Don't let shipping changes disrupt your holiday sales. Learn how to stay ahead of the curve, avoid costly mistakes and sell more with powerful shipping promotions.
You are probably a busy athlete in the current “triathlon” of
- artistic gift-wrapping
- bulk shipping
And whether you do it for your loved ones or handle the orders of your store, it is all about these special surprise moments under the Christmas tree.
Surprises are great. We all love the thoughtful, pleasant ones; when it comes to online shopping however, surprises can mean conversion tragedy. Just like with your family gifts, you have thoughtfully planned for everything—you picked your inventory carefully, designed and promoted your store, maybe paid for traffic (e.g. AdWords), your shoppers browse, the cart is filled, credit card is ready—then, all of a sudden, an unexpected S&H charge pops up during checkout! Customers reconsider, and perhaps even bail out. The chain is only as strong as its’ weakest link, and this one just broke.
68% of all carts get abandoned, and it is not just because shoppers doubt that their new pair of jeans will fit or that a set of towels will be as fluffy as they appear on the website. A recent study found that hidden shipping costs are, by far, a shoppers’ #1 “pet peeve” (see chart below). These fees are just as popular as ATM fees and the penalty for losing a garage ticket.
Let’s be honest, shoppers know that stamps aren’t free, but they don’t care. Why would they? Of the Top 1000 web retailers in North America, 625 promoted some kind of free shipping offer on their home pages, and Amazon Prime sets the bar for many online bargain hunters. If you don’t have a very unique product or service, you probably can’t afford to not offer free shipping.
But when it is the merchant that pays for “free,” how can you afford it? Consider these tactics to drive conversion—and your bottom line:
- Track your overall shipping costs and factor them into your price calculation. See them as a “cost” to you, just like brick-and-mortar stores need to pay for rent and having a parking lot. You can also try this on selected products first. Make sure you label them clearly!
- Advertise flat rate shipping (good), free shipping with minimum order value (better) or free shipping in general (often best) on your homepage, in a banner and also in our new slideshow.
- If you tie it to an order minimum to increase sales, we recommend using 125 - 150% of your average order value to make this strategy add profit.
- Use our shipping and logistics partners’ apps to get better rates for your USPS packages so you can save on these costs and stay competitive.
Speaking of savings, did you know that USPS lowered Priority Mail rates significantly? Reductions were $2.80 on average for all packages and up to $7.00 for heavier packages (15-20 lbs). These savings go straight to your bottom line on each order.
Since time is money, the last thing you need is to deal with complicated rates, FedEx and UPS Ground have both introduced “dimensional weight” formulas to their 2015 price charts. Experts see this not only as “their single largest rate increase on record,” but also as an additional complexity to the calculation. Amine Khechfe, Co-founder and General Manager of postage provider Endicia, provides an excellent example: “A 2lbs women’s handbag, with package dimensions of 19x15x5, will now ship at the 9lbs rate, an increase of 28.3%.”
Make sure you understand what these changes mean, by calculating some of your typical shipments well ahead of time. If you are using live rates, make sure you mark them up accordingly, as Volusion will not factor-in these increases.
When in doubt—and these changes will often mean being in doubt—your best option is to calculating the costs of some of your typical shipments and, rather than relying on live rates, increasing the prices of your products accordingly. Don’t panic. Doing this will make it even easier to advertise free shipping throughout your site, and lower shipping rates are a far greater motivator than lower product prices. Wharton University of Pennsylvania’s David Bell has conducted research in the area, and concludes that: “A free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.”
Your other option is to move more shipping volume over to USPS. Khechfe’s advice, “With the USPS, not only will DIM (dimensional) weights not apply for the handbag package, but they also just lowered their rates for Priority Mail, providing cost savings that can be passed on to customers. These new rates target packages weighing between 5 and 35 pounds and being shipped across 5 zones. And since its Priority Mail, packages are delivered in 1 to 3 business days, making it an excellent alternative to UPS and FedEx’s 5- to 6-day Ground services.”
And to top that off, USPS will deliver packaging material for free if you use their “Flat Rate” services – “if it fits it ships.”
Not all of this will fit all of your scenarios. What matters is staying on top of the “shipping game.” This game is a very critical factor in conversion, revenue and profitability that you fully control. Planning ahead for the UPS/FedEx rate changes will simplify your business during the busiest days of the season and prevent sticker shocks next year. It hopefully also gives you more time to take care of your gifts - the ones you ship to your customers and the ones you give to your loved ones.
~ Stephan Millies, Product Marketing Manager