Shipping is one of the main expenses for any online business. You can have great products at the lowest price out there, but it’s shipping that enables customers to try the products you offer.
Inaccurate shipping rates, high real-time rates, lack of delivery options are some of the key factors shaping why your customers might abandon their shopping carts instead of proceeding to checkout. To achieve cost-effective shipping, retailers might want to consider matching products dimensions with the dimensions of the package, use dimensional weight shipping, apply landed cost when needed, and more.
To find out about all tips on cost-effective shipping, have a look at these steps and factors influencing shipping costs directly.
The more precise package parameters you send to the carriers, the more accurate real-time rates you will receive. In some cases, this means saving extra money on shipping. Carriers charge more for bigger packages even if they are lightweight because they take extra space in the transportation vehicles. Retailers ship packages wrapped in filling and packaging materials that take 70% of the whole package. Not only is this unprofitable for all parties, but it is also harmful to the environment.
As a retailer, it is important to match the dimensions of the product with the dimensions of the package. This is called Smart Packaging. Smart Packaging is a shipping feature that automatically pre-packs each order into the optimal package and requests real-time rates directly from the carriers based on these specific parameters. Smart Packaging feature is very similar to what many might know as Dimensional Weight Shipping.
Unlike Smart Packaging, when using Dimensional Weight Shipping there are only the product’s dimensions taken into consideration which are length, width, and height of the product. Both methods are cost-effective, however, the accuracy of real-time rates is higher when using Smart Packaging.
Landed cost is a sum of all costs it takes to ship a package abroad. These costs include value-added taxes, insurance fees, shipping costs, import licenses, customs duties, and similar. Some of the costs like import license or insurance fees are not obligatory and depend on the nature of the product or the country the package is going to be shipped to.
It is crucial to keep in mind that accounting for shipping and manufacturing is not enough. The formula for calculating landed cost should include profit margin as well. Profit might be completely wiped out altogether by the landed cost if the retailer miscalculates how much it will cost to ship a package abroad.
Additionally, surprising your customers with unexpected shipping costs after receiving packages from abroad is not professional and might lead to dissatisfied customers.
Rate shopping is a comparison between carriers’ service and their corresponding real-time shipping rates. This comparison serves to find the cheapest or the fastest real-time rates. The process of rate shopping can be fully automated, saving a lot of time. Overall, the automated rate shopping process creates a better and simpler checkout experience, as only the best shipping rates are visible for your customers.
Offering a return policy is nothing new and unique these days. The majority of retailers use quick and free returns as a competitive advantage. However, what will be the influence on your business if you offer a zero return policy?
The point of limiting the return policy is to make your customers aware of what they shop for. The drawback of the return policy is that any product can be returned quickly and easily.
Customers do not pause about the necessity of the product and online shopping becomes very impulsive. It became easier and cheaper for retailers to dispose of faulty products rather than repair them. Limiting return policies might save you as much shipping cost as any other factor mentioned above.
The destination is another factor influencing the cost-effectiveness of your shipping. The farther away the destination is, the more expensive and slower it is to deliver the products. The problem with international shipping is that often carriers delegate shipments to one another once they reach the international borders. For example, for some ground shipping services UPS delegates shipping to Canada Post as soon as it reaches the Canadian border. This process is slow and requires one unified shipping rate from both carriers.
If you are shipping from the United States, check out the list of the countries which are in a free trade agreement with the US. Free trade agreement allows you to ship with lower shipping rates, but it does not guarantee lower tariffs for each type of product shipped. Still, it makes moving goods around the world more cost-effective and easier.
Here are summarized the main factors that are necessary to achieve cost-effective international shipping. Some additional factors might be the inclusion of delivery dates at the checkout to avoid paying for re-routing or rescheduling of the package. Some of these factors are not only helping you to achieve cost-effective shipping but also increasing the accuracy of real-time rates as in the case of Smart Packaging and Dimensional Weight Shipping.
Lucia Liskova is Marketing Manager at Calcurates by Amasty shipping SaaS for e-commerce.