Shipping is one of the key reasons given for abandoned shopping carts.
It’s a critical issue for ecommerce businesses to address – 60% of people who abandoned carts have said they did so due to shipping costs.
With that being said, we wondered what shipping best practices there may be that actually help ecommerce stores with conversions. Here’s what we found:
You’ve got to be upfront about shipping
Customers hate (bad) surprises in the checkout. That includes an unexpected shipping cost or a shipping cost that seems too high for what they’re ordering. In fact, this is consistently one of the top reasons given for abandoning the cart.
Shipping shouldn’t be seen as a secondary part of an ecommerce business, it can actually operate as a sales strategy. Customers who are surprised by shipping costs often abandon the cart. Suddenly, the item that seemed like a good deal appears much more expensive. People have become used to Amazon’s “free shipping” options, often without considering they pay for membership. It’s fair to say, expectations are high.
For conversion’s sake, it helps to be upfront about the cost of shipping. Let customers know early what to expect so they don’t get a shock in the final stages of the shopping cart. Of course, your shipping strategy will play a role in what exactly being “upfront” looks like…
Ecommerce businesses often don’t think of shipping as part of the strategy of their business, but in truth, you can devise a shipping strategy that is linked to any specific sales or business goals you have. Here are some to consider:
Goal
Shipping Strategy
To increase average order value
Offer promotional shipping, such as “free shipping on all orders over $50.”
To encourage more small, “impulse” buys
Free shipping on all orders
To get more first time buyers to try your products
First order ships free
To show consistency and provide a simplified service
Offer flat rate shipping (e.g. shipping is always $5)
To meet the varied needs of customers
Offer options, for example free standard shipping or a $20 fee for expedited shipping
To get more customers on your email list
Code for free shipping when they sign up
Price has to be a crucial component of any shipping strategy, as it’s the most frequently cited reason for ditching the sale. How you price your shipping will directly influence your conversion rates and your profit margins.
One of the big issues ecommerce businesses strike when devising a pricing strategy is the balance between offering what customers want (which, let’s face it, is generally that you charge as little as possible) and remaining profitable. It can be a tricky one to manage, especially if you offer products of different sizes and weights. Naturally, you’re going to pay different amounts for shipping depending on how the order is made up.
What do shoppers want? Naturally, most will say “free shipping,” but a Pitney Bowes survey of shoppers also found:
88% said that free shipping with 5-7 day delivery time is more attractive than paying a fee for 1-2 day faster delivery
3 in 5 consumers have increased their total spend in the past to qualify for free shipping
93% of consumers say shipping options are an important factor in their online shopping experience.
Options. Customers want options and that’s an important thing to consider for your shipping strategy. Of course, different ecommerce stores have different target customers with varying needs – one of the best things to do when determining your shipping strategy is to survey your own customers (or an audience made up of people who represent your target customer). Find out what really matters to them, for example, speed of delivery versus cost of shipping.
Ecommerce shipping options
Let’s look a little more closely at common ecommerce shipping options:
Free shipping
Free shipping is one many e-tailers struggle with. Shipping is expensive! Offering it for free can hurt your profitability, especially if you’re a small business.
On the other hand, free shipping checks the box in terms of “no surprises” for the customer and in general, it does positively correlate with conversions. (Of course, you have to do your own testing on this. Shipping cost is just one of several potential reasons someone might abandon the cart…)
Many smaller ecommerce businesses take the strategy of only offering free shipping on orders where they know they’ll make enough on the sale to cover shipping and still make a profit. That’s where “free shipping on orders over $X” comes in.
It involves doing a little homework. You need to look at your profit margins and run some scenarios to see where free shipping becomes profitable. Free shipping tends to be a “win some, lose some” deal. Some orders might see you barely break even, while others will be profitable. Taking a monthly view of averages tends to be better than freaking out over an order where the shipping costs sliced out profits. So as long as you work out with a reasonable monthly profit (whatever that looks like to you), free shipping might work.
You could also build some shipping cost into the price point of your products. This also tends to be a balancing act – shoppers who are price conscious will compare you to any competitors. You might still come out on top though, especially if competitor’s make up for their prices with additional shipping costs. Again, research is the key. Include competitor research in your shipping strategy.
Lastly, look at delivery timeframes. You’re not Amazon with endless resources and lucrative postal contracts. If you offer free shipping, it’s not going to be within two days for the customer. It’s important to know what you can offer so you can be transparent with the customer.
Flat rate shipping
Flat rate shipping might look like $10 per order, no matter what or how much is ordered, or, you might go for a table rate structure.
Table rates mean that the shipping rate changes according to whatever conditions you set. For example, maybe you can offer $5 shipping to residents of California, but $8 for residents of other states. Or, you might do something like $10 shipping for orders up to $50, $5 for orders up to $100 and free shipping for all orders over $100. Charging according to the weight of the order or charging according to speed of delivery are other ways to do it.
The pros of flat rate shipping are that it’s easy to explain to the customer. You can put your rates upfront, by showing them on your product pages or your homepage. Charging for shipping on lower value orders should also help offset your costs on the free shipping orders. It’s not perfect – you’ll still win some and lose some. However again, as long as your monthly average works out at a profit, you’ll be fine.
If you opt for flat rate shipping, do some testing and recording to see what works out best for you. Will you be better off charging for order value, or for weight?
Exact cost of shipping
There are live shipping calculators available (which you can use with your WooCommerce checkout) that will calculate exactly how much shipping will cost, according to the weight of the product and the destination for delivery.
While this shipping method doesn’t eliminate the surprise factor for the customer, in some product niches, it will be helpful for conversions. For example, B2B customers buying large, heavy items are probably less worried that they actually have to pay for shipping, and more concerned that you’re not somehow ripping them off by overcharging for shipping. A live calculator shows them that you’re not picking a number at random.
If you sell large items, using a live shipping calculator may be your only choice to ensure you don’t lose money on shipping the item. If you ship large items regularly, it’s important to negotiate good rates with your carrier that you’re able to pass on to customers. It could be a difference between you and competitors – others might have more costly shipping, or might offer free shipping with a higher price point for the item.
Final thoughts
Okay, so there is a lot to consider when it comes to ecommerce shipping best practices. The one universal best practice is to be upfront with your customers. Avoid surprising them in the cart with shipping costs – they should know those are coming!
In terms of other best practices, viewing shipping as part of your sales or marketing strategy is a good one to embrace. That means what works best for you may not be the best solution for a different ecommerce store.
Lastly, it’s obviously important to find that balance between appealing to customers and profitability. Research, test and find the shipping strategy that delivers conversions AND profits.
