Choosing the right shipping strategy for your store

Several variables can influence the actual expense of shipping your products to the buyer, such as:

• Package weight and dimensions. Shipping carriers like USPS, FedEx, and UPS calculate shipping charges based on the actual weight of the package or its dimensional weight.
• Shipping destination. Your shipping costs will be higher if you offer international shipping in your store.
• Value of shipped products. If you sell high-value products you may want to insure their shipment which will increase shipping costs.
• Delivery times. Some buyers prefer to pay for expedited shipping; this cost is based on where the buyer is located.

After you find a shipping service to use, calculate your shipping costs to make sure your margins can stay high.

Here is an example of how much an online order can cost:

Product cost $30.00
Shipping fee $5.00
Packaging cost $0.75
Credit card processing $0.85
--
Total cost $36.60. To make a profit of roughly 50% for this product, you should sell it at $54.99.

Calculating shipping costs will help you choose a shipping strategy and decide at what price to sell the products. If your margin is high, you may want to absorb the costs of shipping domestic orders and offer free shipping to your local customers. To compensate for shipping expenses, you can slightly increase product prices in your online store.

Alternatively, you have the option to charge your customers the precise amount that you incur for shipping their order.

You can use online calculators to check how much shipping carriers charge to ship products of different weights and dimensions to different destinations from your location:

UPS rates calculator,
USPS rates calculator,
FedEx rates calculator, etc.

If you have recently launched your online business and focus on local sales, offering options such as local pickup or personally delivering the ordered goods can be advantageous.

You can also use simple packaging for orders and hand-write shipping labels to reduce expenses at the start.

As your business expands, it's prudent to periodically reassess your shipping strategy and make any required adjustments to ensure its effectiveness.

Choosing a shipping strategy

After determining the shipping costs for your product line, the next step is to set up the shipping process and decide whether you, the buyer, or a combination of both will cover the shipping expenses. You can add as many shipping methods as you need in order to cover all of your products and destination zones.

There are four popular shipping strategies:

Allow a local pickup for free or for a small fee

You can provide a local pickup option for customers with an offline store, allowing them to purchase online and collect their orders themselves. Even without an offline store, offering local pickup is a beneficial option to consider.

You can offer a free pickup, charge a small fee (to compensate for delivering products from your warehouse to the pickup point), or give a discount to customers who have chosen pickup at checkout (for example, you can give them a discount coupon with their order).

Free shipping

Statistically, the shipping cost ranks among the primary reasons why shoppers abandon their shopping carts. Consider offering free shipping whenever you can to increase conversion in your online store. Usually the cost of shipping is almost negligible for domestic orders, especially if your margin is high and you’re shipping products that do not require extra packing or handling. To compensate for your shipping expenses, you can slightly increase your product prices.

You can also offer free shipping on orders over a certain subtotal amount to encourage customers to buy more. Or you can offer free shipping to certain customers by giving them a discount coupon code that they can redeem at checkout.

Charging exact shipping cost

If you utilize a widely used service such as USPS, FedEx, UPS, etc., to ship your products, you have the option to charge your customers the precise rate that you are paying these carriers for each order. For this, you can set up your store to receive automatic online shipping rates from carriers (USPS, FedEx, etc.) at checkout.

If you are using the service of a carrier that is not integrated with store for live rates (for example, Sendle or Mondial Relay), you can manually add this carrier’s shipping rates for various order weight ranges.

Flat rate shipping

If you personally deliver products or your products share a consistent weight and size, you can implement flat rate shipping for delivering them to the customer's location. For example, you can charge $5 for the local delivery of any order in your store.

If you need a more complex shipping cost calculation than flat rates, consider using tiered rates that you can base off order subtotals or different order weights. You can use flexible tiered rates to charge different shipping costs for different order subtotals, to charge for shipping large products by freight, or to charge for any other shipping setup you may want to have in your store.

Setting up shipping in your store

Before proceeding with any shipping options, it's essential to complete the initial shipping setup:

Step 1. Mark products as shippable and enter the product’s weight

You should specify weight and tick the Requires shipping or pickup setting for the products that you are going to ship. You can do this in the product editing pages:

Step 2. Specify your shipping origin (if you use live shipping rates)

The shipping origin address denotes the location from which you dispatch your orders. Integrated carriers utilize this address as the ship-from address when computing shipping rates in real-time. Shipping origin is automatically set as the company address that you entered in your store profile at the initial store set up. Make sure you enter the right address if you are using real-time shipping rates in your store.

If you are shipping products from another place, specify that address as your shipping origin to receive precise shipping quotes from the carrier enabled in your store.

To edit the Shipping Origin address (if it is different from your company address):

1. From your store admin, go to Shipping & Pickup.
2. Under the Settings block find the Shipping Origin section.
3. Click Change Address.
4. Select the option I ship orders from a warehouse or another location and edit the address.
5. Click Submit to save the changes.

Step 3. Set up destination zones

Destination zones represent the regions where you will deliver products. You have the option to provide various shipping methods for customers from different zones. For instance, you might ship via USPS within the continental United States and use FedEx for shipments to the Hawaiian Islands. See Adding and managing destination zones for detailed instructions on how to create destination zones.

If you’ve decided what shipping strategy to use, you can go ahead and add your shipping methods in your store admin in Shipping & Pickup.

Offering specific payment methods depending on shipping choice

Enhancing customer experience is possible by linking specific payment methods with particular shipping options in your store. That way, your customers will see only the payment methods you choose for the certain shipping/delivery. That can be useful if you deliver yourself and want to receive cash payments directly from the customer, saving on online payment fees.

To offer a payment method for certain shipping methods only:

1. Go to Payment.
2. Select the method you want to set up and click Edit.
3. Scroll down to Payment method availability based on shipping choice and click Limit availability by shipping method‍.
4. Click Select Methods and check boxes for all the shipping methods you want this payment to be available to. Then click Select.
5. Click Save.

Now, your customers will only encounter this payment method if they select the shipping methods you've designated for this payment option. For example, if you set up the cash payment method to be visible only for the Free delivery in Michigan and Self-pickup, it will be disabled for other shipping methods like UPS Worldwide Express.

If you don’t specify the shipping method for the payment, it will be available for all shipping and delivery methods in your store.

Optimizing shipping rates

You may encounter additional expenses associated with packing and shipping products to customers. To offset these costs, you can impose a small extra fee on your customers through one of the following options::

• Handling fee. This fee applies to all orders and is shown at checkout as a separate line. It is typically used to compensate for the time and cost it takes to package an order, etc.
• To cover the shipping expenses just for certain products (e.g. for fragile or large items in your product line), you can add a hidden fee as a fixed rate per item on top of your regular shipping costs.
• Shipping markup. This hidden fee is added to the live rates returned by the carriers which you’ve enabled in your store.

Be careful when adding extra fees as you want to keep your prices competitive on the market.

If you are using real-time shipping rates from the integrated carriers:

• Specify the right product weight and product dimensions so that accurate shipping rates are paid by your customers at checkout;
• If you've secured negotiated shipping rates with a carrier and wish to provide these discounted rates at checkout, you can input your own account information with this carrier in your store's settings instead of relying on our default account. Connect your UPS account, connect your USPS account, etc., accordingly.