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How To Effectively Calculate Shipping Costs For Your Online Business

Now that you have started selling online and managing your business, you would have come across the various challenges that running an E-Commerce business gets along with it. The biggest being logistics, shipping itself is a very prominent part of the entire chain of E-Commerce industry and if used effectively can turn into the game changer of your business. Many entrepreneurs who are selling online are not even aware of how they can save money just by altering very small things when it comes to shipping.

So here we will explain to you few methods to cut down on your shipping cost:


Offering Free Shipping

Offering free shipping is a double-edged sword. On one hand, it makes the product more attractive to the customer while on the other hand, it can affect your profits. Either some of the profits get absorbed when opting for this or to manage it, costs of the product are inflated.

This can also be a useful tactic to gain an advantageous position against other competitors. Advertising free shipping effectively can garner attention. Or better yet offer free shipping on a minimum order. This will be beneficial in elevating your average order value, in addition to that earned profit can assist in managing shipping cost. Amazon often uses this technique and has been quietly propelling its major customers to add-on pay-for-shipping services such as Prime Pantry to build its own factory operation.

It’s a predominant factor here to identify the type of business. In case of ostentatious or luxurious products, shipping cost will not be a driving factor in influencing the addition of the product to the cart but products like mobile phones where it is conventional to offer free shipping, deviating from the norm will make the product less appealing.


Calculated Shipping Costs

Heavy and over-sized products cannot be shipped using free shipping method. In calculated rates method shipping cost are determined using real-time rates, weight based and price based techniques. It is detrimental to know exactly what product is being ordered and where it is to be shipped to arrive at shipping costs. Simple Sugars offers real-time shipping quotes, building customer trust as the shipping cost is determined by a calculator and it’s more transparent than other methods. Real-time quotes are gaining are increasingly gaining popularity and some the renowned ones are FedEx and UPS and will soon hit the Indian market too.


Flat Rate Shipping

Many websites in India, like Grofers, use this method of shipping fixing an amount for orders below Rs 500. You can also opt for flat rates. In this method, every product is delivered at the same shipping rate. In the normal course of business, this doesn’t affect the profits as the fixed shipping cost is determined through adequate deliberation. The fixed cost will either be slightly higher than the actual cost which can be evened out with some other products profit from fixed shipping cost. A slight imbalance can take place but nothing drastically affecting your profits.

The estimated fixed cost should be properly calculated. A product which is relatively inexpensive with a high shipping rate will not be attracting any customers. Also, small but heavy objects can come into an apt flat rate range through cost savings from cubic shipping prices.

How do you ship your products? If you have any interesting finding from your learning while shipping? Let us know in the comments section below!

Written by
Shiwangini Singh

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