Optimise your shipping costs for your e-commerce!
19 April 2023
As an e-merchant, shipping your products is one of the most important aspects of your business. Shipping costs can impact your profits and your conversion rate. As a result, there’s only one rule! Find the right balance between reasonable shipping costs for your customers and profitability for your business. In this article, we explain how to determine if your shipping costs are competitive.
Conduct a market study
83% of online shoppers abandon their cart if they find the shipping costs too high. This figure shows just how important it is to be competitive on shipping rates!
The first step to knowing where you stand is to conduct a market study. Look at what your competitors charge for shipping similar products and compare with your own prices. You can do this simply by visiting your competitors’ websites and noting their shipping fees.
Tip: Ask your customers if they are satisfied with the shipping costs you offer. This will give you an idea of the competition and what your customers expect.
Analyse your own data
Another important thing to monitor is the impact of shipping costs on your conversion rate:
- Have you ever run campaigns offering reduced shipping costs?
- Have you ever tested different shipping amounts? For example, have you ever increased or decreased them in general or for certain items?
- What was the impact of these operations on your conversion rate?
Analysing this data can help you determine the right amount for shipping costs for each item, but also whether you should charge or offer free shipping.
Tip: Use an online sales tracking tool. By tracking the conversion rate for each product you sell and analysing it in relation to your marketing operations on shipping costs, you’ll be able to see the impact of shipping costs on your sales.
What is the right level of shipping costs?
There’s no simple answer to this question. It’s up to you to find the right balance that will both maintain your margins and satisfy your customers.
To give you an idea, it’s generally estimated that the psychological price is around 20% of the order value. In practice, if an order costs €100, customers will generally consider €20 shipping to be reasonable. However, keep in mind that the larger and more expensive the items to be delivered, the less impact shipping costs have on conversion.
Tip: Put yourself in your customer’s shoes on your site. Add an item to the cart and ask yourself if the shipping cost is acceptable compared to the product price.
Should I cover part of the shipping costs?
The answer to this question depends on your pricing strategy and your margins. If you have high margins, you can more easily offer free shipping or subsidise part of it. This can increase your conversion rate and build customer loyalty.
On the other hand, if this solution is too expensive, there are other alternatives you can turn to:
- Free shipping above a certain amount: as well as rewarding your customers, you increase your average basket size
- Free shipping for specific products: a good way to reduce stock of your slowest sellers
- Free shipping for a category of customers: this helps build loyalty among your best customers or reactivate former ones
Tip: Include shipping costs in the product price. If you charge shipping fees, it can be seen as an extra cost. Why not include shipping in the product price and offer free delivery? This strategy can increase both your sales and customer satisfaction.
Is it possible to offer more competitive shipping costs?
It is entirely possible to offer more competitive shipping costs by choosing alternative delivery services such as pick-up points or collaborative delivery. Pick-up point services like Mondial Relay or Relais Colis can be cheaper than home delivery.
Even better, co-transporting. Also called collaborative delivery, like the service offered by Cocolis, can significantly reduce your shipping costs: up to 60% cheaper!
The principle of Cocolis is very simple. You have your parcels transported using the existing traffic of individuals or professionals who are driving with empty space. A modern practice that offers an economical and ecological alternative to traditional carriers, adopted and approved by more than 10,000 merchants.
Tip: Start by reducing your logistics costs, which will directly impact your shipping costs. There are several tips, such as renegotiating rates with your provider, optimising your packaging, or managing your stock. If you’re interested in this topic, we invite you to read our article: 5 tips to reduce your shipping costs.
As you can see, determining whether your shipping costs are competitive is essential for your e-commerce. By following the tips and strategies mentioned in this article, you’ll be able to find the right balance between profitability and customer satisfaction, while staying ahead of the competition.
No time to lose? We’ll help you boost your sales right now with co-transporting. Discover Cocolis, the ecological and innovative logistics solution for e-merchants.
