How to Optimize Shipping Cost for E-commerce

Many people would agree that the times of big multi-stores, as large as a football field, have ended. Nowadays, we witness the rapid development of e-commerce companies.

Often idea-based startups at the beginning, they develop to large nets of agile commercial entities with big client bases and a long range of products and services. Small companies or even creative individual entrepreneurs are getting more and more market share.

Buying things on the Internet gives customers a lot of opportunities. First of all, it saves time and often money. At the same time, some clients still prefer buying things offline, as they are afraid that the product in the catalog will differ from what is eventually sent for them. Others have big concerns on the issue of shipping.

Unfortunately, we often face the problem of delayed shipping, or it’s hard to estimate the final cost of delivery, as the sellers can’t offer a standard price list of the shipping services. It also happens when client want to save money and order products with the bare price without estimating the delivery cost, and in the end get the products with much higher price, because the seller can’t provide a proper shipping solution.

So, if you feel that the only obstacles in the way of gaining the clients’ loyalty is shipping cost, then it’s time to analyze a couple of main issues:

  • How do you calculate the shipping cost?

Shipping companies, working with clients on regular basis, inform them about some seasonal changes in their fees. For example, national holidays and different special dates ramp up the number of gifts being shift around the world As the amount of good being shipped increasing, ship times increase. Many clients have waited more than two weeks to get the goods they buy on Black Friday.

To avoid surprising customers with extended shipping times, here are two main points, e-commerce companies need to take into account.

  • The first one is the possibility of extra shipping expenses due to the overload on Christmas and other holidays.
  • The second issue is the possibility of delays.

These things must be analyzed when you form the final proposition for your client, and he/she wants to get extra guarantees the product will come on time, such as possible fines or product decline if it doesn’t come when it should. Make sure to calculate shipping costs effectively so you don’t run into any issues.

  • Do you calculate properly?

There are a lot of modern shipping solutions for e-commerce which you can use in your business. Professional software will help you become precise in calculating as platforms not only help to estimate the cost, comparing famous international carriers, but also help develop strategic tricks to make your business safe.

Applications for estimating the shipping cost have a user-friendly design and easily integrate with your e-commerce platform (Magneto, Shoplift, Woo, etc.). Analyzing your data step by step, the software will help you keep all the stages of calculation under control.

  • Who decides on insurance?

Many e-commerce companies choose the strategy to offer their clients a full package of services, including product insurance. Research show that the insurance fee included in the final price of the product can influence the buyer’s decision, as it adds more expenses.

That’s why to be clear and gain the client’s trust fully, the best strategy is to offer insurance as an extra option when the client gets the price for each constituent separately in the formula:

price of the product + shipping fees + insurance cost

In the end, you give an opportunity to your client to make his own decision whether he wants to save money and exclude the insurance from the total cost, or agree on the final price with all the components. In this way, you show there’s nothing to hide from the clients and build a transparent, trusting relationship.

  • Who is better: a local player or a global one?

Another way to cut the shipping cost is to choose the proper shipping company. Global shipping companies have a lot of advantages. They are trustworthy, experienced, and have good shipping facilities. But sometimes they might not be that attractive in regard to shipping prices.

Big players choose big partners. Sometimes, it’s not very profitable for the big company to cooperate with a bazillion smaller companies. Under normal conditions, every client is worth cooperating with. But when it comes to some extraordinary situations, like already mentioned national holidays, they prefer to load their facilities with the products of the bigger senders.

Everybody knows how difficult it is to perform all of the accounting procedures at the end of the year, working with minor partners. That’s why each e-commerce company should have a list of local shipping firms. They are often not overloaded. Besides, as they want to gain more trusted and regular clients, it’s easier to negotiate on the price of the shipment. They are much more flexible than global players.

  • Do you often hurry?

When you start working in the field of e-commerce, be very careful with the time you spend on making the key decisions. Don’t let the temporary success go to your head. Starting the negotiation with a new shipping company should begin with minimal orders until you ensure quality.

Trust needs evidence. On one hand, when you come with a good list of products to send you might look attractive to the suppliers. But at the same time, you haven’t seen them in the action, that’s why it’s important to start with a minimal shipment or minimal product lines to analyze whether they are as good as you’d be led to believe by their advertising campaigns.

Kicking off working with a bulk of delivery orders, you automatically agree on the shipping price and lose the opportunity to bargain and negotiate the costs once again in the nearest future. On the other hand, there are a lot of other points, except the shipping cost you need to pay attention to. That’s why study different shipping strategies, like blind shipping, that will minimize the risks, and won’t let your company become easy picking for the competitors.

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Nikolay Pasholok
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