While many small eCommerce business owners might have previously believed that their simple shipping approach was all they needed, the pandemic made most of them reconsider it and many businesses decided to invest more in developing and refining their logistics. Investing in logistics certainly pays off, as choosing the right shipping strategy and correctly pricing and executing it provide businesses a competitive advantage.
This requires training all teams involved in the marketing, fulfillment, and shipping processes to provide your customers the kind of experience that keeps them coming back. This blog post will share the best practices for eCommerce shipping and how you can cover the cost of offering free eCommerce shipping.
What is eCommerce Shipping?
Ecommerce shipping involves receiving and processing orders, picking, packing and shipping these orders after printing and attaching shipping labels, and managing returns. Once a customer places an order, you need to verify the product is in stock, verify the customer’s information, and pick, pack and prepare the order. The level of shipping complexity depends on the size and categories of products, your product delivery regions, as well as the delivery and shipping options that your business offers.
What are the Best Practices for eCommerce Shipping?
To make your eCommerce shipping strategy work for you, it is essential to have your team’s goals aligned with your business goals, frequently get feedback from your customers, and analyze your KPIs and continue to make improvements.
Putting Together the Right Team
Identifying the right people for different roles, encouraging communication between them, and ensuring that everyone is capable of performing the job assigned to them is integral to achieving your eCommerce shipping goals. Your fulfillment staff must be fully trained and aligned with your goals. The customer service team must be always available and capable of providing immediate support.
Define and establish your goals before you begin so you know where you want to reach and head in the right direction from the get-go. Your goals could be either to expand your target customer base, expand the markets you tap, enhance your operational efficiency, or increase your average order value (AOV).
Picking the Right Shipping Strategy
There is a range of shipping options to choose from, and picking the one that you can practically fulfill while securing a decent average order value is important. Different shipping strategy options include:
- Flat rate and table rate shipping
- Free in-store pickup
- Free shipping
- Live rates
- Mixed strategies
- Same-day delivery
How Can Your Business Cover the Cost of Offering Free Shipping?
For businesses that sell competitively priced products, it is important to find practical ways to cover the cost of offering free shipping and managing to stay profitable, such as increasing prices, developing a good customer retention strategy, or offering product bundles.
Raising Product Price
Offering free shipping for a cheap product can risk making your transaction unprofitable. Therefore, it is advisable to price your products accordingly. A higher product price tag accompanied by free shipping creates a profitable illusion for your customer while it benefits your business.
Developing a Good Customer Retention Strategy
Developing the right strategy that retains your customers and keeps them coming back for more purchases is crucial to recovering the money invested in securing sales. Retention strategies include smart email marketing, loyalty programs, subscriptions, etc. These make customers stay loyal to your business, and a sale or two later, once the acquisition cost is covered, it is only profit there onwards.
Offering Product Bundles to Increase AOV
A great way of increasing your Average Order Value (AOV) is to offer product bundles and memberships, increasing your profit margin while still offering free shipping. Product bundles ensure reduced fulfillment and shipping costs while enhancing your AOV. Attractive product bundle deals encourage customers to spend more than they might have initially planned to.
Bottom Line: Should you Offer Free eCommerce Shipping?
Time and again, research has shown how customers respond to free shipping offers and it doesn’t come as a surprise that a majority of them (over 80%) prefer shopping for products with free shipping offers. If you want to offer the same benefit to increase your order volumes and profitability, you must first check the status of the following factors and make a calculated decision based on them.
How bulky and big are the products that you are planning on selling or already offering? Heavier and bigger products are less easy to handle while shipping. Therefore, size and weight must be carefully considered before making any shipping offers.
How much profit your business makes and how much you charge and pay for shipping varies from product to product. For example, you don’t need to offer sitewide free shipping if you deal with less costly products.
Average Order Value (AOV)
For businesses offering free shipping with a certain product threshold, it is best to measure the Average Order Value and set a slightly higher threshold.
For businesses offering international shipping, it is best to set an order threshold for customers abroad or exclude them from free shipping offers to save on costs.