilise a drop shipper, who will ship at a flat rate under a certain weight, this could save your margins!
Charge Real-Time Carrier Rates
If you can’t swing the free shipping, your shipping strategy could be to charge real-time carrier rates. For example, you could partner up with carriers like DHL to generate shipping options and live pricing. This passes on the cost to your customers, but they get to choose and pay for the service they want.
Charge a Flat Rate
The final effective shipping strategy is to offer a flat rate shipping price. However, you will need to ensure that you fix a price that doesn’t undercharge or overcharge your customers. No one wants to pay $20 to get small items delivered. Flat-rate shipping is most effective if your products are fairly standard with similar sizes and weights.
What do couriers charge for?
If you want to outsource your shipping, you need to understand what a courier is charging for. It’s not as simple as dropping something in a mailbox. They need to take into consideration the following factors:
- Shipping source
Shipping costs can quickly add up so you should always double check your math. We’ve designed a simple cost pricing document that can help you finalise your shipping strategy. Don’t get side lined by unforeseen costs!
[lnsert link to mailing list sign up for free shipping cost document]
Do you have pretty packaging?
Once upon a time, packaging was as simple as some brown paper and string. However, with more people selling more products, packaging is an effective way to stand out from the crowd. Shipping, packaging and unboxing are part of the ecommerce customer experience.
This means you’ll need to really impress your customers by delivering an experience, not just a product.
If you see a turquoise box with white trim, your mind instantly goes to Tiffany and Co. That’s the kind of experience and presence you need.
Some brands even go as far as to encourage their customers to post pictures of the packaging on their social media. And market research has shown that it works because 4 out of 10 people will post pictures of their purchases if the packaging or unboxing is pretty.
Sealed mailing bags or bubble wrap is great, but if you want repeat sales, you’ll need to consider how you can provide better customer experiences.
What are my options?
Most shipping companies or couriers will have basic options for packaging including (padded or unpadded) boxes or envelopes.
There are many different types of boxes, even ones with bars to hang clothing! (I know, amazing right?)
However, if your product is something non-fragile and unstructured, you might benefit from using poly mailers. Lightweight and adjustable, they can save you shipping costs. This is an important consideration because size and/or weight are the key considerations.
Insurance and tracking
If your product is something valuable, such as custom jewellery, it’s a good idea to get insurance and tracking on your orders. These options are relatively inexpensive and, at the very least, it’ll give you and your customer some peace of mind. Always ask your courier if their costs include shipping prices, because some do, which can inflate their prices.
Customs declaration and forms
For international shipping, you’ll need to consider customs documentation and fees. Super annoying, we know. Essentially, you need to declare what you’re shipping, for how much and for what purpose.
Typically, any additional customs fees upon arrival at the destination is the responsibility of the customer. However, it is smart and convenient to include this information on your page so customers aren’t blindsided by unexpected fees.
The Australian government has some tools to help local merchants calculate these costs.
Similarly, Australia Post has a website with customs forms.
Labelling your packages
The final step in your packaging and shipping strategy are labels. Stickers, stamps or plastic pockets are good options. While you can write out shipping labels, as your company grows, this is not a sustainable strategy.
Is this all just a little much?
What is a fulfillment warehouse?
Fulfillment warehouses are businesses that automate and handle you’re your shipping. From order fulfillment to delivery, they will do it all. As an order comes in, inventory from your stock at their warehouse will be picked, packed and shipped just the way you want.
What’s the benefit?
Apart from the sheer, unbridled convenience of using an Ecommerce and Warehouse Fulfillment Services Brisbane AU, you benefit from cheaper wholesale shipping rates and faster shipping, which leads to happier customers.
Fulfilment warehouses ship tons of stuff for tons of people. Therefore, they maximise their shipping capabilities. These are savings that are passed on to you, their customer, and your customers! It’s a win-win!
If the bulk of your customers are in Queensland, choosing a fulfilment warehouse that’s in the state can cut down the shipping time it’ll take to move inventory across the country.
Whether you’re starting or expanding your shipping strategy, it is a difficult consideration. We hope this comprehensive guide will help you understand all the involved factors so you can make an informed decision.