Does Your eCommerce Shipping Strategy Support Your Goals to Grow?

Does Your Shipping Strategy Support Your Growth Goals

Key Takeaways

A smart eCommerce shipping strategy is critical to success, but many online business owners are too busy or too confused by the intricacies of shipping to really optimize their strategy. In this post we’ll demystify the topic and give you some quick tips for making shipping the anchor of your business’ growth. Here’s what you’ll learn:

  • Cutting Costs – How reducing shipping costs will help you scale your business cost effectively
  • Reducing Cart Abandonment – Why lowering shipping costs can reduce your cart abandonment rate
  • Dimensional Weight Shipping – How to handle dimensional weight shipping without breaking the bank
  • Efficient Shipping – Why an efficient shipping operation can serve as a firm foundation for growth
Are You Taking Your Shipping Strategy Seriously Enough? 

As a busy business owner, you’re burdened with dozens of competing priorities. Should you roll out a new product line this month or next? What role should you fill before the end of the year? How much should you invest in marketing next quarter? With all of these demands, it can be all too easy to look at shipping as an escape. Something to break up the frenetic day-to-day pace of thinking strategically about your business.

Put bluntly, this is a huge mistake. Shipping has such an influence on so many different aspects of your business that it should be taken seriously. Getting your eCommerce shipping strategy right needs to be a priority. This is especially true if your business is planning for growth.

The Right Shipping Strategy Is Critical to Your Business’ Growth

In order to scale, businesses need an operational foundation that’s profitable and efficient. Shipping is a huge line item for most eCommerce businesses. And by its nature, shipping is ripe for runaway inefficiencies that will only compound as orders increase, so it can literally pay dividends to optimize it as much as possible. Here’s why:

  • Purchasing Intent – As we’ll discuss in greater detail below, shipping costs play a huge role in whether or not a shopper actually makes a purchase.
  • Customer loyalty – Giving customers a sub-par post-purchase experience can significantly impact their likelihood of making repeat purchases.
  • Overall profitability – Shipping is a huge expense. A small inefficiency mightbe OK today, but as your business grows, these inefficiencies can become crippling.
High Shipping Costs = More Abandoned Carts

According to research from BI Intelligence, high shipping costs are the primary cause of abandoned carts. It’s not high product prices, poor customer service or indecisive shoppers. Nope, if you can reduce your shipping costs, there’s a solid chance that you’ll watch your cart abandonment rate plummet and your revenue jump.

While we won’t get into every single one of the myriad ways you can save money on shipping in this post, what follows are some general tips for cutting costs in the name of reducing your cart abandonment rate and generating some extra revenue.

  • Don’t Try to Make Money Through Shipping Fees – As we said earlier, customers are incredibly sensitive to shipping costs. They know when you’re manipulating prices for your benefit. Instead, approach shipping with a break-even mentality.
  • Negotiate For Better Rates – Sometimes the simple act of asking for better rates from your carrier is all you need to get them. Most small businesses have more bargaining power than they assume, but you need to go out on a limb and actually ask for what you want.
  • Offer Free Shipping – Much has been written about the merits of free shipping, and while this won’t actually lower your costs, it will reduce prices for your customers. The goal of course is that an increase in order frequency and volume will be more than enough to cover your now higher shipping costs.
  • Pass Savings to Shoppers – Any time you can pass on savings to customers, especially in the form of lower shipping rates, do so. This general principle should always be in the back of your head. Don’t try to make on money on shipping fees!

Implement one or all of these tips and you’ll be well on your way to lowering your cart abandonment rate and significantly increasing your business’ revenue.

Dimensional Weight Shipping Can Almost Double Your Costs

Dimensional weight shipping is newly introduced pricing from UPS and FedEx that charges based on the dimensional weight of a product versus its actual weight. This means if you ship a small, light product in a large box, you’ll be paying based on the size of the box and not the weight of the product.

