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How to Set the Shipping Rates in eCommerce

Posted on Friday, October 16th by Pallet2ship logo

The shipping rates play a decisive role in online shopping, often deciding whether a simple visit on a website converts into an order or not. According to research, shoppers admit to high shipping costs being the main turn off about shopping on the internet. As expected, mistakes can be made very easily in e-commerce, causing the sales to drop. However, they can also be avoided very easily. Here are three basic tips on setting the shipping rates to remember as an e-commerce business owner.

Tip no. 1: Choose the right calculation method

Depending on the products to be shipped, the shipping rates can be set using a number of different methods, as follows:

"¢ Cost per unit: The shipping rates are calculated based on the quantity. The customer may be charged per unit or per number of units. This calculation method is recommended in situations where the products or groups of products to be shipped are similar in size.

"¢ Percentage of the total order amount:

The shipping rates represent a flat percentage of the total order amount. These shipping rates should be used as default ones. This calculation method is recommended for apparel shipments.

"¢ Flat fee:

The shipping rates are calculated independently of the quantity or total order amount. This calculation method is recommended in situations where the products vary in price to an extent that makes the calculation of the shipping rates as a percentage of the total order amount convenient.

"¢ Based on the product weight:

The shipping rates are calculated based on the product weight, with rates calculated per weight range being more advantageous than those calculated per pound.

Tip no. 2: Make sure the shipping rates are reasonable

Sales can easily be lost because of the shipping rates being set too high. Often times, shipping larger volumes at discounted rates is more profitable than trying to save money by recouping the shipping costs. Even more so, research has shown that free shipping can cause the abandoned cart conversion rates to increase by as much as 60 per cent. Naturally, free shipping is not always an option. However, the shipping rates should not exceed 10 per cent or they might drive customers away.

Tip no. 3: Make sure you do not use too many calculation methods

However tempting it may be, diversity is not recommended when it comes to the calculation of the shipping rates for it increases the chances of making various mistakes, as well as tends to cause all kinds of complications. This is bound to become evident with international and express shipping services, each calculation method increasing the number of possible combinations exponentially.

In e-commerce, the simplest solution is bound to deliver the best results in the long run. Whichever that solution may be, it is important that you try your best to use one, two or three calculation methods at most when setting the shipping rates and that you make sure you do not use more than four different ones.

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