Shipping options - good enough?

[LPPC]

Hi all,

I'm building an ecommerce store and driving traffic through Facebook ads. My shipping options are like this (within the US):

My question is, are my shipping options sufficient in the sense that I will not lose a significant amount of customers to sites like Amazon because they have better and faster shipping option (Amazon prime for example has free two-day delivery, but you have to pay $99 yearly membership fee).

In other words, is my shipping speed fast and cheap enough?

Or maybe it's too cheap and I should charge money for standard shipping because I can then increase my margin?

Looking forward to some advice!

Thanks!

 

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[jon.a]

How much is your average ticket?

Hi all,

I'm building an ecommerce store and driving traffic through Facebook ads. My shipping options are like this (within the US):

My question is, are my shipping options sufficient in the sense that I will not lose a significant amount of customers to sites like Amazon because they have better and faster shipping option (Amazon prime for example has free two-day delivery, but you have to pay $99 yearly membership fee).

In other words, is my shipping speed fast and cheap enough?

Or maybe it's too cheap and I should charge money for standard shipping because I can then increase my margin?

Looking forward to some advice!

Thanks!

 

[LPPC]

How much is your average ticket?

What do you mean with ticket? Average order size?

 

[OldFaithful]

Selling price. Order quantity. Physical size.

If you are selling buttons, that's different from selling shoes, and very different from selling furniture. It's impossible to know if your shipping charge is too low, if one doesn't know what you're shipping.

 

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[LPPC]

Selling price. Order quantity. Physical size.

If you are selling buttons, that's different from selling shoes, and very different from selling furniture. It's impossible to know if your shipping charge is too low, if one doesn't know what you're shipping.

Selling price is $19.99. Let's say order quantity is 1. It's a dog costume, let's say the size is 40 cm x 30 cm x 10 cm (guessing here).

I want to have a fulfillment company ship the product. The wholesale price of the product is $5.50 a piece. If I use Amazon FBA, then I have to pay $6 for fulfillment per product. That's a $11.50 minimum cost. Add FB ads cost and some other fees and the margin won't be that big.

 

[1step]

How will you make money delivering in one day for $10?

 

[biophase]

I just say free shipping 2-5 days. That pretty much covers USPS and Fedex ground.

 

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[malonewolf]

Free shipping at some level is becoming an expectation, so you're right on the money there. Have you considered only going Free Standard and 2-Day shipping? 1 day can be more cost prohibitive than you think (try shipping 1-day when the customer places an order after 5pm wherever the distribution center is), has higher expectations for customer service and is one more option they have to go through in the checkout process.

 

[LPPC]

How will you make money delivering in one day for $10?

I'm sorry but I don't know what you mean. The customer has to pay $10 on top of the price of the product for next-day delivery... Thank you.

I just say free shipping 2-5 days. That pretty much covers USPS and Fedex ground.

I assume you have in-house fulfillment? If I understand it correctly, on your own e-commerce store outside of Amazon, you only provide your customers 1 shipping option and that is ''free shipping in 2-5 days''?

I think for now, fulfillment by amazon is my best option. You can see the shipping speeds and options here:
Amazon.com Help: Shipping Times for the Contiguous U.S.

Should I provide these 3 shipping methods to my costumers (standard, two-day and next-day delivery)? Or should I only provide free shipping and say delivery time will be between 4 and 5 days? I don't know whether Amazon standard shipping needs 4 days minimum or 4 days maximum. If it's 4 days maximum and it regularly ships faster I might be able to say ''standard shipping 2-5 business days''.

Thank you!

Free shipping at some level is becoming an expectation, so you're right on the money there. Have you considered only going Free Standard and 2-Day shipping? 1 day can be more cost prohibitive than you think (try shipping 1-day when the customer places an order after 5pm wherever the distribution center is), has higher expectations for customer service and is one more option they have to go through in the checkout process.

I haven't considered it. If I use fulfillment by Amazon, then 1-day delivery should go smoothly I suppose because it is an option they provide and the fees are pre-determined. How could it then cost more than what Amazon enlists as fulfillment fees?

Why does it have higher expectations for costumer service? Next-day delivery just makes them expect next-day delivery I think, nothing significantly more.. Just trying to understand your points

Thanks!

 

[amp0193]

I haven't considered it. If I use fulfillment by Amazon, then 1-day delivery should go smoothly I suppose because it is an option they provide and the fees are pre-determined. How could it then cost more than what Amazon enlists as fulfillment fees?

From my Amazon account. 1-day shipping on a small 6-inch product, weighing a few ounces, selling for $15.

I don't think there's any way you'll be shipping anything next day for sub-$10.

Why does it have higher expectations for costumer service? Next-day delivery just makes them expect next-day delivery I think, nothing significantly more..

