One thing I have discovered with most new e-commerce store owners have a problem with is figuring out shipping. Not only, figuring out how to ship, but also what to charge to ship. After doing this for years, it is second nature for me but I know it is something difficult for new entrepreneurs. I wanted to take some time to go over not only, what shipping options are available to you, but also how to price your shipping. Obviously every store is different and how you price your shipping has to reflect your store, your philosophy and your customers.
Here in the US we have multiple shipping options including US Postal Service, Fed Ex, UPS, DHL as well as commercial carriers. Most likely starting out, USPS will be the most cost effective option for new store owners. USPS, depending on what you are shipping has a ton of options including first class, parcel, flat rate, regional flat rate and cubic rate pricing. If your product is less than 13 ounces (16 ounces if you use a commercial service like I recommend at the bottom of this post) than you can ship things via first class mail which will save you a lot of money and just works so well. If not, check out the flat rate boxes which are 3 days shipping. And, if you are in the same zone, regional flat rate boxes may save you a ton. Finally, Cubic Rate Shopping is what a lot of subscription boxes use to offer free shipping on a monthly basis. Either way, all shipping options including tracking at no additional charge if you buy online or use a service.
Fed Ex, UPS and DHL are also options, especially if your products won’t fit into a standard flat rate box. They all price based on dimensions and weights and you have to be careful about larger packages getting surcharges. If you ship both large and small items, check out Fed Ex with their SmartPost feature. In this case, your smaller items are shipping by Fed Ex, dropped off at a local post office and the Postal Service finishes the delivery. This allows you to maintain your volume with Fed Ex on your larger items. After you have consistent volumes, reach out to all of the and have them give you a bid on pricing.
In some cases you won’t be able to ship via the regular carriers. This is especially true for big bulky items, like furniture for example. In this case you will need to use a freight service or what they call a white glove service. Obviously you have to have enough margin to make this worthwhile as the large bulky items are not cheap to ship.
How much to charge
Figuring out how much to charge for a shipment is not easy. The first thing you need to do is figure out if anyone else is selling your products, and see what they are charging for shipping. For example, if your product is being sold on Amazon with prime shipping, you are going to have a hard time charging shipping. If you are the sole seller, then you have other options. Ideally, free shipping gives you the best sell through. Normally, I like to offer free shipping with a minimum purchase such as $50 or $75. This incents the customer to buy more and can increate your average transaction volume. Depending on your cart, you can set it up to do it automatically, or use a coupon.
My rule of thumb for my e-commerce stores, is not to charge more than $6 shipping. Anything more and I notice a larger cart abandonment and people are so conditioned by Amazon’s cheap shipping, anything more than $6 just turns them off. Now, if you are using a dropshipping company to sell your products and they want to charge $13, $17 or more, you will have to eat part of that. If you don’t have the margin, I am not sure what to tell you since I don’t use those services.
Obviously, this is very domestic-centric when it comes to shipping. Most carts allow you to create shipping zones to reflect different pricing and I highly recommend you take advantage of as many zones as possible. In fact, if you are shipping internationally, then setting up real time shipping in those zones probably make sense. People buying from overseas are more forgiving of higher shipping costs.
One of the best recommendations I can give you is to look at a shipping service. Now, if you are using Shopify they give you the ability to buy postage but there are also services like Stamps.com and Endicia, which have been around for ever. Not to long ago, I switched over to a company called Shipping Easy. It integrates with tons of carts and gives you access to commercial pricing that allow you to do things like Cubic Rate Shipping and 16 ounce first class mail. And, starting out, they even have a free tier. Go click the link below and take a look at the demo.
Let me know what you like to do or use in the comments below.