Many small businesses have to learn the hard way, logistics is no laughing matter. It can be stressful, costly, and can pose a significant risk to your business and its reputation. Suppose there is a mistake being made somewhere along the supply chain, and a client receives the product much later than expected. Or perhaps there was a miscalculation regarding the cost, leading to a significant cut in profit margins. Or perhaps something happened along the way in transportation that led to the product becoming damaged.
If your business deals in physical products, understanding, and factoring in the logistics of it all are absolutely crucial and easily overlooked or miscalculated As a small business owner, you spend an equally ample amount of time figuring out the perfect pricing for your products. But have you also thought about the cost of delivering your product to the customer? Shipping for small businesses can confuse you at first, but with some research and a little advice, you can nail it.
The Basics Of Shipping For Small Business
There are a few factors to consider before choosing a shipping carrier. While you can always browse through DHL, if you don’t know how to answer these basic shipping standards, it’ll be hard to decide which shipping carrier and method is best for your small business. Here are some things to consider with small business shipping.
Shipping Volume
Are you a fully established shop and shipping 100 packages a week? Or are you just starting and expecting your shipping volume to be a few packages a month? No matter the frequency of your shipping, carriers offer a variety of business plans to make it so you never have to say, “Oh ship,” again.
Weight
On average, how much do your products typically weigh? Unless you are using a flat-rate box, the weight of the object can affect the price of shipping.
Consider teaming up with a partner
Start networking with other small businesses who may be in the same situation and may face the same budget restrictions.
Most logistics companies set their prices based on volume and teaming up with a partner could provide a more cost-effective way to meet your needs. You take into account not only the specific details of the logistics company but also the specific needs of your partner.
Try a small business logistics service
If the size and budget of your business cannot accommodate investing money in a specialized logistics provider, perhaps it could be beneficial to explore what some major shipping and transportation providers offer.
Consider an industry-specific provider
Depending on your particular business, you may find it more helpful to hire a specialized logistics provider. We do not confuse this with the previously mentioned third-party option, which may specialize in serving small businesses.
An industry-specific provider would know the specifics on how to handle and care for the specific product being delivered. The quality of the service and care for the product in transportation is of equal value to the cost of hiring the logistics company. You may spend more money on a specific provider, but consider the risk of hiring a provider that does not specialize in your particular market. Mishandled or damaged products are money down the drain.
How do I cover the cost of offering free shipping?
Unless you sell very expensive products, offering sitewide free shipping on all orders will probably not be a workable option for you. However, there are several ways brands implement free shipping on their e-commerce site while still being profitable.
Increase The Product Price
Free shipping would not make sense when a customer buys a single small, inexpensive item, as the cost of shipping may be more expensive than the item itself. But if your products are priced moderately, you may bake the cost of shipping into the product price.
Offer A Minimum Order Requirement
By offering a free shipping threshold, retailers can increase the average order value and make customers feel like they are getting a good deal. For this to be effective, the minimum amount spent to qualify for free shipping should be larger than your average order size.
Make Customers Pay For The Cost Of Shipping
Many retailers still pass the full cost of shipping onto their customers as a line item. While there are potential repercussions for this in the form of abandoned shopping carts, you are covering your costs. With new technology comes more possibilities, including real-time shipping estimates from connecting your checkout to your shipping solution. This way, we will give your customers a dynamic shipping quote based on the items in their cart and by inputting their zip code.
How to pay for free shipping
Someone has to pay for the cost of delivering goods to consumers. The ultimate challenge for online businesses is how to offer free shipping and balance the expense?
Factor shipping into operation and pricing: understand shipping costs from the moment you receive inventory and include it in financial models.
Market free shipping: Customers love free shipping, but they need to be made well aware that it’s a distinguishing perk. Mention free shipping or on every major page that gets customer visits and be sure to include it on product pages.
Focus on up-sells and cross-sells: Shipping gets more efficient as we add items. When merchants incur the cost, it makes up-sells and cross-sells a margin-mover.
Different ways to offer free shipping
Free shipping can be an effective marketing tool that aims to benefit both the consumer and the retailer. There are many ingenious ways to generate revenue and keep consumers returning to a particular online store. Most businesses offer free shipping with additional delivery options such as overnight express delivery at a cost to the consumer. The delivery campaigns below offer ways to increase sales:
Orders of a specific amount: Many savvy shoppers will add additional items to their shopping cart to receive something for free, especially delivery
Buy two or more items: Up-sell through the use of a free shipping campaign
A predetermined period: Offering free shipping during a specific time frame is ideal for increasing sales during slow periods or offers further incentives during highly competitive seasons.
Finally
It is important to weigh the pros and cons when considering a plan for your business’ logistical needs. Some providers may charge a higher price for their services, but that may also result in a lower risk of mishandling or damage. It is also important to consider the reliability of a company being considered. Will this company deliver on time? Will my product be damaged, mishandled, or even lost? There are a lot of factors to consider, and it’s important to consider them all to find the most efficient and cost-effective option for your business.
