eCommerce Shipping Costs: A Beginner’s Guide for Online Stores
Shipping costs vary widely depending on a number of factors, including the size and weight of the item, the shipping method you choose, and the distance the package has to travel. In this article, we’ll break down all the factors that affect shipping costs so you can better calculate how much it will cost to ship your products!
Why the Shipping Cost Matters
Before we get into the nitty-gritty of shipping costs, it’s important to understand why the cost of shipping matters in the first place. After all, shipping is just one of many costs associated with running an online store.
It Determines the Final Price of the Product
Your customers would want to save as much money as possible. This is why discounted or free shipping promos are quite popular among online consumers. In fact, according to SaveMyCent, 90% of shoppers say that they would purchase items online more often if they were offered free shipping. Meanwhile, 24% would be willing to buy more items just to qualify for the promo.
Despite the undisputed power of free shipping, it’s important to remember that shipping is a cost that needs to be covered somehow. As such, you’ll need to either raise the prices of your products or find ways to reduce your shipping costs so you can offer the promo without eating into your profits.
It Affects the Bottom Line
That’s right. Whether directly or indirectly, the cost of shipping affects your business’s bottom line.
For example, if you’re selling heavy or fragile physical goods, you need to factor in the cost of shipping when calculating your margins. This is because the cost of shipping can significantly harm your profits if you’re not careful.
Your Customers Should Know What They’re Paying For
Transparency is important in business, especially when it comes to pricing. Your customers should know exactly how much they’re paying for shipping before they finalize their purchase. In fact, according to UPS’ Pulse of the Online Shopper reports, about 44% of consumers have abandoned their online shopping carts because they first wanted to know their order’s total cost, including the shipping, and compare it to other retailers before checking out.
This shows that being upfront about the cost of shipping is crucial to maintaining a good relationship with your customers and increasing your chances of making a sale.
A Quick eCommerce Shipping Cheat-sheet
Now that we’ve talked about the importance of shipping costs in eCommerce, let’s go over some of the basics.
There are different shipping methods any eCommerce business can choose from. These can ultimately affect the cost, speed, and convenience of shipping your products. Here are some of the most popular shipping methods or options used by online retailers today:
International Vs. Local Shipping
Of course, it’s pretty obvious that shipping costs will vary depending on whether you’re shipping locally or internationally. After all, it costs more to ship a package across the country than it does to ship it across town.
For most online store owners, the cost of local shipping is easier to manage and predict. This is because you have more control over the process and there are fewer variables to consider. On the other hand, international shipping can be a bit more complicated. This is because you have to deal with different customs regulations, duties, and taxes.
This is among the most popular shipping methods used by eCommerce businesses today. That’s because customers have come to expect fast shipping and same-day delivery is the fastest option available. But of course, this convenience comes at a cost. In fact, same-day shipping can cost up to 10 times more than standard shipping.
Next-day or overnight shipping is another popular option for eCommerce businesses. This is because it’s faster than standard shipping but not as expensive as same-day delivery. Many known couriers like FedEx offer this option but often with weight and size restrictions.
Real-time Carrier Rates
If your store is powered by Shopify or any other major eCommerce platform, then you can easily integrate it with a shipping carrier like UPS or DHL Express. This will give you access to real-time carrier rates, which means that the shipping costs shown on your checkout page will be accurate.
This is important because it will help you avoid overcharging or undercharging your customers for shipping. It’s also a good way to ensure that you’re not losing money on shipping.
Flat-rate shipping is a type of shipping where the shipping cost is the same regardless of the weight or size of the item being shipped. This is also a popular shipping option for many eCommerce businesses, especially the smaller ones because it’s much easier to manage and predict.
If you use a print on demand provider like Awkward Styles for your store’s fulfillment, this is the method your business will most likely fall under. Most providers will offer shipping profiles that can easily be set up through integrations.
The downside of flat-rate shipping is that it might not be the most cost-effective option for you or your customers. This is because you might end up overcharging your customers for shipping lighter items, or spend more on shipping heavier ones. However, it does simplify the process and saves you and your customer a headache or two!
This is the most common type of shipping and it’s what most customers expect when they shop online. Standard shipping usually takes 3-5 days, but it can take longer depending on the shipping carrier.
The good thing about standard shipping is that it’s usually the most affordable option. However, the downside is not all customers may be willing to wait that long for their orders.
How eCommerce Shipping Costs are Determined
Since there are so many shipping options available, it can be difficult to determine which one would be the best for your business. Ultimately, the shipping option you choose should be based on your specific needs and goals.
To help you make the right decision, here’s a look at how eCommerce shipping costs are determined.
