Data from Internet Retailer released earlier this year showed that U.S E-Commerce sales continue to grow double digits in 2015.
Thanks to the growing number of E-Commerce website builders like Shopify, Magento, and WooCommerce. It is easier than ever for an aspirational entrepreneur to launch an online store. As a matter of fact, with marketplaces like eBay, Amazon and Etsy, you do not even need a website to start.
However, things are not this easy in the real world. Big retailers set the shipping standards so high by offering free shipping or reduced shipping rates. How can an e-commerce start-up compete where abandoned carts are often a result of shipping costs?
At ShipGooder, we discussed the biggest shipping challenges that small E-Commerce retailers currently face and shared the best practices on how to fix them.
Shipping Vendor selection
When you just start your online business, you may rely on one carrier to handle all your shipping needs. However, as you grow, you will want to find the best shipping channel for each of your shipments.
Small businesses need to make sure they have a lot of choices. We recommend that online retailers consider USPS as an alternative to private carriers, especially if you regularly ship light-weight or bulky products. Find all your shipping options based on price and transit time in one place
Small e-commerce retailers may not have the resources to build a supply chain system, but using applications like ShipGooder.com, you can find the fastest or cheapest delivery method, depending on the package weight and dimension. This can help you minimize costs and transit times for your customers.
Flat Rate or Not Flat Rate
Yes, flat shipping rates do have a few advantages such as free boxes, known costs and secure delivery times. Many online retailers simply charge flat shipping rates instead of comparing shipping rates before each shipment. However, this will cost you money when the shipping fee is higher than the flat rate, or what if the shipping fee is lower than the flat rate.
We believe that transparency is the best policy when comes to shipping. Provide your customers with the most accurate shipping estimate and make it easy to ship.
Free Shipping or not Free Shipping
Offering free shipping will assuredly increase your sales, however, it also can diminish your profit margins if you are not careful.
Online retailers that offer free shipping have built shipping cost into the cost of a product. So there is no such thing as “Free Shipping”. However, free shipping can be expensive for small start-ups because it is difficult to build 100% of the shipping fee into the products. This is especially true if you are selling inexpensive products or your profit margins are thin.
One big setback on free shipping is that if you start a free shipping policy, there is no way to go back.
So how do you make free shipping profitable? Testing. Here are our recommendations on what to test:
- Free shipping for minimum order
- Free shipping on select products that are profitable
- Free shipping for a limited time
- Free shipping for long-standing customers
- Free shipping for certain regions
- Free shipping on items that make up a full master carton
Furthermore, search, compare and get the lowest possible shipping rate for any particular package at ShipGooder.com.
Damage and Loss in Transit
Depending on the types of products you sell, you may want to add parcel insurance. This can be an inexpensive way to protect valuable items during transit. Be sure to read the carrier’s terms and conditions with respect to parcel insurance.
Dispatch notification and tracking information that sent to your customers is crucial, as they want to know exactly where their purchases are. Some couriers will notify your customer through email about the status of their delivery. Others will give you the ability to communicate this to your customer directly. The more information you can provide to your customers about their package delivery, the higher the customer satisfaction.
In order to improve your customer satisfaction and reduce the number of damage claims, we recommend that you have a policy for packaging based on weight and density. It may add to your shipping cost but prove to be cheaper in the long run.
Are you an e-commerce business owner? Please share other shipping challenges you encountered in the comments below.