How To Optimise Shipping Costs For Higher Conversions

As an online retailer, shipping costs become part of the overall cost of your product to the purchaser. Research firm eMarketer puts cart-abandonment rate at 52%, while a NetIQ study found that consumers attribute 35% of their abandoned carts to high shipping costs and lengthy delivery times.

To the extent that you can reduce shipping cost, you can establish a competitive advantage against others operating in your space. But, how do you do that on shipping, when everyone is using the same set of carriers?

If you are a large company, the best solution may be to establish a relationship and negotiate price with one major shipping provider. This strategy works very well if you have enough volume to attract the attention of a major shipper or even a smaller shipper who can do a good job at a more favorable rate than offered to the general population.

As a smaller shipper, however, you may feel that you have no options but to provide a series of alternatives that make you customer-friendly such as UPS, US Postal, FedEx. Before you consign yourself to this inevitability, it makes sense to look at some of the shipping software solutions available in the marketplace.

There is a growing field of software alternatives that provide retailers with a search for the best deal type strategy similar to the popular travel sites such as Expedia, Travelocity and Priceline. These solutions monitor all major carriers and their policies and provide an immediate assessment of the best rate by carrier for any specific shipment.

This means that you can provide customers two types of options:

1. Select the shipping service you prefer. (Some people feel that specific carriers are more reliable than others in their area.) Or,

2. Let us select the least expensive alternative that fits your delivery needs (using the shipping software).

The major drawback of these solutions is the cost. There still are not strong, low cost solutions for small shippers but there probably will be in the near future.

For now, it costs close to 1000 Dollar/month to use these logistical software solutions. You will need to do the analysis that adds up the savings on shipping costs plus the lost opportunity of shopping cart abandonment against the cost of the software.

You can find these types of solutions by googling shipping cost software. Three vendors worth checking out are Harvey, Neopostloopone and Logicor.

You may also want to consider outsourcing your shipping to shipping aggregator companies. These are companies that have a single account with major shipping carriers, which they use to deliver parcels from a large client base. By being part of their large client base you can get access to favourable shipping rates only available to large volume resellers.

Whichever option you choose, there are ways to decrease your shipping costs. Offering your customers free or very low shipping is statistically one of the best methods to increase conversions online.

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