Editor´s note: This is a guest post by Lilibeth Lausin, Marketing Manager of Heroic Search.
Have you ever looked at a shipping membership like Amazon Prime Pantry and wondered how the company is able to profit when they offer such great deals? That’s exactly what you’re about to learn. This is how you can monetize shipping for your eCommerce store and boost revenue.
Charge Less, Not More
In the early days of eCommerce, it was typical to see outrageous shipping charges for products that didn’t cost much for the seller. Successful online retailers eventually learned that customers don’t like excessive shipping and handling charges. In the United States, 61% of modern cart abandonment is due to unexpected charges showing up during checkout. That stat changes when you explore Europe and specifically Germany, where people abandon carts mostly because they simply get distracted. This could signal that most European retailers have already optimized their checkout and shipping practices.
When selling online today, the trick is to provide immense value at the lowest cost. According to WalkerSands’ 2016 Future of Retail Study, 9 out of 10 consumers say that free shipping is their number one incentive to shop online. By finding a way to ship for free or cheap, you’re more likely to generate sales.
How to Get the Best Deals From Shipping Providers
If you want to offer shipping for less, you have to find a way to save on the charges you accrue. The two most popular shipping services in Germany are DHL and DB Schenker AG. Shop within these companies to find the least expensive option (in most cases, using ground vs air is going to save you the most money).
Use a Comparison Tool
Use a service like ShipGooder or Parcel Monkey to compare rates and easily find the best option. Simply enter your location, the package destination, weight, and dimensions, print your label, and drop off the package locally. Comparison tools eliminate the need for you to browse multiple websites each time a package is sent.
Use a Shopify Add-On
Shopify creates eCommerce themes, which include easy integration with a number of shipping add-ons. Among them is ShipStation, a multi-carrier shipping helper. The add-on finds the best DHL rates, aggregates orders, and allows you to create hundreds of labels at a time for multiple carriers. It works with most global shippers. So, no matter which shipping company you choose, this tool will save you time and money.
Set Up a Commercial Shipping Contract
Shipping brokers exist to help you save money on large and multiple, ongoing shipments. They serve as intermediary between the store owner, and the shipping companies. In exchange for a promise to ship a certain number of packages with a specific shipping provider, they are given discounts on the cost of the service. A broker then marks up the final cost to earn their fair share of the total profits. Do a Google search for a shipping or freight broker in your area to see what’s available.
You can either hire a broker to do the work for you, or negotiate shipping rates yourself. In exchange for high volume business, most companies are likely to cut you a deal. You need to ask your account manager for a Negotiated Service Agreement (NSA). They are generally willing to work with someone who can show that they are going to be shipping a large number of packages consistently.
How to Make Up for the Loss of Offering Free Shipping
Just because your customers get free shipping doesn’t mean you do too. So, you’re going to need to make up for the loss somehow – better yet, turn shipping deals into a company gain. So, how can you do that?
What Would Amazon Do (WWAD)?
Of all the things they do right Amazon.com has one feature that stands out – Amazon Prime Pantry. Anyone can sign up to receive €4.99 shipping on select food and household goods. But that’s not all. With a prime membership, shoppers also receive free instant streaming for movies and television shows, free music, and free Kindle ebooks, and free shipping on select Prime products. Members who choose no-rush shipping on Prime items receive small credits to use on future purchases. So, how can the company even profit from a system so seemingly customer-centered?
Amazon makes money through Prime memberships by increasing brand awareness and expanding market share. Because I know I’ve already spent €69 on shipping, I’m more likely to purchase through Amazon rather than a competitor when presented with multiple options. Sometimes I don’t visit a grocery store for weeks because I can have many items delivered to my door in just 2 days. This is how the company provides immense value to their customers and for themselves.
Create a Conditional Shipping Strategy
Many common shipping strategies involve conditions. In this way, by offering free shipping, you are giving the customer incentive to act. What can your shoppers do to earn free shipping? Here are some ideas:
- Choose economy shipping
- Shop during a promotion
- Purchase select items
- Place an order of a certain amount
Conditional shipping strategies work for companies like Get Grocery, who offer free shipping on orders over €49 in Germany, Austria, France, and the Netherlands. Someone might land on a site looking to order some produce, but when they see the free shipping offer, something clicks – they realize that they are going to need to order new pasta. So, this person ends up ordering more now to save later. Do you see how a conditional strategy turns shipping into a money-maker?
To create an optimal shipping experience that generates revenue, you want to charge more, not less for shipping. Ideally, you should offer free shipping to your customers. To be able to give your shoppers a deal, you have to find one yourself. Use a comparison tool, a website add-on, or negotiate a deal for the best rates. To generate more revenue to make up for your shipping costs, offer customers valuable incentives. What experience do you have with monetizing your shipping strategy? Share your own tips in the comments below.
Author´s Bio: Lilibeth Lausin is a Marketing Manager of Heroic Search.