The sphere of e-commerce in India has continued to rise at unprecedented levels. As consumer behavior keeps on changing and newer technologies continue to advance, e-commerce stores must keep up with the best shipping practices. Irrespective of whether you have found a highly profitable product idea(s) or are done with product sourcing research, you can’t fulfill an order without the right shipping strategy.
Wondering how can a small online store compete with giant marketplaces and other established brands when it comes to shipping? You’ve come to the right place.
Shipping is one of the core aspects that an e-commerce business, irrespective of size and scale, can’t live without. If you are just starting an e-commerce business, it is normal to be apprehensive about the cost and quality of product delivery services. You might want to pick, pack, and deliver your products as soon as an order comes in. Later on, you will need a delivery partner to get things done for you.
With big brands offering better shipping discounts and the rise in shipping rates year after year, you may face hurdles to doing it well for yourself and your customers. We get that, which is why we have created this post to help you define the right shipping strategy for your small-scale online store. Let’s start with the why.
Why do you need to select the right shipping strategy in the first place?
A basic customer journey on an e-commerce store proceeds as follows –
A shopper visits your online store, explores the product lineup, and adds the products he likes to the cart. He gets to the checkout page and this is where it happens: he sees the shipping price, questions his purchase, and is most likely to abandon the cart. Suddenly, the products he thought were aptly priced become a little expensive.
Even the statistics show that unexpected shipping cost is one of the main drivers of shopping cart abandonment (48%). This is where shipping becomes an influential level affecting sales.
Having the right shipping strategy will help you:
Increase conversion rate
When your target customers know what to expect at a reasonable price that includes the shipping cost, they are more likely to complete the checkout process and buy from you.
Increase the average order value
You can also define discount offers around shipping to encourage customers to buy more to get free shipping. This will eventually increase the average order value.
Create a better customer experience
A well-defined shipping strategy will also ensure that shoppers have a delightful, positive experience as they buy from your online store even if it only has a few products lined up for them.
Elements of the right shipping strategy for your e-commerce store
Shipping cost as a part of product pricing
How you choose to charge customers to get products delivered to their doorstep is a crucial component of a well-defined shipping strategy. You can offer free shipping on all orders above a certain threshold, say Rs. 2,000 or any other. While you might have seen most online retailers offering free shipping, the truth is shipping is never free. Either it has been shifted to your (merchant) side or it is already included in the product pricing (after the discount).
Also, aspects like product packaging, external logistics service price, and order tracking affect the shipping price considerably. Since you are new to the online selling space as a retailer, you should not go with any random shipping strategy. Instead, do the following things first:
- Consider your profit margins on selling products at a certain price including or excluding shipping cost
- Check how much your competitors ask for shipping
- Start by offering free shipping with a condition for minimum order value
The first 100 or 1000 orders will also help you gather data to redefine your shipping strategy. You will get to know:
- Who are your ideal customers?
- Where are they located?
- What do they preferably buy?
- What is the average ticket size?
- Which products are most expensive to ship?
Consider the impact of the chosen shipping plan on the average order value. Does it change if you change the shipping offers periodically? If yes, consider profit margins to continue generating ROI. If not, you can raise product prices, set a different minimum order threshold, or shift to a different shipping strategy.
Passing shipping cost to the customer
If you think free shipping is not possible for the kind of products you want to sell online or is not meant for every shipment, you can pass the shipping cost to the customer. Ideally, asking your customers the exact amount charged by an external logistics partner is one way to empower them to select the best fit for their needs.
For instance, if a customer needs an order from your online store to arrive before a certain date, he/she may be willing to pay an additional Rs. 100 for faster shipping. On the other hand, the ones who’d rather save money and wait a few more days to get their product.
You can even include a real-time shipping calculator at the checkout to bring a more transparent view of the shipping cost as per the date of delivery. Here, the transparent shipping charges also imply that you have not increased the item price to cover this cost element.
Offer flat-rate shipping
Another popular shipping strategy you can test with your online store is offering a flat rate. This can be determined based on package count (one rate per package), weight range, or total cart value. Adopting this shipping strategy requires you to research and find out the average cost of shipping a package to distinct regions.
For example, the average cost to deliver a package locally will most likely be lower than sending the same product to a distant state in India. Knowing these average rates will also help you ensure that you do not overcharge or undercharge your buyers all of a sudden.
Here, you need to find the flat rate that specifically works for what you sell. Do multiple testing and calculations to determine how you need to finalize the flat shipping rate – by order total, package weight, or some other parameter.
Add alternatives to usual shipping methods
If you want to target local customers only while starting an online store, you can benefit from in-house delivery to deliver orders directly to customers nearby. This is one way to skip using a third-party logistics partner. On one hand, it is a great way to reduce shipping costs and take the control of shipping into your hands. On the other hand, you can attract more sales with the draw of either lower-cost or free delivery. Depending on the locations from where you receive maximum orders, you can set up either a storefront or a warehouse nearby.
Another innovative shipping strategy you can follow is to offer curbside pickup to your customers. At its core, this purchase method allows buyers to place their orders online and then visit the nearby store for a quick pickup.
It is the convenience of local delivery and curbside pickup that is more likely to make your buyers stick around longer than you expect.
Set the right shipping strategy from the very start
What you plan to charge customers in the form of shipping costs can have a lasting impact on conversions and profitability through your online store. Therefore, it is important to decide from the very start what can work best for your business, brand, and buyers. You should test a few methods before settling on the most suitable one.
| Want to know more about other steps of starting an e-commerce business? Read this complete guide. |
