Tactics to put shipping costs in your favor
Laia Ordoñez
13/04/2021
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Logistics costs are a sticking point for the customer, but... did you know that there are tactics to put shipping costs in your favor? Take a look at these tips that you can apply now.
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Among the obstacles to online sales, the first one, marked in red, is that of "unexpected" costs at the moment of closing the conversion. Many carts are abandoned in the middle of the checkout process precisely because of this issue.We can resign ourselves to this and let it continue to happen or, what seems smarter, turn our strategy around and find a way to turn this weakness into an opportunity for growth.
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4 tactics to put shipping costs in your favor
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We are going to give you several alternatives so that you can play with this cost without any damage for your business. There are 4 different options you decide how much you want to assume and how much to pass on to the customer; but in all cases they have something in common: the buyer's perception is that he is getting a good deal.I do not know how obvious this last point may seem to you, but it is absolutely essential to make the customer appreciate the extent to which we are making an effort to offer the best deal. This is the only way to motivate them to buy
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#1 – Reflect part of the commercial margin on shipping costs
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These tactics are not complicated to apply. We could even say that they are self-explanatory (or almost so) in the title.The first of these strategies consists of passing on part of the product's commercial margin in the shipping costs.This way, you can lower the price of the product a lot, also improving conversion; and recover that margin by charging fixed shipping costs that leave you a profit. Shall we see an example to understand it better?
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We have one product:
- Cost price: 5€.
- RETAIL PRICE: 10€
- Price you set: 7€ (your competition 10€)
- Shipping cost: 3€ + 2€ (lost margin) = 5€
- Total cost for customer: 12€.
In the end the customer gets a shipping cost of 2€ compared to other sellers who sell the same product at a higher price. -
The only drawback to apply this tactic is that you need to have a lot of volume, only then you can negotiate a low courier price.
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#2 – Offer a variety of shipping options
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We all agree, we are more than used to immediacy. Customers are very sensitive to 24/48 hour deliveries, even same-day deliveries. The problem is that, logically, they are much more expensive.There is only one thing that customers can be even more sensitive to: price. We can offer a variety of options, prioritizing those cheaper options with a lower cost (typically those with a longer waiting time) and, if applicable, even click and collect with in-store pickup.You may be surprised how many users will consider the cheaper options giving up that speed and, consequently, making shipping costs work in your favor.
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#3 – Raising the price of the product in exchange for free shipping
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Many times, it is more important that the customers understand the advantage clearly, even if it is not that much. I am not talking about cheating in any case, just making sure that what they see is what they are going to pay for the product.With that price they goe through the whole process and through the conversion funnel. At the critical point of the purchase, we do not include more variables to consider, or rather, we do, but always in a positive way. The price may be a little higher, but we are "giving away" the shipping.
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#4 – Shipping costs reduced according to the ticket
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This is as old as eCommerce itself. You can always consider that the higher the amount of the ticket is, the lower the shipping costs.In a way, it is to pass on to the customers the savings of a single shipment. Here, the basis of the strategy is not to pass on all that benefit directly. You must find the balance so that you improve your margin with higher ticket orders while the users have an advantage that encourages them to make a higher purchase.
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#5 – Bonus:loyalty and one-time fee
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We had said that we were going to put 4 tactics to put shipping costs in your favor, but we cannot overlook one that works very efficiently: set a flat rate with a regular payment in the style of Amazon Prime or El Corte Inglés Plus.
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Horizontal marketplaces have an easier time implementing this strategy because their level of recurrence is high. But if our niche is characterized by purchases that are repeated regularly over time, we could consider as an incentive a one-time payment with certain advantages that can be applied to a plan, such as free shipping on all orders.
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You only have to think about it a couple of times and you will have many tactics to put shipping costs in favor of our eCommerce. Which ones can you think of?
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Images | Unsplash.