Shipping can be a major challenge to growing your ecommerce sales.
It’s normal to be apprehensive about shipping and delivery. Even though you can do everything in your power to pick, pack, and mail your product as soon as a sale comes in, you’re still relying on a shipping carrier to deliver a package on time and in good condition.
The shipping partner you choose shapes customers' experiences and how they feel about your business. But there are ways you can take more control of your shipping strategy, which you'll learn in this article.
What is a shipping strategy?
An organization's shipping strategy outlines how it plans to move goods to its customers. It involves deciding on transportation modes, carriers, routes, packaging, pricing, and delivery schedules.
A shipping strategy aims to maximize the efficiency of your shipping logistics to ensure timely, cost-effective, and reliable product delivery that builds trust and loyalty with customers.
The importance of a shipping strategy
Let’s say a new customer visits your online store, finds a product they want at a price they like, and adds it to their cart. They get to the checkout page and then it happens: they see the shipping price and start having second thoughts about their purchase. A product they thought was well-priced seems a little expensive now.
One of two things happens next:
- They decide to continue, despite the increased costs.
- They abandon their cart and leave your store.
More often than not, they abandon their cart. In fact, research shows about 48% of customers cite unexpected shipping costs as one of the top reasons for shopping cart abandonment—right up there with taxes and fees.
For that reason, it’s best to think about shipping costs as more than just another expense associated with doing business. Rather, if applied strategically, shipping costs can be a lever for directly influencing your entire business.
With the right shipping strategy, you can:
- Create a better customer experience: By setting clear expectations with your shipping strategy, you’ll ensure customers have a consistent and positive experience when they shop with you. Being transparent with shipping costs and updates is key. Make sure customers are aware of any shipping promotions, like free or discounted shipping. Keep your customer informed that natural disasters, carrier delays, peak volume impact, and many other situations out of your control may hold up packages.
- Increase your average order value (AOV): Promotions and offers related to shipping are excellent ways to encourage shoppers to buy more. For example, you could offer free shipping with a minimum purchase on select items or for a limited time. This could encourage customers to add more items to their cart.
- Expand your business: Choosing the right shipping strategy could take your business global. You can sell to more people in more places around the world and grow your business with aninternational shipping strategy in place.
- Increase your conversions: When customers know what to expect at a price that’s perceived as fair, they’re more likely to complete their purchase. Giving them options, like a choice of carrier, delivery time, and fulfillment method, also encourages sales.
💡Pro Tip: Communicating shipping speeds at checkout to your customers can help improve cart conversion, provide clarity and transparency, and increase consumer confidence. Learn more about how to add shipping speeds directly from your Shopify Admin.
Types of ecommerce shipping strategies
How you charge customers for shipping is a crucial component of your shipping strategy, and it directly influences both your conversion rate and profit margins. Let’s take a look at some of the most popular strategies for your ecommerce shipping:
Free shipping
Some merchants offer free shipping on all orders, while others choose conditions. For example, free shipping on all orders over $100.
Recent data shows that 75% of ecommerce brands offer free shipping. In fact, 21% of small and medium-sized online retailers always offer free shipping. Note that free shipping is never truly “free,” as it means the shipping cost has shifted to you.
Generally speaking, free shipping without conditions is best for high-margin products, where you can account for shipping expenses with the overall price of your products.
Fast shipping
How fast can shipping get? Same-day delivery is becoming increasingly popular, with many retailers offering this option to customers who place orders before a certain cut-off time.
Some companies are even experimenting with drone delivery, which could potentially get products to customers within minutes of placing an order. Still, the most common fast shipping options are usually next-day or two-day delivery, which many online shoppers have come to expect as standard.
Flat-rate shipping
You can also apply a single flat fee for shipping to every order, such as $10 for any order sent anywhere within the United States.
One important point about the nature of flat-rate shipping: find the flat rate that works for you. This will require some testing to determine if you need to do it by order totals, weight ranges, or something different.
Exact shipping costs
Typically, providing exact shipping costs involves using exact real-time shipping carrier rates down to the penny (e.g. $8.36).
For example, a customer who needs an order to arrive before a certain date may be willing to pay $20 for expedited shipping. Still, a customer who wants to save money and wait a few extra days might convert more if they can pick a five-dollar shipping option and wait a few extra days.
