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Real-time Shipping Costs: What to Know for Your eCommerce Site

Dave Haas • July 9, 2015

By David Haas

Today’s online consumers have come to love, and now expect, free shipping on their orders. According to Forrester, 59% of online shoppers indicate that shipping costs are the primary consideration when making a purchase.

The preference for and prevalence of free shipping (47% of all online purchases include it according to Monetate) has made it a reliable tactic to gaining and keeping customers. We’re all familiar with the high rate of shopping cart abandonment when free shipping is not available. Offers of low cost shipping, however, can entice shoppers back to a site. Forrester finds 51% of online buyers cite this as a reason to make a return visit.

As an online merchant, you need to consider what you sell and your profit margins when deciding what to charge for shipping. While many firms offer free shipping, many others can’t afford to or do not need to, offer this benefit. In some cases, including a base shipping option that’s free to the customer is a valuable option. Only you can decide if an uplift of 10% on your conversion rate is better than losing money on free shipping.

Real-time Shipping Estimates

Price sensitivity requires you to be as transparent as possible about costs. If free shipping is not an option, consider offering real-time shipping estimates. Charges that mirror your actual costs are one way to deliver the product in a reasonable amount of time at a reasonable rate.

The big carriers like FedEx, UPS and USPS all have free or relatively low-cost real-time shipping estimators. But as an eCommerce professional, you understand fulfillment and shipping aren’t always simple.

  • You wouldn’t ship a 5-quart ceramic casserole in the same package with delicate crystal.
  • It doesn’t make sense to ship prime meat which requires refrigeration along with an assortment of dry rubs, spices and seasonings.
  • A table lamp requires different packaging than a flannel-lined dog bed.

If you choose to use one of the real-time shipping APIs from FedEx, UPS and USPS, you’ll need several data points to be able to make an accurate shipping estimate. If you aren’t able to provide accurate data, you won’t be able to offer shoppers an accurate estimate. Here are the important data points you’ll need.

Postal Codes: It’s important that you get the customer’s shipping postal code before presenting them with any quotes. The last thing you want to do is get a customer comfortable seeing a price for expedited shipping, only for that number to significantly change once they’ve entered their shipping address. A price that changes during the check-out process can lead to cart abandonment.

Product Weight: You’ll need the accurate weight of every SKU you offer.

Packaging Information: As the aforementioned examples point out, a more complex issue revolves around fulfillment: how do you package items and divide them up for shipping? In the ideal scenario, your eCommerce site would be integrated with your warehouse system which has data on sizes, weights, and number of items per package.

Unfortunately, most warehouse systems today are not setup for outside integration with an eCommerce platform that requires high availability and real-time responses. This usually requires custom development.

Hard goods make it easier to estimate box size or number of boxes used to ship items. However, soft goods like apparel, make it difficult to approximate how your fulfillment center will package an order. Again this will limit the accuracy of your shipping estimate.

Real-time Shipping Strategy

If free shipping isn’t feasible for your eCommerce business, using real-time shipping estimates offers several benefits.

  • Your customers can make an informed decision about their purchase. They can weigh the value of the items they want against what it will cost to obtain them. It also demonstrates you aren’t inflating shipping fees or raising item prices to cover costs.
  • Your company won’t incur significant losses on shipping if you charge what it costs you.

Be up front about costs throughout the checkout process, and try to offer the customer the best deal available on shipping.

If you’d like to learn more about integrating shipping calculators with your eCommerce platform, please contact LYONSCG.

Dave Haas

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Dave Haas

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