The Internet has dramatically transformed the freight-shipping industry Today a customer based in the Maldives can easily buy a product from a seller or business in Canada. Geographical distances are no longer a hurdle in terms of shopping. However, while handling tangible products, an e-business needs to identify a particular delivery method so that the item reaches the online purchaser efficiently, accurately, seamlessly, and quickly. It is, therefore, essential for a business to manage shipping costs to ensure that your business is profitable and competitive.
According to Forbes, container shipping organizations have not been totally immune to the various disruptive factors agitating the markets like a potential recession, soaring inflation, the Eastern Europe war, and rising interest rates. You may consider cost stratagems along with cost factors while determining your shipping costs.
Free shipping is the perfect strategy for all e-commerce businesses aspires to. However, free shipping is not free. No judicious e-retailer will follow free shipping to get pushed into the much-dreaded loss-making zone. So when e-store promises free shipping, it implies any one of the following two things.
Firstly, the business has chosen to bear a short-term loss hoping to attract substantial customer volumes to run the business successfully once the offer is closed. Secondly, the e-store is actually transferring the shipping cost to their customers by incorporating the shipping expenses into the price.
To determine if a free shipping strategy is viable for your business, you have to compute your total volume of sales, competitor pricing, profit margins, and the minimum order required to offer free shipping. Container shipping quotes depend on the shipping cost strategy implemented by a business.
Free shipping is unsustainable and impractical for most e-businesses. It is best to opt for a flat rate or fixed rate shipping stratagem. In such a case, a fixed shipping cost is applicable to all items irrespective of individual dimensions, weight, or destination.
The main advantage of this pricing strategy is predictability. Right from the start, the customers know how much to pay for shipping costs. The only disadvantage is that your business may fail to cover the entire freight costs. Moreover, in the case of international orders, it is difficult to constantly keep track of duties, surcharges, taxes, and other landed costs. The landed costs for international shipping are billed post-delivery, implying the customer is confronted with unexpected costs that in the long run disprove the inherent concept of flat or fixed shipping pricing.
Calculated Rate Shipping
A calculated shipping rate implies you calculate the accurate shipping expenses and transfer the entire burden to your customers. The chief advantage of this pricing strategy is that the entire shipping expenses are paid by the customer and you do not have to bear any burden. Shipping charges can be increased due to many factors like inflation. Learn how to hedge against inflation.
The best policy for e-business is to offer multiple shipping options to your customers. Let the customers choose what they feel is best for them. The major disadvantage is that several prospective buyers will reconsider their decision to buy when they find that the shipping costs exceed their expectations. Moreover, it is a big challenge to integrate real-time carrier rates software seamlessly into your e-store that considers all relevant variables like destination address, size, and weight.
You need to choose a pricing strategy per your unique requirements and the expectations of your target audience! Your shipping cost stratagem plays a pivotal role in making or breaking your business.