In the highly competitive retail environment, retailers must provide their with customers the best shipping rates. High shipping rates can have customers abandoning their shopping cart at the end of their purchase journey. This makes it important to calculate shipping costs that work for the retailer and their customers.
What Compromises Shipping Costs
Shipping costs refer to the direct cost associated with moving an item from a shelf in your shop or warehouse to the doorstep of your customers. They include the cost of boxes, packaging, tape, and stickers, labor cost, courier cost, and import or export costs. Retailers must get an item from their shelves to their customers in a timely way, for the lowest price, and in good condition.
Determining Shipping Costs
The following are the categories of shipping costs retailers can choose for their business and customers.
- Calculating shipping. Calculating shipping is the easiest way to calculate shipping costs. Retailers can get the price by measuring the package’s weight and dimension. They can calculate the shipping charge based on such measurements and the location of the customer.
- Flat-rate shipping. This works by charging a price for shipping no matter the shape, size, and weight. The price may only differ when shipping to various countries. This method allows customers to purchase as much as they like and only pay a fee that the seller sets. This is a common choice for small companies because of its dependability and convenience.
- Free shipping. Most retailers offer free shipping to attract customers to their stores and purchase their products. When offering free shipping, retailers can build the shipping cost into the product list price, but this can possibly make the product more expensive than products from their competitors. Another option for retailers is to absorb the shipping cost and decrease margins.
What Affects Shipping Costs?
When calculating shipping costs, retailers must factor in the following:
- Shipping insurance. Shipping insurance is important when shipping expensive, fragile, or personal products. It will protect the business against damage and loss during the shipping and handling process.
- Shipping-related charges. Shipping-related charges can be incurred when shipping domestically and internationally. These include pickup location, fees when mistakes take place, and fuel surcharges.
- Charges for handling the parcel. These are commonly applicable for sending dangerous goods and when a parcel takes two people to deliver.
- Duties and taxes. These additional costs depend on what is being shipped and its value. In some instances, they are covered by the seller, the buyer, or split between them.