💡ProTip: With Shopify Shipping, you can purchase shipping labels directly in Shopify to simplify your shipping process and receive the lowest rates with USPS, UPS, or DHL Express in the United States, Canada Post in Canada, and Sendle in Australia.
Eco-friendly shipping
Eco-friendly shipping reduces packaging waste and carbon emissions by using biodegradable or recyclable packaging materials.
Consider green shipping options to appeal to environmentally-minded customers and differentiate your brand from competitors. Brands like Tentree, an outdoor apparel company, have found success by integrating sustainability into their shipping practices.
How to create your shipping strategy
- Evaluate your shipping data
- Know your margins
- Offer multiple shipping options
- Set minimum order values
- Launch shipping promotions
- Consider international shipping
- Optimize your packaging
- Secure competitive shipping rates
- Offer alternative delivery methods
- Create a return shipping policy
- Consider outsourcing shipping
1. Evaluate your shipping data
Look into any current shipping data you have and see how your current strategy stacks up.
- Identify your current providers and what the benefits they provide (i.e., speed, reliability, reach, specialty services).
- Determine how much your current strategy costs.
- Analyze delivery times and customer feedback on the delivery experience.
- Note how frequently you ship products.
With a clear understanding of volumes and costs, you might be able to negotiate your rates. You can also work with multiple carriers to meet different needs, like international shipping or faster delivery times.
💡 Note: If you’re selling in the US, Canada, or Australia, Shopify Shipping offers negotiated rates to help cover the cost of shipping, whether or not you’re offering free shipping. Learn more about Shopify Shipping.
2. Know your margins
Your ability to provide effective shipping hinges on two numbers: the cost to ship an order and your profit margins. While predicting costs and profit margins for every potential order is difficult, look at your current AOV and the cost to ship your most common products and orders to get a better idea.
Those estimates will give you an idea of whether offering different shipping options is possible. If you primarily rely on international shipping, the costs will likely be different than domestic, so consider that when establishing your margins.
If you’re using Shopify, for example, add product costs directly to each product to know your profit margin percentage for each sale. Depending on the numbers, it’ll be easier to make data-driven decisions about shipping strategies.
3. Offer multiple shipping options
Amazon has conditioned consumers to expect free and fast shipping, but not every brand can offer that. Often, that’s okay because consumers are open to different shipping options if you provide them.
Provide a few different options at checkout, such as free and slow or expedited for an extra cost. A recent study found that 75% of consumers are willing to pay more to get their orders faster. A good example comes from streetwear apparel brand Culture Kings, which offers free standard shipping for orders over $100 or expedited shipping for an added fee.
4. Set minimum order values
If free shipping is a competitive must-have in your niche, one strategy to remain profitable is to plan for the costs as you price your products. Remember, many factors influence your pricing strategy, and covering shipping fees is only one of them.
However, setting minimum order values essentially guarantees that your profit margins stay within a healthy range. For example, if your average order value is $40 and shipping costs around $8, setting a minimum order value of $50 before being eligible for free shipping, helps absorb your shipping cost without significantly impacting your bottom line.
5. Launch shipping promotions
If free shipping isn’t sustainable year-round, consider using it as a promotional tactic to boost sales. For example, you can clear out older inventory at full price during the slower times of the year by launching a free shipping promotion.
To do this effectively, you can:
- Offer free shipping on select products.
- Run free shipping promotions during specific times, such as holidays or special sales events.
- Use free shipping as a reward for customer loyalty, offering it to your most valuable repeat customers.
- Apply tiered shipping promotions where customers unlock free shipping by spending more, like "free shipping on orders over $75.”
- Bundle free shipping with other promotions, such as discounts or free gifts, to create more attractive offers.
Using shipping profiles in Shopify makes this strategy pretty straightforward. You can set shipping rates for specific products, shipping locations, and shipping zones that will automatically adjust for you.
6. Consider international shipping
Expanding your business to international markets opens new growth opportunities, but it also comes with its own set of shipping challenges. Before offering international shipping, take the time to research and plan for the added costs, regulations, and logistics involved.
To maximize profit margins with an international shipping strategy:
- Find a reliable international shipping company that offers competitive rates.
- Communicate international shipping policies, costs, and estimated delivery times to customers.
- Calculate shipping rates, taxes, and duties based on the destination country.
- Provide tracking information and updates so international customers know what's going on with their orders.
