How to choose the right shipping strategy for your store
Delivering goods to your customers is one of the critical aspects of running an online business. You must find a way to transport the products intact, in as little time as possible without breaking the bank. In fact, finding an optimal shipping strategy has a profound impact on customer satisfaction, setting a basis for a health company.
“The two main reasons why people abandon a cart is because shipping is too expensive and/or inefficient,” warns JTM, an Australian freight forwarding company. “In this day and age, customers are used to getting their products within a week, even if it’s sent across the world.”
In this article, we will go through some of the most important factors you must consider when choosing a shipping strategy. After that, we will go through some of the best options you have at your disposal.
Factors You Must Take Into Account
Before choosing a specific shipping model, you must take into account different factors that affect your profits and customer satisfaction:
Product
The type of product you’re transporting has one of the biggest impacts on your shopping decision. Large, heavy, and fragile objects require special care, commonly resulting in higher expenses for the retailer. On the other hand, if you’re selling clothes or light, small products, you’ll have an easier time finding an affordable partner.
Volume
Companies that sell large quantities of items have much more leverage when negotiating shipping prices. This is especially true if you’re sending bulk packages all the time or if you transport several containers during every trip. On the other hand, smaller stores are often “penalized” by spending more money on shipping and having to increase their prices (or reduce profits).
Target Market
Domestic trade is usually much easier, resulting in lower costs. Then again, this might vary based on your location and the location of your clients. For example, if you’re transporting goods across Russia or USA all the time, you might have to spend extra to cover expenses. International shipping is especially tricky, because we also have to consider customs and duties.
Customer Expectations
You must learn what’s most important to your target audience. Some people prioritize price, while others focus on speed or reliability. While some customers are willing to wait several weeks for their package to arrive, others may require it within a few days, making them more willing to pay extra for the service.
Profit Margins
You must make a financial projection to determine how much money you can spend on shipping before it eats away your profits. While the transport should meet the needs of your clients, you must also consider how much money you’ll earn from each round-trip.
6 Shipping Options
Online companies have 6 main strategies at their disposal:
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Free Shipping
Most online businesses nowadays offer free shipping to customers, which improves conversion rates while reducing cart abandonment. People love free shipping because they don’t feel swindled; the last thing you need is to incur a last-minute cost while ordering products online.
Although this is a fantastic feature, it forces shops to absorb the transportation expenses. So, you must make sure your margins are high enough to justify the strategy. Many companies offer free shipping only once you reach a certain purchase threshold.
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Flat-Rate Shipping
The great thing about flat-rate shipping is that it makes customers’ costs much more predictable. Whether you buy 1 or 100 items, you’ll still pay the same. This is simultaneously the strategy’s biggest drawback, especially if most of your customers buy small, low-cost products.
A flat-rate tactic is optimal for shops with products of similar sizes and weights, as there isn’t much fluctuation in potential expenses.
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Real-Time Carrier Rates
This method allows clients to cover a carrier’s charges, which brings about more accuracy and transparency in the entire transportation process. The strategy is especially beneficial for large shops with a diverse assortment, especially if they have a large pool of international buyers.
The problem with real-time carrier rates is that many clients will get discouraged when they see the price tag, especially if they don’t need the product that much. Ideally, you should integrate the carriers’ API into your web store to streamline the process and ensure up-to-date costs.
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Local Delivery
Ideally, you should use local delivery as often as you can. The strategy is perfect for small businesses whose clients are mostly located in the same city, such as florists, bakeries, and food retailers. The great thing about local deliveries is that they’re fast and convenient, giving shoppers quick access.
Of course, the strategy won’t work if you’re selling products in other cities or thinking about expansion. Nevertheless, local delivery is a fantastic way to improve your customer service, especially if your competitors are still not using it.
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Tiered Shipping
With this strategy, you ensure higher flexibility while improving upselling. Basically, the more your customers buy, the lower the shipping costs. The strategy motivates your buyers to get as many items as possible, thus unlocking better rates.
The most important thing about tiered shipping is transparency. Potential customers must understand what they’re getting into to avoid backlash. The approach is fantastic for stores with diverse inventory.
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Same-Day Shipping
Same-day shipping is not a necessity for most customers, but it can be a game-changer for some. As you might expect, this strategy costs more but enhances clients’ convenience and delivery speed. This makes it ideal for perishable goods, but it is also very common among luxury clients.
The biggest issue with same-day shipping is logistics, especially if you’re transporting goods to other cities or even countries. Because of that, you must find a suitable shipping partner to ensure your clients receive their goods without issues.
Finding the Best Shipping Option
First off, we recommend that you get acquainted with your business and its peculiarities. After that, you should check out the suitable shipping providers until you find the right partner. Give yourself an option to back out of a deal, and look for another partner if the first one proves unsuitable.
