Because of economic problems worldwide, a low-cost shipping strategy is now more important than ever to protect ecommerce businesses. Descartes recently released an ecommerce consumer sentiment study highlighting significant shifts in buying behavior related to home delivery.
After analyzing the trends and consumer needs, we developed an easy, low-cost shipping strategy to help ecommerce businesses prevent losses and boost growth. First, let’s look at two major factors threatening ecommerce right now.
Why isn’t my ecommerce business growing faster?
Less Disposable Income
37% of ecommerce consumers said having less disposable income will prevent them from increasing the number of online purchases they make in the future.
“Less disposable income” recently jumped to the number-one spot as a threat to growth for ecommerce businesses. This is a significant increase from last year, when it was only the fifth-highest reason people would not increase their number of online purchases, according to the previous consumer sentiment study (Descartes Systems Group, Inc., 2023).
Shipping Costs
Descartes’ latest consumer sentiment study revealed a second significant shift in ecommerce consumer buying behavior: 79% of consumers rate delivery cost as extremely important. This represents a 5% increase over the previous year, along with a 7% increase in people who rate security as extremely important.
When describing their delivery preferences, a whopping 39% of consumers preferred the lowest-cost delivery option, stating that delivery speed was less important than low cost (Descartes Systems Group, Inc., 2023).
When ecommerce shoppers arrive at checkout in the shopping cart and see their total, including shipping costs, many abandon the cart if shipping costs are more than they expected to pay.
What kind of shipping strategy is best for low-cost ecommerce shipping?
1. Use multi-carrier rate shopping to find the cheapest shipping rates.
To save money on shipping and offer the cheapest shipping for your ecommerce customers, use multi-carrier rate shopping in your shipping strategy. Shipping software integrates multiple carriers into one program for easy rate comparisons, allowing you to apply bulk updates to order details and automation to choose the lowest-cost shipping option for each order.
This eliminates the tedious task of researching carrier rates and manually selecting shipping options for orders. In addition, any changes to carrier rates will automatically update within the system. That means that even if carriers change their rates, the program will still automatically choose the cheapest shipping.
2. Take advantage of lower rates negotiated with carriers by shipping platforms
Software companies that provide shipping platforms negotiate discounted shipping rates with carriers to save ecommerce businesses money on shipping. As you seek to provide low-cost delivery to your customers, stop paying retail prices for shipping. Instead, use a shipping solution and start saving money on shipping.
Some shipping solutions, such as ShipRush, offer the opportunity to use the software for free for up to three users. For small businesses, this results in immediate savings on shipping with no cost to the user. As your business grows, you may desire additional shipping software capabilities and move to a paid plan.
3. Reduce operational costs by increasing the efficiency of order fulfillment.
How much money does your company spend on operational costs every month? How much would you save by increasing the efficiency of activities such as picking, packing, label printing, and data entry?
By using technology such as shipping software and warehouse management software, you can greatly reduce inefficiencies and operational costs.
By eliminating tedious tasks such as manual data entry, warehouse “treasure hunts” to find the correct order, paper-based processes, and logging into multiple ecommerce shops to manage orders and print labels, each worker can accomplish more tasks in less time.
As order volume increases, you can handle it without needing to hire more people.
“By automating fulfillment with Descartes ShipRush, we’re now easily processing 30 to 40 packages per day and over 1,000 per month and we’re accomplishing this with two people, instead of six. It’s been a boon to customer service, and it has given us a path to a sustainable and profitable home-based business.”
– Billy Carmen, Owner, Wizard Distribution
Consider these results from companies that implemented Descartes ecommerce software solutions:
- Big Frog Supply experiences an estimated $50,000/yr. savings on mis-ships.
- Unimart achieves 54% faster order fulfillment.
- Box Components increases efficiency in the warehouse by 80%.
By reducing operational costs, you will gain a greater ability to strategically reduce shipping costs for your customers, increasing customer satisfaction and competitive advantage.
4. Offer free shipping for a minimum order value or subscription.
“In the US, 21% of small and medium-sized online retailers always offer free shipping. Free shipping is never truly ‘free,’ as it means the shipping cost has shifted to you” (Fariello, 2022). What are your competitors offering for shipping options? Can you do something similar or better?
As a bonus, by setting a minimum order value for free shipping, you will increase the average order value of your ecommerce transactions. People may purchase more than they originally intended because they want to hit the minimum order value and get free shipping.
To delight your customers and gain a competitive advantage while protecting your profit, consider a shipping strategy that allows you to offer free shipping without absorbing the entire cost yourself. Most ecommerce customers understand and accept minimum order value or subscription requirements to get free shipping.
Similarly, by providing free shipping through a subscription, you increase the likelihood that people will shop at your store instead of somewhere else because they have a subscription.
5. Keep your customers happy and coming back for more.
As part of a low-cost shipping strategy, focus on providing unbeatable customer service and keeping your existing customers happy. As you provide low-cost shipping and an excellent home delivery experience for your customers, their trust in your company will grow, and so will repeat business.
Instead of spending so much time and money on customer acquisition, invest in a strategy to provide shipping options that suit your customers’ preferences. Free shipping, fastest delivery, precise delivery time, and environmentally friendly delivery are options to consider. Customers are happiest when they can shop according to their values.
Through the strategy outlined above, you will have more budget available to serve all your customers according to their different needs. Not all customers need free shipping, but by lowering overall costs and providing a free shipping option, you will have money to offer other (potentially more costly) delivery options to the people who want them.
How to Save Money on Shipping
You can put your new low-cost shipping strategy into action today when you start shipping with ShipRush for free. As a recap, with ShipRush you can:
- Take advantage of specially negotiated carrier rates below retail prices.
References
The Descartes Systems Group, Inc. (2023, March). Dear Consumer: How Do You Feel About Home Delivery Now? Waterloo, Ontario, Canada.
Fariello, G. (2022, October 30). Shipping strategies: How to offer free, flat rate, and more. Shopify. Retrieved May 1, 2023, from https://www.shopify.com/blog/shipping-strategy
Rathi, R. (2022, February 2). Customer acquisition cost by industry: CAC Benchmarks. StartupTalky. Retrieved April 12, 2023, from https://startuptalky.com/cac-by-industry/#Customer_Acquisition_Costs_by_Industry
