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Choosing your postage options and charges

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One of the most common reasons for shopping cart abandonment is the shipping charges that pop up at the check out. We all know the story. We find the product, the price is right, there is no mention of shipping charges yet. We get to the checkout and there it is. We hit the back button and look for someone that delivers it at a better rate.

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When it comes to choosing shipping services many companies feel they have to offer free, next day shipping. Free shipping is very attractive to customers and if you are getting the shipping for nothing they are very likely to complete the checkout process. There are of course profit implications for sending items for free on a premium service. If shipping is free most people don't mind waiting a couple of days, especially if there is an option for paid next day shipping. It is what a lot of the market leaders do, Amazon do it, the prime account is simply a prepayment of your postage. Until everyone offers free next day shipping, there is no need to buck the trend especially if margins are tight. if you feel you really must offer free next day shipping, offer it over a set amount. This helps to ensure your profit is not eaten away and customers are encouraged to spend more.

There is more to consider than just what services to offer. Setting postage charges in an online store for UK and international delivery is a common quandary for almost all e-retailers. With several million possible services and prices to be considered it is not practical to try and included every price for every possible combination of order and destination in a shopping cart. It is something that many of our clients ask about, so we thought we should share the best practice as far as we have seen:

  • Provide simple tiered postage such as express at a higher rate and a slow economy service at a cheaper rate. The brand, product mix and price point will naturally determine what these services are.
  • When shipping internationally, and provided the shopping cart supports international tables, it is best to provide a small number of geographic regions in which these tiers apply. E.g. Domestic (UK), Europe, World.
  • The next step is to set a fixed price for each. Companies looking to break even on the postage, should aim to break even on average (large orders may get a bargain; small orders may overpay; unusual addresses might hit a surcharge 0.1% of the time)

The benefits of this approach as experienced by our clients:

  • Minimal setup, minimal maintenance, little time wasted.
  • Easy to communicate to customers.
  • Easy to tweak the 2-6 rates up or down once you have some order history.

Please feel free to contact us with any further questions or comments about shipping prices, delivery rates and fulfilment services.

February 18th, 2014 by Hannah Newman

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