Your Target Areas
As mentioned, shipping internationally vs. shipping locally will have different costs. This is because there are different shipping routes and carriers for each. Thus, it’s important to be certain of the areas or regions you want to ship to before making a decision.
If you’re just starting out, you might want to focus on shipping locally first. This will help you keep your costs down while you’re still trying to establish your business. You can always expand to shipping internationally later on.
Your Customers’ Desired Shipping Speed
As we’ve seen, there are different shipping speeds available, each with its own cost. So, one important factor to consider is the shipping speed your customers desire.
If they’re willing to wait a few days for their orders, then standard shipping would be the best option. But if they want their orders as soon as possible, then you might have to consider same-day or next-day shipping. You can also find a way to offer your shoppers different shipping methods and let them choose which one they want.
The Size, Weight, and Dimensions of the Product
Of course, the size, weight, and dimensions of the product will also affect shipping costs. Heavier and larger items will cost more to ship than smaller ones. This is something you need to take into account, especially if you’re planning to offer flat-rate shipping.
The Shipping Packaging You Use
Your shipping packaging will also play a role in the final cost. For example, having your products put in a box instead of bags or envelopes will cost higher. This is because boxes take up more space and weigh more.
To keep your costs down, you can try to find ways to minimize the packaging you use. For example, you can ship multiple items in one box instead of doing it individually.
Your Shipping Carrier’s Rates
Before picking a shipping method, you should also compare the rates of different shipping carriers. They all have their own pricing structures, so it’s important to find one that fits your budget.
Also, take note that shipping carriers often give discounts to eCommerce businesses. Keep an eye out for these discounts and take advantage of them whenever possible.
Your Profit Margins
If you will be handling the shipping and fulfillment of orders yourself, then you need to make sure that your profit margins can cover the cost of shipping.
You can do this by calculating your shipping costs and comparing it to your product’s selling price. This will help you determine if you’re making a profit or not. If you’re not, then you might need to either raise your prices or find ways to reduce your shipping costs.
The Cheapest Way to Ship Your Shirts
Given all these factors and shipping options, what exactly is the cheapest way to send your t-shirts? In this example made by Nexcess of Liquid Web, they compared the rates of shipping a t-shirt from San Francisco to Chicago through the three most popular carriers in the US: USPS, UPS, and FedEx.
The shipping costs per carrier are as follows:
Tips to Help You Save on Shipping Costs
Knowing the cheapest shipping option may not be enough to help you save on shipping costs. After all, there are other factors that can affect how much you actually spend on shipping and the methods you use. This is why we’ve listed down some tips that would surely help you save:
Work With a Print-on-demand and Dropshipping Partner
If you’re mostly selling your own designed t-shirts and other products like accessories and home décor, working with a print-on-demand and dropshipping partner like Awkward Styles will ultimately save you time and money.
This is because you won’t have to worry about things like printing, packaging, and shipping. All you need to do is design your products, upload them to your store, and start selling. Your print-on-demand partner will take care of the rest.
Choose the Right Carrier
If you have products you still have to ship on your own, then you need to make sure you’re working with the right carrier. Shipping rates will differ from one courier to another, so it’s important to compare their rates and services first.
Calculate Your Shipping Costs in Advance
You can use shipping rate calculators to help you determine how much it would cost to ship your products. This way, you can plan your pricing strategy and shipping methods in advance.
Use Flat Rate and Free Shipping to Your Advantage
While these shipping options can be really enticing to your customers, you need to make sure that they won’t hurt your business in the long run. If you’re going to offer flat-rate shipping, make sure that your prices are high enough to cover the actual shipping cost.
The same goes for free shipping. You may opt to offer it only for orders over a certain amount or to specific locations. This way, you can still make a profit while giving your customers the convenience they’re looking for.
Ship Your Products by Batches
If you want to save yourself from the hassle and costs of driving to the post office every time you need to ship an order, then you can opt to batch your orders and ship them all at once. This way, you can take advantage of discounts and lower your shipping rates.
Pack Your Products Wisely
How you pack your products can also affect your shipping costs. This is because the size and weight of your package will be taken into account when calculating shipping rates.
So, if you want to save on shipping costs, make sure to pack your products as efficiently as possible. Avoid using unnecessary packing materials and choose the right box size for your products.
Use Automation Tools to Help with the Shipping Process
There are now a lot of automation tools available like Easyship, that can help you streamline your shipping process. These tools also let you save money through exclusive discounts and lower shipping rates.
Sell, Ship, and Profit!
With these tips and information on hand, shipping your items doesn’t have to be stressful. Just remember to take your time in planning and be wise with your decisions, and you’ll be able to find the best solution to send your precious products to your beloved customers.
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