Choosing a Shipping Model for your E-Commerce Website

March 26, 2016
Karen

One of the biggest challenges with e-commerce is deciding what shipping model to use and what prices you should charge for your postage and packaging. No matter what company you use for parcel delivery, it is unlikely that the cost to you will be the same for every parcel you send. Furthermore, they all have different rules on pricing which can depend on the weight, the dimensions of the parcel and whereabouts it is being delivered.

To help you decide which model you’d like to offer, here is an outline of the most commonly used options:

Weight based shipping

The price of shipping is calculated based on the total weight of the items purchased. This is probably the most commonly used model as it can give you an accurate price to cover the shipping cost for couriers who charge you by weight. However, most couriers have some size restrictions that you cannot factor in. The biggest drawback of this shipping model is that you will need to enter the weights of every product you add to your website so that it can calculate the postage cost.

Shipping based on number of items ordered

The more items that have been purchased, the more parcel will typically weigh. This is a simpler way to get a similar result to the weight based model, but without you needing to know the weight of every item. However, it doesn’t quite work if you sell some very small and light items and some which are very large.

Based on order value

A variation on the model above, that will fit better if the small and light items are low value and the large items are expensive.

Prices calculated based on the delivery location

This is fairly straightforward to set up and customers can relate to why the price is higher for delivery to a different country.

Table rate shipping

Allows for more complicated rules for your shipping using various combinations of the above. You can create shipping classes which will group together similar sized items and then base the shipping price on this, weight, geographic location… You can even add different shipping methods too. Remember that the more complicated the shipping pricing becomes, the more difficult it will be to explain to your customers how much their shipping will cost.

Flat rate shipping

The easiest one to get your head around because the price is the same for everyone and everything. You need to figure out your average cost of shipping a package which will require some testing to find out what works best for your business. Of course whatever final flat-rate price you arrive at it’s going to appear expensive to some customers and an absolute bargain to others.

Free shipping?

Customers love this, but I’ve put a question mark in the heading because you have to remember it’s never really free and the cost needs to be factored into the product price instead. This then introduces the difficult decision of of how much to add to the product price to cover the shipping costs.

In reality, it’s unlikely that any of these options will allow you to charge exactly what it costs you to send the parcels. The only way to do this would be to have real-time shipping quotes from your courier company integrated into your website, but note that this will be costly. The best way to decide is to think which shipping model will make the most sense to your customers. Then decide on the pricing by working out what you should charge in order to cover the majority of your orders.