A tricky decision for any organisation involved with ecommerce is how to set shipping prices. While, of course, shipping inevitably costs merchants money, customers are often tempted to abandon their shopping carts when they see unanticipated shipping costs added to their bill at the checkout. Indeed, some studies have even shown that shipping and handling fees are the most common reason for shopping cart abandonment, resulting in significant trade losses for many unfortunate retailers.
The challenge, therefore, is to find a shipping solution that appears attractive to customers while leaving as small a dent on your margins as possible. Fortunately, there are a few ways that this can be achieved:
1. Find a way to offer free shipping
Free shipping is, unsurprisingly, a customer favourite, and is a great marketing strategy for up-and-coming brands. Offering it without making alterations to absorb the costs elsewhere, however, can significantly affect your margins.
One way of allowing for free shipping is to increase your prices. Psychologically, an item with free shipping appears to be better value for money than one that costs exactly the same with shipping.
Alternatively, you could offer free shipping to orders above a certain amount. This should push the average order value up and increase profits.
Ultimately, before making a decision about whether to offer free shipping, it is a good idea to do plenty of research into your market niche, the kinds of products you are selling and whether your competitors offer free shipping deals.
2. Charge exactly what you pay for shipping
Offering what you get charged for shipping can engender trust in customers as it demonstrates transparency and fairness. It is commonly known that some retailers inflate shipping fees or play around with the costs of their items to appear to be offering a better deal. Including shipping guidelines and quote calculators is a great way to position yourself as trustworthy and genuine.
3. Charge flat rates
Work out the average cost of shipping and work out a flat rate that seems fair for both you and the customer. This may not seem as attractive as free shipping and may seem less personalised than charging according to an item's weight, dimensions and destination, but it is a good way to save time and effort making calculations and adjusting your prices.