Anyone familiar with e-commerce and online shopping knows that Shipping fees they are perhaps the most annoying aspect of digital transactions.
Despite the reduced price, in fact, we often find ourselves spending more for a product on the web, compared to a physical store, precisely because of the shipping costs. In this sense, it is no coincidence that large digital retail companies (such as Amazon) often guarantee the free shipping (at least apparently).
Therefore, in order to even think of competing with these big giants, a small / medium-sized e-commerce must study a commercial strategy that also includes the free shipping, or at least a method to reduce shipping costs.
How to manage shipping costs
The Shipping fees, however hateful, they are physiological and inevitable. Thinking about it, it is obvious that moving a product from the warehouse / shop to the customer's home involves an expense. Nonetheless, when we are on the buyer's side we are still annoyed.
For this reason, an accurate analysis of the sector and of your online store can be extremely useful to find the most suitable solution in terms of shipping. There are five options.
Shipping costs are fully charged to the customer
The simplest and most profitable solution for the seller is surely to let the customers pay for the Shipping fees in full. However, this option is also the least appreciated by users, for obvious reasons.
Shipping costs are divided between seller and buyer
If you don't want to (or can't) use the free shipping, a good compromise can be to make the customer pay only half of the shipping costs, bearing the remaining cost. This is certainly a more expensive solution than the previous one, but which has a higher probability of conversion.
If you inform the user during the purchase phase that the shipping price would be, for example, 5 euros, but that he only has to pay half of it, there is a strong possibility that this will be positively received by customers.
Free shipping over a certain amount
Increasingly used, this mode performs a double function. On the one hand, it indicates to the customer that there is the possibility of having the free shipping. Secondly, setting a minimum expense incentivizes the customer to exceed the amount that has been established, in order to access the free shipping.
Using this option is likely to see the seller's costs rise, but this is just as likely to incentivize customers to buy. The secret consists in knowing how to accurately choose the threshold which is exceeded free shipping. In fact, it is necessary to identify the amount that allows you to bear the shipping costs, without generating a loss of earnings.
Free shipping in specific cases
If, in addition to the sale, the commercial strategy includes other objectives, one can think of exploiting the free shipping to reach them.
For example, if you are trying to attract new customers to your e-commerce, an effective method to achieve this is to allocate free shipping only on the first order placed. Or you can set the free shipping for those who decide to subscribe to the newsletter, or again, only for certain articles, according to the needs of the commercial activity.
The most advantageous solution for the customer, but most expensive for the merchant, is the free shipping for any purchase or amount. But be careful, not all companies can afford this option, especially if the products in the catalog are cheap.
Before choosing the free shipping it is good to verify that you can financially support this choice. However, if so, it is an aggressive business strategy, which can give a great advantage to those who put it into practice.
Which one to choose?
There is no single answer. The choice of the method to use is closely linked to the commercial activity and the products it sells. As we have seen, the free shipping it is the solution that may be advantageous for the customer, but it is not always sustainable.
Let's take the case, for example, of a jewelry store. This type of business sells products with a usually high cost and will therefore be able to bear the shipping costs. On the contrary, a stationery, which offers a large number of products at low prices, with the free shipping it will see costs rise and risk going at a loss.
It must also be considered that the method may vary, depending on the needs, the time of year and many other factors. An e-commerce can introduce the free shipping for a limited period to encourage sales, for example, during the Christmas holidays.
Free shipping yes or no?
To understand which is the best solution to adopt, it is essential to collect data on previous shipments. If you do not have this information, it is difficult to estimate the costs and the weight that shipping costs have on the total costs.
Our advice is therefore to gather this information before making a final decision. The best solution would be to try different modes among the 5 listed above and thus evaluate the most profitable.
Once the data has been collected, some considerations can be made:
- how many shipments are made in a given period (for example a month)?
- how much does it cost to ship these products?
- what price range do the most shipped products belong to?
- at what time of the year are orders most concentrated?
By analyzing the data collected and answering these questions, we arrive at the solution to the really important question: which method of managing shipping costs is the most profitable?
Since this is a useful guide to any type of e-commerce, in this article we necessarily had to generalize. If you are also looking for the most suitable shipping method for your e-commerce, contact us for personalized advice.
The professionals Digife they will be happy to help you maximize the potential of your business!