How shipping can give your small business a competitive advantage
Are you ready to out-shine your competition? Strategic shipping decisions can help you get ahead.
Be ready with the right shipping options and be flexible
Choose default-shipping services up front and write them down. Create a guide for your team to take the decision-making out of the equation. That way, during the rush of getting an order out, they use the most economical option.
You’ll want a standard low-cost option and an expedited one for customers willing to pay for faster delivery.
Here are some tips for choosing your default shipping services:
1. What do you ship most often? Small packages to homes? Larger boxes? Multi-piece shipments to businesses? Freight?
2. What is the average value of your shipments? If you are selling low-priced items, buyers don’t want to pay much, or anything, for shipping. Using the most economical service will help you be competitive.
3. How fast do your customers need it? Are your products time-sensitive, or will getting it there in 3-5 days usually meet their needs?
- How fast is your competitor’s standard shipping? And what premium options do they offer?
4. Do you need insurance/advanced tracking/signature service? If you’re shipping high-value or fragile items, it’s worth considering.
5. What shipping services have you and your team been using, and have they been working for you? Look at your shipping history. Be sure to consider any customer feedback you’ve received.
6. Go straight to all shipping services to get in-depth descriptions.
Offer free shipping on all orders, or use it as an upsell opportunity
Many sellers offer free shipping because customers say they want it. But free shipping isn’t always the easiest thing to offer. No one wants to eat the cost of shipping.
To make it easier, some sellers offer free shipping for a limited time or on select products. Or they offer free shipping on orders above a minimum purchase, which protects their margins. The simplest way to make free shipping work for you? Build the shipping cost into your selling price. Calculate your average shipping cost, then raise the price of your product by that amount to cover it.
Strategies that can help:
1. Extend the delivery window. Instead of a guaranteed 2-day delivery that your customer pays for, offer a delivery time of 2-7 days for free. This option provides a happy medium between keeping customers and minimizing expenses.
2. Provide free shipping on orders over a minimum purchase. Decide how much shipping cost your profit margin can absorb on each sale. Anything under that and you’re taking a loss by offering free shipping. So, charge for shipping below that threshold. Many retailers use the $30, $50, or $75 cutoffs for minimum free shipping. The cutoffs also motivate customers to buy more just to qualify for free shipping.
Make returns work for you without breaking the bank
Finally, don’t forget about managing your returns effectively. Some industries, like clothing, have a lot of returns. Returns are never what you want, but sometimes it’s part of making the sale. Unless you need products returned quickly to your inventory, have customers make returns using the most economical shipping possible, with the longest delivery time. Put return labels at your customers’ fingertips in the box or in their email.