Nothing makes customers jump ship as fast as excessive shipping and handling charges. Forty-four percent of people who abandoned their online shopping carts did so because they deemed the costs too high, according to a Shopify survey. Another 22 percent waved their final “goodbye” when the charges weren’t listed early enough in the ordering process.
But shipping does cost money, so how do you stop customers from abandoning their online shopping carts?
The message is crystal clear: to close that sale, e-commerce shipping costs can’t be treated as an afterthought. But how do you get past the fact that you could lose money if you don’t charge enough for shipping? Customers do, after all, love the idea of not paying anything at all for the product to arrive on their door step. It seems like a Catch-22. Let’s untangle the equation by gathering some facts about your product line:
- What is the price of your products?
- How much do they typically weigh?
- What’s the margin on your average order value?
- How much do you tend to pay for shipping?
- How competitive is your niche?
Although charging the customer exactly what it costs to ship the order (calculated shipping) may seem like a straight-forward solution (you break even), it’s not always the wisest choice from a sales perspective (think about those 22 percent). Customers who have made their way to the end of the sales funnel simply don’t like being surprised by shipping and handling charges right before they’re about to hit “purchase.” This is especially true if the item is cheap and shipping costs nearly match its price tag.
By offering free or flat-rate shipping, on the other hand, you straighten out all question marks right away and make shipping part of your marketing pitch. Let your answers to the questions above serve as a guide to which method makes the most sense:
- If competition is fierce, free shipping may give you the edge even if you decide to set a minimum order amount for the offer to kick in. You can also raise the price of your products slightly to absorb the cost of free shipping. In other words, the final price the customer pays doesn’t change noticeably and the checkout process is made simple when shipping charges are eliminated.
- Flat-rate shipping also streamlines the ordering process and generally works well for small and fairly light products. Again, it may encourage larger orders since the price stays the same. The key to success is staying on top of the average cost of each shipment and determine whether the cost should be done by order totals or weight ranges.
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