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How to Choose the Best Shipping Strategies: Free, Flat Rate, and More

how to choose the best shipping strategy

Drawing the users to an online store and making them buy a product is only one part of the story of making a profitable eCommerce business. There is another part where most optimizations have to be done to improve the customer experience and the profit; this part of a successful eCommerce business story is called SHIPPING and FULFILLMENT.

Selecting the best shipping strategy for your product and business type will help you stay successful in the long run. In this post, let’s see how to select the best shipping strategy for your business. 

Why do you need to choose the right shipping strategies for eCommerce?

The most successful business owners use smart shipping strategies to stand out from the competition and boost their profit margins. The reasons for having a shipping strategy have to do more than with competition and profit margins. Let’s look at the big picture.

Meet customer expectations and reduce cart abandonment: 49% of the customers abandon the cart often due to the unanticipated shipping cost. Another study says that 58% of customers add products to their cart to avail the FREE shipping. A shipping strategy will help you set clear customer expectations and reduce cart abandonment.

Create a better customer experience:  As you are setting clear expectations with your customers through your shipping strategy, you can deliver a consistent customer experience. Customers won’t feel any friction on the checkout page as they are aware of the shipping cost and delivery timing.

Increase your average order value (AOV): Shipping cost and average order value (AOV) are interlinked. When you are clear with your shipping strategy, you can increase the AOV; we will see more about the AOV later in this post. 

Familiar, tried, and tested shipping strategies

There are different types of shipping methods, and the most common ones are 

  • Free shipping
  • Flat rate, and table rate shipping
  • In-store & curbside pickup (Local pickup)
  • Same-day delivery

Except for Same-day delivery, the other three are default shipping classes in WooCommerce.

Recommended Reading: How to configure Flat Rate, Free Shipping, and Table Rate Shipping in WooCommerce

In-store & curbside pickup (Local pickup)

This shipping strategy is best for businesses with both brick-and-mortar and online stores. If you have a strong local business, then you can also opt for this shipping strategy.

Instead of shipping a product from destination A to destination B and managing shipping bills, you can give customers the option to pick up their orders in your store or in a pickup location. In addition, you can pass on the savings from shipping to your customers and lower their overall purchase cost.

You can use Order Delivery Date Pro for WooCommerce plugin to easily handle delivery dates, set local deliveries, and even manage pricing for speed delivery and special day delivery. 

Pros:Zero shipping cost, faster delivery. Convenient for local customers.
Cons:It can be only offered if you have an outlet or a location like a warehouse in the locality.
Best Suited for:Local businesses. Businesses that have outlets & warehouses in multiple locations. 

Flat rate and table rate shipping

Flat rate shipping is one of the most preferred shipping methods for all types of businesses, especially small and growing eCommerce stores. 

In the flat rate shipping method, you charge a flat rate based on order value and weight ranges. For example, you can charge a flat $20 shipping charge regardless of the product category, weight, or value. Or else, you can charge flat $10 for order values of $50 to $100 $5 for order values of $100 to $150, and free shipping for order values above $150. 

The table rate shipping is a more refined version of the flat rate. You can define rules based on the product’s destination, product weight, the number of items, shipping class, and price.

Before setting a flat rate, you have to do some groundwork. You have to identify the average order value, shipping cost, etc. Based on your findings, you have to try different flat rate shipping rule combinations. See how your conversions are going, and you have to improvise the pricing to get more conversions. 

Managing all factors and finding an exact sweet spot for your flat rate shipping strategy can be difficult, but you can execute this easily on your WooCommerce store with the Advanced Flat Rate Shipping for WooCommerce plugin. This plugin lets you set flat rates for location-based shipping, product-based shipping, user-based shipping, cart total-based shipping, and more. 

Pros:Win-win for both seller and shopper. You can provide a consistent customer experience.
Cons:We must find a flat rate sweet spot that works for all customers. 
Best suited for:Small e-commerce stores, growing eCommerce stores that are providing nationwide and international shipping. 
Read Related: Shipping Made Simple: How to Set Up Product-Specific Shipping Classes for Your Online Store

Same-day delivery

According to a survey, a majority of online consumers aged 18-34 (56%) expect same-day delivery, and 61% are willing to pay more for it.

Same-day delivery will set your business apart from your competition and grow your revenue, as customers love fast delivery. 

Catering to customers’ expectations is good, but think twice if you can provide this. Same-day delivery is easier said than done. You must need a smooth logistics and delivery system to achieve this. Local businesses can think about this based on their delivery capabilities.

If same-day delivery is not feasible for you, you can also try to offer two or three-day shipping, as it is also preferred by 90% of the customers

Pros:Shoppers love this, and hence conversions will be higher.
Cons:Unless you have a capable logistic and delivery system in place, you can’t think of this.
Best suited for:Local businesses and businesses that have a well-established delivery network.

Free shipping

Free shipping has become the normal standard in the eCommerce world. In fact, a majority of shoppers in the United States (61%) and Canada (68%) said that free delivery is their top consideration for most purchases.

Implementing free shipping involves lots of calculations, and trial & error need to be done just like in flat rate shipping. In this method, also you need to identify the average order value, shipping cost, destination, etc. Based on the findings, you have to think about pricing strategy, and that’s what we are going to see next.

Pros:This is the ideal solution customers look for; hence you can get recurring customers and improve your revenue. 
Cons:Not easy to offer in all regions and all types of products.
Best suits for:Almost all types of stores, if the pricing is done correctly. 

