Technology has transformed the world into a global village, with almost everything accessible at our fingertips. One of the best conveniences we experience today is shopping online and having goods delivered at our doorsteps. This trend has opened a huge opportunity for shipping and receiving services. However, with the rise of the demand for shipping, there also comes an increase in processes and fees. If you’re looking for ways to save on shipping and receiving services, this is the right article for you.
Shipping costs for e-commerce
The shipping cost is determined by the size and weight of the product, the delivery destination, and the delivery method. Below are three types of e-commerce shipping options in terms of shipping rate, how they are computed, and how you will be able to save:
Flat Rate Shipping
A flat rate is applied to when you designated a fixed price to specific package size. This means that the customer will have to pay a fixed rate, whether they fill the package size or not. The US Postal Service is a good example of an establishment that offers flat rate shipping. Any document that fits an envelope will have a shipping fee of $6.70, while any parcel that fits a box will have a flat rate shipping fee of $13.65 (source).
Offering a flat rate is convenient for the seller as it provides only a few options for shipping computation and packaging. It also saves time as the packages don’t have to be weighed. Offering a flat rate can push buyers to buy more in order to take full advantage of the shipping fee.
However, a flat rate may not always be beneficial for the customers. For example, buying a $30 computer mouse from a shop offering a flat rate of $15 for a box that could fit 7 pounds worth of products may just not be worth it. If you’re from Canada ordering from a US-based shop, the flat rate shipping fee may come off as affordable, but it doesn’t really take into account additional costs and taxes.
A real-time shipping rate offers a flexible pricing system compared to flat rate shipping. It provides the cheapest possible shipping fee to customers as they will only be charged the amount depending on their orders. Real-time shipping is commonly used in websites where shop owners don’t have to manually study how to calculate shipping. The shipping rate is computed automatically according to size, weight, and location upon checkout. This type of pricing provides transparency and appeals to overseas customers, making it one of the best shipping options.
Free shipping doubles as a marketing strategy. According to a 2018 study conducted by analytics company Walker Sands, free shipping is enough to convince 80% of the sample population to make a purchase online. And with Amazon, the largest e-commerce site, setting a standard by offering free two-day shipping to its Prime members, other businesses are inclined to offer the same to keep up with public demand.
However, as enticing free shipping may sound, nothing is entirely ever free. The seller will definitely shoulder the shipping costs for operations, posing a challenge to small business shipping operations in Canada. Amazon may be a good business model to use as inspiration, but keep in mind that Amazon is a multi-billion dollar company and can definitely shoulder shipping costs using their own resources.
What does this mean for small business owners? Free shipping can definitely be done if you want to. You can divide the cost and allocate one half to marketing and the other half to the product cost. You can also offer discounts and coupons instead of entirely free shipping. A free shipping strategy can also be offered during the sale period or within a limited time frame to encourage buyers to make their purchase.
What is ground service shipping?
Freight or physically delivering goods from one place to another can be done through air shipping, ship shipping, ground service shipping, or intermodal (also known as using multiple channels in shipping). When delivering parcels locally, getting a ground service shipping is the cheapest option. Done either through train or truck, ground service shipping can offer door to door delivery in a minimal amount of time. Amazon FBA makes use of ground service shipping when delivering cross-border packages between Canada and the US.
How do you save on shipping costs?
Shipping is one of the most crucial processes of running an e-commerce business as a third-party service provider mainly does this. While you want to ensure that your customers receive your product in excellent condition, a lot can happen to your parcel between when it leaves your storage facility to the time it arrives at your customer’s doorstep. This is why as much as you want to save on shipping costs, it can still be considered worthwhile to invest in a trusted courier service.
On the other hand, you could also seek the help of an e-commerce shipping solutions provider. These service providers partner with carrier companies to offer cheap but fast and reliable shipping. You can choose to drop off your package at the nearest service centre or to have them picked up at your home, and they will do the rest in making sure that your package reaches your customer in the least possible time in its original condition.
If you’re wondering which shipping service is cheapest, it would still depend on the product’s weight and size along with the recipient’s location. Whether you’re coming from the point of view of a seller or a customer, it would also matter who gets to shoulder the bigger part of the cost. But if you want to give as many discounts as possible to your customer without sacrificing your profit margin, there are service providers available to help you.
If you want to learn more about how shipping and receiving services and how to reduce costs and delivery time, visit Stallion Express so we can get you started.