Exploring Your Shipping Options
Web Commerce Today, Issue 15, October 15, 1998
When designing shipping offerings for your online store your first consideration is your customer. Decide what is the fairest and easiest-to-understand shipping system you can offer. Then combine this with the shipping approach that makes the most sense with your type of products.
With some kinds of store software you have a number of shipping calculation options open to you:
- By price
- By weight
- By number of items
- A fixed rate for each item
- A fixed base plus price or weight
And for each of these you can probably set up a number of regions or zones to ship to, each with its own table of prices. How do you determine which option is best? If you've been engaged in an off-Web business previously, then you'll have your decisions pretty well made. If not, consider these suggestions.
In the US, United Parcel Service (UPS) offers up to 10 shipping zones. How should you handle so many different zones? One of the keys to an effective Web store is to offer options, but not overwhelm your customer. Ten shipping zones is overwhelming. It might be more effective to look at the price differences from one zone to the next and group them into four for five zones. If you're in Illinois, for example, you'll probably want to make your local state one zone, with perhaps one or two adjoining states. Then have zones named Northeast, South, Midwest, West, and Pacific. Your customers understand these basic regions, and will have little difficulty selecting their own location.
But if you group several UPS zones together won't you lose money? Yes, on some sales, and on some you will make a little bit. Your goal is to break even on shipping over all, and to simplify things for your customer.
Using the UPS Quick Cost Calculator
Should you use the online UPS Quick Cost Calculator? (http://www.ups.com/tools/tools.html) While it's pretty slick, it isn't integrated into many off-the-shelf store-building programs. It also assumes that you won't be adding any handling fee. Many mail order companies set their prices as low as possible to appear competitive, but tack on a handling fee to the shipping costs to cover the expenses of a shipping staff, etc. Whether or not you choose to do this is your decision, but it will affect whether or not you can use the UPS Quick Cost Calculator. Here's an example of the calculator on our site (http://www.wilsonweb.com/wct1/980115ups-calculator.htm)
How Many Shipping Alternatives to Offer
The goal here, too, is to make it simple but to offer the options you customers want most. You may not need to offer ground, second day, and overnight, but you'll probably want to offer at least two of those for your customers. Should you offer different shipping companies? I wouldn't, unless they offer unique advantages to your customer. Parcel Post vs. UPS Ground? Is there a substantial cost or service advantage? If not, reserve for yourself the option of whether you ship UPS or the post office, and don't bother the customer with the decision. It's probably a good idea, however, to provide a "Shipping Instructions" box so your customers can indicate any special shipping or delivery needs.
Calculating Shipping by Price
One of the most popular methods is to calculate shipping charges on the basis of total price of the order. This works well where the products you carry don't vary a great deal in weight. For example, if you sell CDs or computer software, weight is not a big factor. Even if you sell books, you can usually predict the shipping costs for a certain price total of books. And if you're a bit off on one order, you'll make it up on the next. Such a table might be set up as follows:
|
Up to $20 |
$5.99 |
|
$20 to $40 |
$6.99 |
|
$40 to $80 |
$7.99 |
|
$80 to $120 |
$8.99 |
|
Over $120 |
$9.99 |
Shipping as a Competitive Advantage
In the table above, a $5.99 looks like less than a $6.00. Product price is not the only point of competition. So is shipping.
You can also use shipping as an inducement for the customer to purchase a larger amount by offering "Free Shipping for Orders of More than $50" (or whatever threshold works best for your business). By the time you get to that price total, presumably, you've covered their shipping anyway. Many of your customers will spend more just to get what they perceive to be a bargain. If you plan this offer carefully, you can substantially increase your average total order.
Calculating Shipping by Weight
If your products are particularly heavy, or vary considerably from one to another in weight, then you ought to consider instituting a shipping charge based on weight. A weight calculation is more closely related to actual shipping costs, but makes it more difficult for your customer to estimate his total order, so don't use it unless you need to.
Calculating Shipping by Base Plus Weight
Some items may have special packing requirements that need to be added in. For example, I have a client who ships rainbow trout by air from the Rockies using a special cooler container to keep it fresh. Other items might require special crating. In these cases a base price (to cover the special shipping materials) plus weight is probably an appropriate way to charge for shipping.
Calculating Shipping by Number of Items
This method of shipping calculation isn't as common as a price calculation, but for certain kinds of products that all weigh about the same it would work well. It is easy for the customer to understand, and easy to calculate for a shopping program (though most programs don't include this method).
A Fixed Shipping Cost for Items
Certain items you might want to set a single fixed shipping cost, probably for very large items, though I can think of few situations where this would be better than a shipping by weight calculation.
While you may be limited by your particular store building software as to your decisions (Mercantec SoftCart and Open Market ShopSite seem to offer the most options), examine your shipping options creatively, as a way both to serve your customer and to boost sales.
