The Do’s and Don’ts of Shipping and Delivery for E-commerce Sites

Shipping and delivery are vital parts of any e-commerce website. Recently, customers have come to expect free online shipping and almost instantaneous delivery, even on Sundays and holidays. E-commerce merchants who fail in either of these two categories are often passed over for those who will ensure free shipping and timely delivery. However, even when you can’t promise the moon to your customers, at least you can provide clear and concise information about your website’s policies regarding shipping, delivery and exchanges/returns. Such information goes a long way towards enhancing customers’ experiences on your website and increasing the odds of their return.

Do Show Shipping Costs Early and Often

Having shipping information clearly stated on an e-commerce website is a key consumer expectation. In fact, one major reason for shopping cart abandonment is “sticker shock,” when consumers who were not adequately informed about shipping/handling costs and taxes are presented with their inflated purchase total. Even when a merchant clearly explains the additional charges, making it obvious that no profit is derived from shipping, complaints abound about the extraneous costs of e-commerce shopping. What can the e-commerce merchant do to combat this issue?

To reduce the chance of cart abandonment, e-commerce merchants can provide tools that calculate shipping costs and taxes as items are selected. Such tools score big points with customers, even if they view the final charges as too high. Having a clearly defined shipping policy on your website is imperative to customer satisfaction, even if its terms are less than ideal (i.e., shipping is performed only once a week). However, when it comes to a stated shipping policy, it is best to use it as a fallback option and not as the norm (i.e., if shipping occurs once a week, ship twice a week).


Do Provide Shipping Options

Shipping options and their prices should be clearly stated on an e-commerce website. Having the options presented visually is even better, since many customers will not be native English speakers or will be more visually orientated. In essence, the goal here is to reduce any unintentional confusion for the customer. Should the customer select no shipping method at all, ensure that the online selector defaults to the cheapest or most cost-effective option. Finally, do not make customers provide extraneous information such as their name, account number, address, and state in order to obtain the shipping costs for their items, since this also leads to shopping cart abandonment. Such information can always be obtained upon checkout. Instead, install a shipping calculator that requires nothing more than an input zip code.


Do Offer Free Shipping- or Don’t?

There is a lot of debate about whether or not e-commerce sites should offer free shipping. Many merchants feel that e-commerce sites cannot hope to compete with brick-and-mortar businesses unless they remove the biggest “sting” of online ordering (i.e., shipping charges). In turn, many customers have come to expect free shipping from online merchants; a recent comScore survey found that 72% of online customers would turn away from a website that charged them for shipping and look for one that didn’t.

Unfortunately, there is no such thing as free shipping. E-commerce merchants who indiscriminately provide free shipping to their customers risk reducing or even eliminating their profit margins, especially on heavier items. However, merchants who do not offer free shipping risk losing customers at checkout through shopping cart abandonment. This is especially evident around the holidays, when it seems that every competing merchant is offering free shipping.

There are two choices for e-commerce merchants who decide to offer free shipping: set item prices a given percentage higher in order to cover shipping, or offer free shipping only after a threshold amount is reached (i.e., Free Shipping on Orders Over $50). To make sure that your profit margin is not cannibalized, first calculate the actual cost of your bestselling item, including the cost of having it shipped to your warehouse. Next, total up how much credit card processing and shopping cart fees run on your website, along with packaging materials, labels, tape, and packing “peanuts.” Finally, pick a midsize city that is located roughly 1,000 miles away from your warehouse location and obtain shipping prices from your chosen carrier. Tally this final cost and subtract it from the price of your bestselling item. Can you still sell your item for a profit if its shipping is free? If not, then how many items would you need to sell in order to break even?

In some cases, offering free shipping will spell disaster for your profit margin, even if you do manage to increase the number of product sales. For example, if offering free shipping requires that you sell 10 times the amount of your bestselling product, it is unlikely that your business will benefit from this promotion. Likewise, if you make a discrete profit (not margin) for every item you sell on your website, your overall profit may disappear or even become a deficit if your customers start purchasing heavier items.


Do Get Creative with Shipping Costs

If you decide to maintain shipping charges on your e-commerce site and find that customers are hesitant to pay the shipping fees for your heavier items, consider making a small shipping profit on your lighter items and using it to offset the shipping costs on your heavier items. This is possible because many carriers provide free shipping materials, reducing your costs to direct shipping only. Likewise, consider “splitting” the cost of shipping with the customer by offering a coupon for free shipping on a future purchase.


Do Consider Online Delivery Tools

Of course, shipping costs are just one-half of the shipping equation; there is also delivery time. To this end, online tools can help generate estimates of when items are expected to arrive, especially if they are on backorder. Shipping services such as FedEx, the USPS and UPS provide delivery timeline tools that can be seamlessly installed on your e-commerce site. These service providers also offer online package tracking, door-to-door pickup/delivery updates, customs clearance and delivery confirmation.

Before launching any online tool, have a programmer inspect it for accuracy and potential bugs. Allow for a shipping delay in the event that an order reaches your site on a Sunday or holiday. In fact, it is a good idea to simply add an extra shipping day for “padding” and incorporate this time into the final delivery calculation. Always keep in mind that while delivering early is acceptable, delivering past the promised date is not.


Don’t Assume All Carriers are Created Equal

Some carriers offer all-inclusive package shipping, tracking and delivery confirmation while others charge extra for each option. Since your e-commerce business will need to verify where items have been shipped and where they are currently located en route, you may be better off with a service that offer all-inclusive shipping. However, if the overall fees for such services are too high, you should do a cost analysis of shipping providers and find out which one gives the best value for the money. Likewise, some shipping providers provide hourly updates of package locations while others wait until the end of the business day to update their tracking. Since many customers expect prompt location reports of their packages, especially when buying high-end items like appliances or jewelry, your e-commerce site may benefit from a more expensive shipping provider that submits frequent status updates. In turn, satisfied customers who utilize this service will be more inclined to order from you again.


Do Expect Exchanges and Refunds

Finally, what happens when customers wish to return goods for an exchange or refund? You should have a clearly stated policy regarding item exchanges and returns on your e-commerce website. This policy should also be supplied to customers in the invoice or confirmation e-mail once they have made their purchases. Information that needs to be provided in the exchanges/returns policy is the number of working days a customer has to cancel a sale, whether the goods need to be returned in their original packaging, and whether the customer will be charged for return shipping. Finally, if you intend to charge your customers any restocking or handling fees, these fees need to be clearly outlined in your exchanges/returns policy.

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