💡Note: Managed Markets provides all the resources you need to ship internationally. If your business is in the US, you can use Managed Markets to ship internationally.
Managed Markets automatically generates customs forms and paperwork for you when you order international shipping labels. This documentation is electronically sent to customs when you ship from the US with DHL Express—no need to do any extra paperwork.
7. Optimize your packaging
The weight of your packaging is a significant factor for your shipping costs, and luckily, it’s one that’s somewhat within your control. Consider how much packaging you need to ensure your items arrive at their destination safely with no damage.
For delicate items, heavier packaging like cardboard might be needed to protect them, but for items like clothing, you can opt for lightweight packaging, like a poly mailer, to save money on shipments. Merchants can also benefit from free packaging provided by shipping carriers such as USPS.
8. Secure competitive shipping rates
Reducing the cost of each shipment makes shipping more sustainable for your business. After all, shipping is the top expense for more than half of online retailers. To do that, research shipping options in your area to see if there are ways to save money by providing lower rates than retail pricing on the mail classes and services you need.
9. Offer alternative delivery methods
Today, ecommerce delivery strategy is no longer limited to third-party carriers. Managing your own shipping with innovative options like curbside pickup and local delivery is more accessible than ever. These methods attract local customers and are a great way to connect with your local customer base.
Consider a few viable delivery methods:
- Local and curbside pickup: With limitations on dining out and in-store shopping, local and curbside pickup lets customers purchase your products online and visit your store for a quick pickup—sometimes without ever having to leave their vehicle. If you choose local pickup in your Shopify POS, the shipping rate is automatically set to Free. It’s one way to offer “free shipping” without having to eat the cost.
- Buy online, pickup in-store (BOPIS): This delivery method lets customers purchase products online and pick them up at a designated store location. It’s a convenient way for customers to avoid shipping costs and delays, while still enjoying the benefits of online shopping. Implementing BOPIS can help you attract customers who prefer a mix of online and in-store experiences, ultimately increasing foot traffic and potential upsell opportunities.
- Local delivery: Local delivery is another way to get orders directly to nearby customers without having to use a third-party shipping carrier. The preference for local delivery options is reflected in the industry’s growth stats—showing no signs of slowing down.
10. Create a return shipping policy
You can have the best product pages in the world, but no matter the industry or niche, there are going to be cases where a customer gets their product in hand and decides it’s not right for them.
Even if the reasons for a return have nothing to do with you or your product, you still need to be able to handle them. Sharon Reeds, co-founder of Intuitive Shipping, shares an expert perspective on how to handle your return shipping strategy.
Sharon says that a flat-rate strategy can be a great way to set expectations and make customers feel confident with their returns without needing to absorb the full cost.
“Offering a flat rate for return shipping is similar to offering flat-rate shipping, but on returns," Sharon says. "With this strategy, you can offer a return shipping option where the burden isn’t on either side—it gets split between the two. It’s a good compromise for your customers, and they know exactly how much a return will cost them before they buy.”
Figuring out which return shipping option is best for your business boils down to a few key questions:
- Which options are financially feasible? This includes how often you anticipate getting a return as well as general information about your margins and your shipping costs. If you have a generous return policy, you’ll likely have more returns.
- Which option do you want to offer? This is focused on the competitive environment and your customer service strategy, within the subset of affordable options you just identified.
Once you’ve figured out how you want to price your return shipping, you can move on to your process for accepting a return. This can include your communication about return shipping with your customers and the process you use to make the shipping labels available to them, if at all.
11. Consider outsourcing shipping
As your business grows, managing shipping in-house can become increasingly complex and time-consuming. Outsourcing your shipping needs to a third-party logistics provider (3PL) can help you scale your operations, save time, and accelerate business growth.
Consider the Shopify Fulfillment Network, which makes it easy to connect with trusted logistics partners like Flexport. By outsourcing your fulfillment, you can ship your products anywhere while focusing on other higher-value business tasks.
The 3PL is simple and integrates seamlessly with your Shopify store. You can connect your store, send your inventory, and track everything directly from your Shopify admin without the need to juggle multiple systems.
Manage your shipping strategy with Shopify
What you charge customers for shipping can significantly impact your conversion rates and overall profitability. You’ll need to decide what will work best for your brand, business, and customers and likely test a few methods before you settle on the one that’s best for your business.