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Shipping Rates: Free, Flat, or Variable?

Posted by Maeghan Hurley on Tue, Oct 07, 2014 @ 04:41 PM

Shipping Rates Free Flat or Variable

 

Your shipping rates and strategy might be one of your best e-commerce marketing platforms. What you charge your customers for shipping may make the biggest difference in whether they buy those several items they have in their shopping cart, or let them sit there while they go looking for other sites with lower prices or cheaper shipping.

Free Shipping

One of the buyer incentives that people love most when they’re shopping online is free shipping. Customers are more willing to wait extra time for their delivery for free shipping, as well as add more items to their carts in order to reach a minimum cost to reach free shipping. Why is that? As a society, we’ve got sales tax ingrained in our minds—we know our final cost will be slightly more than the total cost on the price tags because taxes are always added. We haven’t totally factored the additional cost of shipping into our minds, though. When we shop, many of us pay attention to the price. When that total price jumps another 10-20% on top of what we have to pay for tax, it scares us away from hitting the “Buy” button. Often, we could just as easily pop into a store and save ourselves the cost of shipping. Free shipping removes that obstacle from the path of the consumer.

Flat Rate Shipping

Similar to the free shipping option, flat rate shipping lets your customers know what to expect when it comes time to tally up their cost. Rather than a variable rate which slowly (yet surprisingly, sometimes) adds up as more items are put into the cart.

Flat rate shipping makes sense if the majority of the products you ship share a similar cost. If they’re all close to the same weight or size, even with several added together, you’re unlikely to have any issues offering a simple flat rate. While you may actually lose a small sum of money on smaller orders, the amount that you’ll make up on other orders will ultimately balance out.

Variable Rate Shipping

Many customers may not favor variable shipping rates, but in some instances, they make a lot of sense for a retailer. For retailers that carry a large number of items of different sizes and weights, variable rate shipping gives them the power to ensure they’re not losing money on their shipping. Obviously, it’s hard for a retailer to offer to ship a 100 lbs. item at the same rate as a 5 lbs. item. Variable rate shipping offers retailers the most control over ensuring that the customer is paying the correct amount for shipping.

Many retailers are also opting a combination of the above—offering free shipping on orders above a certain dollar amount, and variable rate for anything below. Shipping rates are a game that varies from retailer to retailer, but it’s a game that matters very much to increase e-commerce sales. 

 

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Topics: Retail, Shipping, E-commerce