Unfortunately for merchants, dimensional weight shipping rates are almost always higher than standard rates. As you might imagine, the goal of this pricing model isn’t to make things easier for merchants, but rather to optimize the number of shipments UPS and FedEx can fit into their trucks.

To add to the debacle, inaccurately calculating dimensional rates can lead to undercharging shoppers for shipping by up to 50%. You can see how this very quickly cuts into your profitability. Furthermore, most popular, entry-level ecommerce platforms lack a way to calculate dimensional weight shipping rates, leaving merchants to either rely on clumsy workarounds or simply absorb increased costs.

ShipperHQ, the premier source of shipping rate calculation apps, and resident dimensional weight shipping rate experts, were kind enough to share the following tips for dealing with this issue cost-effectively:

  • Review Your Shipping Revenue & Costs – If you’re shipping via FedEx or UPS, you’ve probably already been billed for at least a month at the new Dimensional rating. Take your bill and put together a summary of your shipping costs vs. how much you charged customers for shipping. The extra bit of work will pay off as this gives you a picture of how significantly you’re being impacted by Dimensional changes and how much ROI you can expect from addressing them.
  • Get Together as a Team – Getting the eCommerce and fulfillment operations teams together at this stage can pay massive dividends. By coordinating your approach closely end to end you can come at the issue from multiple angles. Changes like using your boxes more efficiently when fulfilling and ensuring that you’ve got your shipping rates set up correctly on your site can be cost-effective and quick to implement.
  • Get a Short-Term Fix in Place – If you’re seeing a gap between what you’re charging and what you’re spending and want to put a quick fix in place, use a tool like ShipperHQ to increase the rate you’re charging customers, based on the revenue gap you’ve identified. This will never be as accurate as a long-term solution and you’ll undercharge some customers and overcharge others. However, it can either buy you time as you work on a longer-term solution or, if your revenue vs. cost gap is not very large, address the problem in a cost-effective way.
  • Take a Long-Term Approach – There’s no replacement for getting accurate rates every time. You can get true Dimensional accuracy using ShipperHQ. This app allows you to set up your product dimensions and the boxes your fulfillment center actually uses as well as rules around what products can be packed in which box. While this will require more effort up-front, you’ll be sending accurate package dimensions to FedEx or UPS meaning you get the accurate rates you need returned. In doing this, you’ll ensure that you’re not overcharging (and losing competitive advantage) or undercharging (and losing your shirt) on shipping.
Improving Shipping Efficiency Lays a Solid Foundation for Growth

Once you’ve gotten your shipping costs in a good place and dimensional weight shipping is no longer an issue, the last piece you need to consider is the overall efficiency of your shipping operation.

Here are some quick tips to get you going:

  • Invest in Technology – Shipping is a manual, labor intensive process that overburdens the small teams running most eCommerce businesses. By properly leveraging the shipping applications that plug into your eCommerce platform, you can do dramatically more with your existing team. A few of our favorites include ShipperHQShipStation and Shipwire
  • Work With a Third-Party Logistics Provider (3PL) – If you’re already experiencing signifcant growth, or want to prime yourself for growth, you may want to consider working with a 3PL. These organizations are experts in shipping and logistics and can manage almost every aspect of your shipping operation for you.

While these tips might appear short and simple, there’s a world of technology and logistics providers out there. Each represents a significant investment that if implemented correctly will deliver a high ROI down the line, so take your time and select the ones that will solve a critical need in your businesses.

I hope that you now have some new tools in your arsenal for transforming shipping from a major cost center to a key driver of revenue and customer satisfaction. In the coming weeks we’ll be publishing more posts on shipping, fulfillment and inventory. 

Zoey offers highly flexible shipping tools that enable you to customize your shipping operation as you see fit. Plus, we integrate with leading shipping apps like ShipperHQ, ShipStation, and Shipwire that enhance our already robust shipping functionality. To test out Zoey’s shipping features and these shipping apps, start your free 14 day trial today!

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