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Why Offering Customer Selected Shipping Rates May Be A Bad Idea
By Oliver Trunkett, Mar 4, 2015

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Many online sellers want to offer their customers real-time shipping rates based on the items purchased, how fast they want them, and the distance they need to travel. At first glance, this kind of service makes sense. If it’s a heavy package that has to travel far, a customer might choose slower and cheaper shipping. If it’s an important package, 2-day air shipping makes sense—everyone is happy.

However, before you assume this is a good idea  for your store and rush off to implement it, offering real-time rates with multiple shipping options to your customers may actually do more harm than good.

Virtually every survey done on cart abandonment concludes the number one reason people abandon their carts is because they were presented with sudden, unexpected costs (usually caused by shipping and taxes – one example survey from Statista). Going in blind as to how much shipping will add to the purchase and then calculating shipping prices on the spot in their cart can lead to lost sales at what should be the finish line.

Giving visitors the ability to check real time rate options during the checkout process can cause problems, including:

  • Cart abandonment. If presented with options higher than expected, visitors may get sticker shock and abandon their cart
  • It’s confusing. Many real-time rate calculators for customers only highlight the name of the service, and not how fast it’s going to get there. Some people might not know the difference between Priority Mail and Priority Mail Express (aside from the huge price increase)
  • It’s a tedious process. Multiple clicks and information processing just to find shipping rates make the checkout funnel long and complicated for potential buyers. It also sets up the scenario of a customer thinking “Okay, I was ready to buy the item, but now I’m making purchase decisions that feel bad.”
  • The better shipping option might be overlooked. Shipping rate calculators typically rely on the order’s weight to talk to connected carrier integrations and then return a set of services and applicable rates. If the weight on your items aren’t precisely accurate, or the information assumed by the shipping calculator isn’t correct, your buyer can be presented with shipping options that aren’t the best for that order. The old garbage in, garbage out principle.

One simple solution to these issues is a flat rate shipping policy. Many popular eCommerce retailers utilize a flat rate policy to simplify shipping for their customers. Less decisions, known costs and no surprises can lead to greater trust, less abandonment and most importantly – more sales.

Providing your visitors with a flat shipping rate across all orders offers many benefits, including:

  • No chance your visitors will be shocked by shipping prices. This negates the #1 reason for cart abandonment.
  • You can create an incentive to purchase more. Free shipping for all orders over $50, for example, is a popular choice.
  • You can standardize and optimize your shipping. Fewer shipping options for customers means you can utilize the best service for a specific order, with the potential to take advantage of low-cost services like First Class, FedEx SmartPost, Flat Rate Green (ShippingEasy’s proprietary cubic shipping rates), and Regional Rate shipping. These services can be overlooked by shipping calculators.
  • You don’t need to set up anything up. Real time shipping rates are not a standard feature on most shopping carts. They require you to pull real-time shipping rates by connecting to different carriers, require you to have accurate weight for each item in the order for the tool you’re using to calculate rates, and these tools usually cost money (or are part of the highest tier plan for eCommerce cart solutions). Offering a flat shipping policy costs nothing, and can actually improve conversion rates.
  • Presenting your shipping policy early can actually improve conversion rates. One problem with real-time shipping calculations for visitors is that it’s done at the end, and makes the actual order total different than what the perceived total was at checkout. Placing a low-price flat policy on all orders will let people mentally budget properly and even entice them to make a first time purchase if they know shipping isn’t a big commitment.

Figuring out your store’s shipping policy

Some potential shipping policies you can offer your visitors and eventual customers:

  • Flat shipping $X rate on all orders. Simple and effective, allows visitors to mentally budget while shopping and hits them with no surprises in the shopping cart.
  • Free shipping on orders over $X. This policy is great as an incentive to visitors to spend more on their initial visit. Typically a flat rate is offered to those that don’t meet the threshold.
  • Lower rate above $X purchase, higher rate below $X purchase. This one adds incentive to purchases, but gives a more complete look into your shipping policy.
  • $X flat rate on standard shipping $Y higher rate for faster shipping. This is if you want to offer flat shipping, but give your customers speedier delivery options. Look into the type of products you sell and your customers’ feedback if you really need to include expedited shipping options.

My favorite shipping policy is making it free after the customer crosses a certain price threshold. I know I’ve visited many e-commerce stores and ended up loading my cart with one or two more items just to qualify for free shipping. Amazon uses this strategy on their Super Saver Shipping.

Now I know an inexpensive, flat shipping policy can’t work for every business and there are stores out there that use real-time customer selected rates successfully. Some online stores ship really heavy items, some stores ship items that can vary greatly in size, so offering a flat rate isn’t always a simple decision to make. If you are one of those unique cases, check your competitors and see what they offer. Review their shipping policy and you can pick up on the clever ways they minimize shipping costs.

You can even order something from a store that sells similar items to your business and inspect the packaging you receive. Did a FedEx/UPS truck deliver it to your door? Are they using flat rate boxes from the USPS? Is it a SmartPost/SurePost delivery that started off as a UPS/FedEx package but used the postal service for final delivery? Read the actual shipping label on package you receive, it can give details as to which service it is. You can get a lot of insights from competitors and even think of ways to improve upon their shipping which you’ll use for your store.

Lastly, see what your average order looks like and design a shipping policy based around that. If you look at shipping as a whole process, then you can come up with a shipping policy that looks appealing to customers and doesn’t end up costing your business.

Conclusion

While there might be a few stores that can benefit from offering real-time shipping rates to customers, it’s putting a lot of stress and complications on people who just want to buy things from you. Save the dirty work of calculating the best shipping service for your business behind the scenes, and keep options for visitors limited and sensible. Offer your potential customers a simple shipping policy, and just say no to in-cart shipping calculators.

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Oliver Trunkett

Digital Marketing and Growth at ShippingEasy
I'm all about digital marketing and growth. I like finding clever ways to optimize life and business.

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