Enhanced Shipping Methods in the industry of E-Commerce

According to invesp, 93% of online buyers prefer to buy if free shipping is offered and 58% will add more to qualify for free shipping. As evidenced, 78% of Amazon Prime users signed up for the Amazon Prime Loyalty program because of free shipping. A survey by AlixPartners found that 36% of consumers abandoned their shopping cart because they found delivery costs too high.

Choosing the best shipment method is crucial to the success of any e-commerce platform. Before the company decides on the optimal shipping method, it needs to decide on the market strategy. An online retailer needs to decide on whether it wants to sell only to the domestic market or also sell internationally. International shipping is obviously more costly and time-intensive, and the terms and conditions would differ from domestic shipping. Sellers need to be clear about factors that affect international shipping such as the time it would take for an overseas customer to receive the product, the packaging and documentation required and managing foreign exchange and its associated risks.

There are various shipping methods that an e-commerce platform can consider for its domestic market based on price:

Free shipping:

This method will attract customers instantly and usually online retailers offer free shipping on high value items or when the value of the cart exceeds a certain amount. The online retailer factors the costs of shipping into either the product’s price or by distributing over a number of goods placed in the cart.

Flat rates:

The simplest method to ship to customers is charging a flat shipping fee on items purchased online, irrespective of the weight or price of the goods. Shipping services usually charge a flat rate for cargoes for a specific weight class, e.g. Fedex One Rate charges a flat rate for items below 50 pounds.

Real time rates:

Providing real-time rates is the most transparent shipping method. Some e-commerce platforms display real-time shipping rates at the time of checkout thereby, protecting the seller’s margin and saving effort in distributing shipping costs over the purchased products. It also provides greater transparency to customers over the actual shipping costs.

Shipping methods for the domestic market can be enhanced by the delivery time as follows:

Standard shipping

This is usually the cheapest and slowest mode of shipping products. Typically, the shipment can take up to a week and most customers do not mind if they can get free or cheap shipping, as long as their need is not urgent.

2-day shipping

2-day shipping was popularized by Amazon and has now become the industry benchmark for the e-commerce industry. Most large e-commerce sellers offer this premium service but it is possible for smaller online retailers to work with shipping service providers to offer this service. The online retailer may also offer 2-day shipping at additional cost which the consumer may be ready to bear depending on his/her need.

Same-day delivery

This method is fast becoming a unique selling point for e-commerce businesses to differentiate themselves from the competition. For this method to succeed, the store front, backend operations and shipping services have to work smoothly in order to ensure that the customer receives his/her order the same day. Approximately 61% of consumers prefer this method and are willing to pay additional for the delivery.

Overnight delivery

Similar to same-delivery, overnight delivery can be operated using shipping providers that have overnight flights or transportation and can ensure delivery to the customer the next day.

Free shipping can be any one of the delivery modes (standard, 2-day, same-day, overnight) but when factoring in the shipping costs into the product prices, the retailer has to take care that the prices of products do not seem higher than their competitors. Being transparent with flat rates and real-time rates has its advantages but may also put off online shoppers. Some e-commerce platforms have adopted a table rate policy, where shipping rates per item drop when more items are added to the cart. Packaging plays an important role in ensuring that shipping costs are kept to a minimum as carriers charge shipments based on weight, distance and delivery time.

The decision for the shipping methods described above depends on the kind of the business, products and consumers that an online retailer is targeting and plays an important part in the online consumer journey.

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