FREE! It certainly has a ring to it—especially to your customers. And when it comes to shipping, people really like FREE! They feel privileged to have something free, plus the product price they see on your website is the final cost they pay – no surprises. It is easier to shop this way, and people appreciate up-front pricing to allow easy comparison. Research shows that “no surprises” translates to more sales.
Are your customers really getting the shipping free? Of course, the cost of shipping must be recovered somehow. To begin with, most online retailers require a minimum order amount to qualify for free shipping. Studies show that consumers actually add to their original purchases to qualify for a free shipping offer. In order to do this, a business needs to know what its average shipping costs are. Having this information allows those costs to be factored into determining the minimum order level necessary for a successful and profitable free shipping promotion.
If you’ve got a few extra hours, you could calculate these averages yourself. You would start off by taking each carrier’s invoice and dividing the total by the number of packages shipped. However, as you calculate this, you realize that you need to break out the average overnight shipping cost separate from the average ground shipping cost. So, more calculations…and more time. As you continue to analyze the carrier’s invoice, you realize that what you REALLY need to know is the average cost for overnight, two day, three day and ground services separately. If you had to go through this process every month, calculating these numbers by hand from each carrier’s invoice, you would eat up a lot of your valuable time just trying to figure out the right price to charge or the cost to cover in a “Free Shipping” promotion. Not a very good use of your time is it?
Here’s how Harvey Software can help. Harvey Software’s CPS Shipping Software includes a unique and valuable feature called the Flat Rate Shipping Charge Calculator that provides a carrier and service specific analysis of your shipping records. This report shows you separate lines for overnight, 2 Day, 3 Day, Ground, and International services, per carrier, so you can easily find the exact data to help your business plan. The report displays high, low, and average costs, so your business can plan for future shipping expenses based on up-to-date calculations using YOUR actual shipping. Because the cost per pound shipped is provided in addition to the cost per package, a business can even see the cost impact of shipping large but lightweight parcels.
Armed with accurate shipping analysis, a company can calculate the “right” price to use to include shipping fees as part of the base cost of its products. We have detailed information about how a multi-carrier shipping system can help a business calculate and plan in our whitepaper, “Internet Retailer’s Guide to Reducing Shopping Cart Abandonment.” Some companies tell us they consider including some of the shipping costs as marketing costs since “free shipping” is such a powerful marketing tool. A significant additional benefit is that free and “flat rate” shipping offers allow online retailers to avoid charging larger shipping fees to customers who are further away, which can turn a business striving to be a national seller into more of a local or regional business. Offering all customers the same shipping deal is an important step to becoming a truly national Internet retailer. Combine a little business savvy with the Flat Rate Shipping Charge Calculator and take your online business to the national or even international marketplace. For more information, visit www.HarveySoft.com.
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