How to Set-up Shipping Online

This approach is so simple, yet so powerful, that most clients mentally kick themselves that they had been wasting time struggling with how to do shipping online. It may take a little time to get your head around, however it has succeeded for every one of Exceed’s eCommerce clients to date.

Company X

To see Exceed’s Shipping Rules in action, I’ve started by taking one of our client’s shipping set-up before they came to us, and at the end of this article you’ll see how it changed after we applied our Shipping Rules.

Here is what Company X started with: 

Now let’s take a look at how shipping should be set up, and then how this approach changed Company X’s confusing shipping options.

Why Make Shipping Simple?

Complicated or unrealistically expensive shipping options cause a major barrier to a customer buying from you. Time and time again we see high bail-out rates at check-out, which are ‘magically’ fixed just by simplifying shipping.

The Shipping Rules

Rule One
Focus on the total revenue needed to cover shipping costs. Don’t worry about the small percent of exceptions, such as expensive shipping for international or South Island orders. Look instead at a shipping set-up that increases your overall income, covering exceptions so you earn enough in total to absorb the occasional, more expensive shipping fee.

Rule Two
Use your popular regions to cover your more expensive regions. Most NZ eCommerce companies ship predominantly to Auckland. By adding a small increase to the shipping cost for Auckland (or your own most popular region) you can recover your costs for the other regions.

Rule Three
Review your requirements for free shipping. Free shipping is an excellent way to reduce a major buying barrier, but not at the expense of at least covering your costs! Review your margins and consider raising the value a customer must spend to receive free shipping. Help them reach this level by recommending relevant up-sell and cross-sell products as they shop. Alternatively, keep your free shipping level the same, but slightly increase your product pricing. Even a tiny increase to your product pricing adds up if you attract a good quantity of orders, eg: $29 becomes $29.50.

Rule Four
Don’t add unnecessary complexity. Don’t force your customer to choose which of your shipping options applies to them, have your website do it for them. If they purchase a high enough value then free shipping should be the only option available. If they don’t purchase enough, just show the one or two options that apply for their region or item ordered, nothing more.

Shipping in Action

So here’s how we fixed the shipping dilemma for Company X, reducing their 10 options to 3:

1/ Auckland $6.95 or free shipping
2/ Rest of NZ $10 or free shipping
3/ International (based on region) eg: Australia $15, UK $20 etc

How it Worked in Practice

FREE SHIPPING – minimum purchase went from $75 to $95 to qualify for free shipping (along with adding upsell and cross-sell to the site to increase the average order value and help customers shop). This avoided the company losing money on free shipping, without them having to increase product prices. The company can still offer free shipping on certain categories or products no matter what value is purchased, as the platform we moved them onto included such a high level of flexibility for discounting and promotional offers.

AUCKLAND – either free shipping, or for orders under $95 the rate went up slightly, from $5 to $6.95 – with the other 6 (!) Auckland options dropped. Since this region accounted for around 50% of all of the company’s orders, this small increase allowed the company to pay for their other regions and recover the cost of exceptions, such as overseas shipping.

REST OF NZ – Separate regional prices were merged for the ‘North Island excluding Auckland’ and ‘South Island’. The $20 South Island rate was removed and for orders under $95, the rate for the rest of NZ was set at $10.

INTERNATIONAL ORDERS – One price per country was chosen and the price given on the site (we provided our list of recommended pricing based on their previous international orders) which were Australia $15, Asia $15, UK $20 and USA $20.

What About Exceptions?

Of course if they did get an exception, such as $50 freight to the UK, then they could contact the customer to check if they are happy to pay the extra. The reality is, exceptions like that become very unlikely as the other regions pay for them, yet they are still easily resolved.

Ready, Set … GO!

We then set-up their site so only the relevant shipping rate appears for the customer (either free shipping, or the one rate that applies for the customer’s region once they enter their details).

So instead of 10 expensive, confusing options to choose from - now their customers will only have one simple fee, a fee that can now be communicated much more simply anywhere on the site, not just at the checkout. A similar approach will work whether you ship based on weight, dimension or region.

The Exceed team have solved shipping messes much worse than this!

When you partner with Exceed we take our experience and expertise and help you resolve all your online headaches. Test us today with your own shipping dilemma. Email me or one of our other Online Consultants, or give the team a call toll-free on 0800 Web Store.