Ecommerce Shipping Profitability

Using an efficient ecommerce shipping approach is one of the most important steps you can take to expand your online business. While many companies start out in ecommerce using a basic method of shipping, like offering free shipping across on all items or showing unmodified courier rates, the merchants who succeed the most use strategic shipping options to distinguish themselves from their competition and increase margins.

Shipping can be a significant point of differentiation for your business however it is important to make sure that your company can actually follow through on the strategy. This requires communication between multiple teams within your company, from your marketing team all the way to your fulfillment team — and all others in between. Creating a shipping strategy for your online store allows you to make sure that everyone involved in this process knows what’s going on and what is expected of them.

Best Ecommerce shipping Practices

Gather the right team.

Finding the right people to assist in making this decision for your business is the first step. This requires that you involve in the conversation the correct stakeholders within your business.

  • The marketing team must share shipping information to your customers. They can use promotions like free shipping, or flat rate shipping to lead people to your website and improve order value.
  • The web design and development team is responsible for making sure the correct shipping options are being presented to the customers at the right time, and that the offers are understandable to the customers.
  • The fulfillment team must make sure that all orders are being picked, packed and shipped correctly and on time. They are also responsible for ensuring that regardless of the option the customer picks, the team can handle the fulfillment. 
  • The customer service team needs to know how your shipping process will affect customers at each stage so they can accurately answer customer inquiries. 

Identify the goals for your shipping strategy.

Once you’ve established the main teams in your company that will be involved in establishing your strategy, you need to identify what you need to accomplish with your ecommerce shipping strategy.

Here are some goals you can focus on… 

  • Increase order value.

Offer promotions that encourage customers to purchase more, such as free shipping on minimum orders or expedited shipping at a certain price point.

  • Increase conversions.

Offer the kinds of shipping and rates that customers are expecting. These can have a substantial impact on your conversion rate.

  • Improve operational efficiency.

Make sure the fulfillment teams have all of the information they need to make the best decisions about how to pick, package and ship your products.

  • Inflate market or target audience.

Offer shipping in new areas or those who could not previously access the product. 

  • Reduce costs.

Make incremental changes to the shipping process and shipping service the brand is offering. Major carriers often offer alternate services that can reduce costs while still delivering a high level of service.

Choose between ecommerce shipping solutions and options.

Once you have put together your team and established goals for your business, it’s time to choose a strategy that will work for your team to achieve the goals you’ve set. There are a variety of strategies to consider and there are pros and cons for each of them. None of these are exclusive of one another and the most profitable online business will use multiple of these options to form a complete strategy for their individual scenario. As the ecommerce manager or project owner for shipping strategies, it is important that you approach the business with an understanding of the major elements of the shipping industry.

Key elements – 

Product size and weight

The size and weight of your product is often the easiest to wrap your head around and has the most influence on the approach you choose. If your products are relatively similar, then going with a per-item, location based approach, where the shipping price fluctuates by your customer’s location and not by product size or weight can work well.

For merchants with varying sizes and weights among your products, acquiring rates directly from a courier is a great way to make sure the rates you’re offering are the best possible ones. It is important to ensure you have accurate measurements and weights for your products so the rates you receive from a carrier are as precise as possible. This will have the most significant effect on your shipping rates and offer the best return on investment.

Shipping Destinations

Shipping destinations are just as critical as product weight and dimensions. In a simple situation like domestic shipping, a flat-rate or free shipping option works well. To develop further, set rates based on destinations. For example, if you’re located in New York, offer a cheaper rate for the mid-Atlantic region and increase the rate as you spread out out from there.

Shipping Options

Managing your shipping options allows you to keep customers happy and control costs. Research beyond the larger courier companies and you will discover an abundance of opportunity to offer same-day delivery, next-day delivery or timely and cost-effective delivery for even the largest items. Offering the right shipping rates and options to your customers is essential to the success of your online store. Doing this correctly can make the difference between losing a customer if you charge too much and losing your shirt if you charge too little. Also, it’s not just cost that makes a difference. Presenting the right shipping options  at the right times plays an important role in reducing cart abandonment and increasing profits. Taking full control of your online store’s shipping means that you can offer the lowest shipping rates possible, still cover your costs, and offer the options your customers want.

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