Importance of planning pricing in eCommerce shipping strategy

Shipping strategy is only the tip of the strategy pyramid. You have to be sure about the base to make a strong shipping strategy. 

Importance of planning pricing in shipping strategy

Pricing stays at the center of the shipping strategy. Clever pricing allows you to avoid overcharging or undercharging your customers and ensure that the extra charges don’t eat into your profit margin. 

Three factors that you have to consider when planning your pricing are-

  1. Shipping cost
  2. Average order value
  3. Handling returns

Shipping Cost

In simple words, shipping costs are the charges needed to move a product in your store/warehouse to the customer’s doorstep and vice versa. The two key elements that decide the shipping cost are package size & weight and destination. When you carefully handle these two elements, you can considerably save on your shipping. 

Package size & weight: Stores that are selling fairly same-sized products can go with a per-item, zone-based approach, where the shipping price varies by customer location and not product size or weight. If you are selling a little heavy products, it is better to go with live rates. Calculate your product weight accurately and get the rates from your shipping service providers like UPS, FedEx, and DHL. This way, you can provide the best rates to your customers. 

Destination: It’s a no-brainer. The longer the destination, the higher the shipping cost. If you have stores in the delivery locations, you can provide a local pickup option and reduce the shipping cost. For deliveries far from your location, you can go with rates by zone. For example, if your store is in Kansas, the delivery rate for Denver will be less, Los Vegas will be high, and San Francisco will be higher. Likewise, the price increases as the delivery location radiates out from your store location.

For WooCommerce store owners, there are plugins to help you with weight-based shipping. All other factors, like shipping zones, payment methods, etc., can also be managed on WooCommerce.

Average Order Value

Understanding your store’s average order value (AOV) can help you evaluate your overall online marketing efforts and pricing strategy by providing you with the metrics you need to measure the long-term value of individual customers.

The average order value can be calculated by dividing the revenue of the order(s) by the number of orders.

AOV = Revenue of the order(s)/ Number of orders

Remember that AOV is the sales for a particular order, and it has nothing to do with the customers. For example, if a customer makes an order A today and B tomorrow. “A” needs to be treated as a separate order, and “B” should be treated as a separate order. 

AOV helps us uncover several insights. For instance, using the AOV, you can decide whether you can offer free shipping or how to plan your flat rate shipping. 

Determining if free shipping works based on AOV

Free shipping is a FORMULATED result. No one can really offer free shipping; the cost will be either covered by the total order value, smart packaging, or clever logistics handling. AOV helps you understand which product is cheap to ship and which product’s shipping is higher. This can help you make informative decisions on how much you can spare your profits to fulfill the order at a competitive price. 

If your store is new and slowly gaining momentum, look into your current AOV and the shipping cost for the most often shipped products. This will help you have a rough estimate of whether you can provide free shipping or not. 

For example, a beauty store gets $70, $80, and $90 value of orders. The AOV for this order will be (70+80+90)/3= $80. Let’s take that the average shipping cost for most often shipped products is $5. In this case, the beauty store can offer free shipping for orders above $85.

Charging extra is inevitable sometimes

Pricing is not all about shipping alone. There are other factors that contribute to the pricing of a product. If you are selling a heavy automobile part and if it is something you can’t bring under the standard shipping cost category, it is better to charge the exact shipping pricing even though it might seem a little extra than your regular flat rate shipping pricing. You can clearly show the shipping types and rates to the users and let them choose the most affordable option.

Recommended Reading: How to Hide the Entire Section of WooCommerce Shipping fields?

Considering returns in pricing strategy

Handling returns is one of the most commonly overlooked factors while planning your pricing strategy. According to the Shopify customer trends report, 41% of consumers find it frustrating to pay for return shipping. Just like free shipping, free returns also need to be done cautiously. 

The better way is to keep the communication clear when a customer asks for a return. Tell them how much will be deducted for return shipping and how they should prepare the return product. 

One method experts recommend for small businesses that can’t afford free returns is to treat the returns at a flat rate and split the cost between the customer and the store. This way, the stores can reduce the loss and keep customers happy. 

International shipping and shipping solutions 

Including international shipping in your shipping strategy would be a good move based on your product and market. Most commonly used shipping providers like USPS, FedEx, and DHL provide international shipping options. 

If you feel managing all the orders, packaging, shipping labels, etc., to be a little overwhelming and need time to look after your business, there are international shipping solutions that take care of A to Z shipping for you. Here are some of the best international shipping solutions you can consider-

There is no one fit for all needs

Planning a shipping strategy takes more than just choosing a shipping method. You have to consider your shipping cost, product pricing, competitor offerings, Average Order Value, and many more. You can’t take one solution and apply it to all your requirements. In order to meet the customer’s requirements and also stay ahead of the competition, it is always better to provide a mixture of options. 

Pick a strategy that works for your bottom line and add layers of other methods to provide a unique solution. For example, 

Free standard + expedited shipping for customers who prefer a faster delivery

Standard shipping + in-store pickup + same-day delivery for customers who want to save on shipping but also need quick delivery. 

What’s your favorite shipping strategy? What are all the shipping strategies you are going to combine in your WooCommerce store? Let us know in the comment section below. 

Browse more in: Ecommerce Tips, How Tos, WooCommerce Shipping

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