Accurately calculating shipping costs helps you to achieve several important goals:
- You will provide your customers with full transparency of how much they will need to pay for shipping (and increase their trust). Cart abandonment is, sadly, a common phenomenon. Did you know that 23% of those who shop online abandon carts due to shipping issues? (45% abandon their cart when they see that the items added to their cart do not qualify for free shipping, 52% choose to add items to their cart to qualify for free shipping, and 56% end up paying the shipping fees because they don't want to lose the product just because of the shipping costs.) You can avoid it by giving your customer several shipping methods at checkout.
- If you know your shipping costs, you can proactively set your margins to make sure you don't lose profit whether you are offering free shipping or not.
- Are you offering free shipping? Free shipping attracts more customers to your store, but you need a clear strategy to offset the costs that fall entirely on you.
There are several key factors that can affect your shipping costs. When you know them and see how they affect your budget, you can develop an effective strategy on how to save money on shipping. Here they are.Package dimension
The general rule of thumb - the bigger the package, the higher the shipping costs. Carriers estimate their shipping rates based on the package's weight vs. dimensional weight (the volume occupied in transit). DIM becomes a factor when the weight of the package is less than its volumetric weight (dimensional weight). In other words, your shipping rate will depend on which value is higher - the package's actual weight or its volumetric weight. Almost all companies like FedEx, UPS, and DHL calculate their shipping rates based on the correlation between these two values. Use the dimensional weight
calculator from Calcurates to save on shipping costs. This tool allows you to compare which value (weight or DIM) will get you the most savings. Package weight
This one is simple - if the weight of the package is higher than its dimensional weight, the shipping rate will be determined based on the package's actual weight. Generally speaking, the heavier your packaging, the more you will be charged for shipping.
Use scales to accurately weigh your item before shipping - to eliminate unpleasant surprises in terms of shipping rates. Choose smaller boxes to save money - as a rule, the smaller the box, the less you pay. Use quality packaging materials to avoid returns and reputational losses. Shipping destination
Shipping costs largely depend on how many shipping zones
your package will go through. Does your ecommerce store ship domestically or internationally? Ecommerce shipping costs will be different depending on how far your item is traveling. "Shipping zone" is one of the major factors that helps shipping service providers set their price points. For example, in the US, there are 8 shipping zones. The more zones your package travels through, the higher the cost of shipping. If your ecommerce business needs to ship long distances regularly or you ship internationally, a 3PL will help you reduce shipping costs significantly. With multiple warehouse locations, 3PLs can store products closer to your domestic buyers or international customers. As a result, your item will travel through fewer zones, which will help you reduce shipping costs. Calcurates provides the most geo flexibility for your shipping by assigning methods and rates to specific Shipping Zones
(Areas) or by creating location-based rules and restrictions. You can customize shipping zones to set rules and restrictions or offer special rates and shipping methods based on the customer's location. Value of contents shipped
Whether you are shipping internationally or domestically, carriers will ask you to declare your item's value. Shipping high-value products generally costs more. The reason your product price affects shipping costs is that it is used to determine the maximum amount your shipping insurance will cover if your item is lost or damaged. With FedEx and UPS, this value is set at $100 by default. However, this is not how much insurance will owe you in case your package is damaged or lost. It is just the legal financial liability of your shipment. This value is very important especially if you ship globally - to avoid delays with customs clearance. If a customs official has reasons to believe that your package value has not been declared correctly, they might hold your package, which will negatively affect your international shipping costs. Delivery times
Generally, the quicker you want to package to be delivered, the higher the shipping costs. Different carriers offer different delivery speeds. For example, if you offer your customers 1-day shipping, you will need to find a shipping service that provides overnight delivery. Another way to do it is to offer your customers a wide range of shipping methods and delivery times at checkout so they feel more empowered. Customers will be able to compare shipping costs and decide if they want to pay for fast shipping or not. Providing your customers with clear choices tends to significantly reduce cart abandonment. With expedited shipping, you get a same-day, next-day, or 2-day delivery. Typically, this type of shipping is faster than Standard but slower than Priority. If you are looking for an overnight service, USPS Priority Mail Express usually works best if your packages weigh less than 70 lbs. Unexpected problems
Now that so many people shop online, most shipping companies provide more and more shipping insurance options for ecommerce businesses. Shipping insurance is an important factor in determining shipping costs. What situations and scenarios are covered varies between different shipping services. Typically, insurance covers unexpected problems outside of your control such as delays in delivery, damaged items, or shipping malpractices during transit. Before choosing shipping insurance, check your shipping company's requirements and restrictions to see what situations are covered. Remember that if you ship medical supplies, you will need to meet special requirements.