And what if something happens, and it doesn't get delivered next day? If they just paid $20 extra to get it shipped next day, they are not going to be happy.

Whereas, if I say 2-5 day shipping, and it takes 6 or 7 days to get there. They really aren't going to care that much if it was free, or they only paid $5 for shipping, as long as they have a tracking number they can watch.

 

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[LPPC]

From my Amazon account. 1-day shipping on a small 6-inch product, weighing a few ounces, selling for $15.

I don't think there's any way you'll be shipping anything next day for sub-$10.

The standard shipping method is calculated into the price of the product ($19.99). One-day delivery is $11 dollars more expensive than the standard shipping method, that's why I charge $10 extra



And what if something happens, and it doesn't get delivered next day? If they just paid $20 extra to get it shipped next day, they are not going to be happy.

Whereas, if I say 2-5 day shipping, and it takes 6 or 7 days to get there. They really aren't going to care that much if it was free, or they only paid $5 for shipping, as long as they have a tracking number they can watch.

I guess you are right about that. So do you recommend only standard shipping and 2-day delivery?

Amazon says standard shipping takes 4-5 days, does it frequently ship faster than that thus allowing me to state 2-5 days for standard shipping?

In the Netherlands next-day delivery is the norm. But of course, the Netherlands is a very small country so it's easier to distribute.

Thank you.

 

[hughjasle]

Lots of good answers already in this thread.

Really it comes down to what you are trying to do. I mostly have done free shipping. However I have more and more been charging for shipping on various stores or products or promotional funnels.

After lots of testing and tracking of numbers etc., often times charging shipping DID lower sales, BUT the increase in revenue on charging them the shipping costs (or even just $2 for shipping) made up more than the difference and increased the bottom line and sometimes even the overall revenue was higher.

The real trick as you are finding is this:

I want to have a fulfillment company ship the product. The wholesale price of the product is $5.50 a piece. If I use Amazon FBA, then I have to pay $6 for fulfillment per product. That's a $11.50 minimum cost

Fulfillment costs are often MORE than the actual cost of goods sold for these low ticket items. It's a hard pill to swallow sometimes but that's the game.

If you are NOT selling on amazon, I highly suggest you look for fulfillment services outside of amazon. I have found their costs to be extremely high. I have tested various fulfillment centers and in the end started my own (mainly just doing my own products). The lack of quality customer service for me was too much to deal with. They charged too much money to be a pain point. If you have the ability to ship yourself while starting and while sales are small, I'd suggest starting there as you will learn a lot about your customers as well as the true costs of fulfillment.

 

[biophase]

I don't know whether Amazon standard shipping needs 4 days minimum or 4 days maximum. If it's 4 days maximum and it regularly ships faster I might be able to say ''standard shipping 2-5 business days''.

If you use Amazon's cheapest shipping price, which is something like standard shipping, it can take 5-9 days. You basically get the same service as Free Standard Shipping, which means that your order sits around for 1-3 days before it's shipped if Amazon is busy. During the holidays, Amazon is going to ship all their prime orders first and leave the non-prime orders to sit around until they get to them.

I just did a multichannel fulfillment order on Amazon and the cheapest method had a delivery date of March 23, today is March 15. So 6 business days.

 

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[biophase]

I assume you have in-house fulfillment? If I understand it correctly, on your own e-commerce store outside of Amazon, you only provide your customers 1 shipping option and that is ''free shipping in 2-5 days''?

Yes on one of my stores that is all I offer.

On another store, they can choose to pay Fedex prices for overnight to 3 day shipping which costs between $25-$60.

 

[amp0193]

Amazon says standard shipping takes 4-5 days, does it frequently ship faster than that thus allowing me to state 2-5 days for standard shipping?

It occasionally ships faster than 4-5 days, but I wouldn't say frequently.

 

[LPPC]

Lots of good answers already in this thread.

Really it comes down to what you are trying to do. I mostly have done free shipping. However I have more and more been charging for shipping on various stores or products or promotional funnels.

After lots of testing and tracking of numbers etc., often times charging shipping DID lower sales, BUT the increase in revenue on charging them the shipping costs (or even just $2 for shipping) made up more than the difference and increased the bottom line and sometimes even the overall revenue was higher.

The real trick as you are finding is this:

Fulfillment costs are often MORE than the actual cost of goods sold for these low ticket items. It's a hard pill to swallow sometimes but that's the game.

If you are NOT selling on amazon, I highly suggest you look for fulfillment services outside of amazon. I have found their costs to be extremely high. I have tested various fulfillment centers and in the end started my own (mainly just doing my own products). The lack of quality customer service for me was too much to deal with. They charged too much money to be a pain point. If you have the ability to ship yourself while starting and while sales are small, I'd suggest starting there as you will learn a lot about your customers as well as the true costs of fulfillment.

Thank you for sharing the information about charging for shipping costs being more profitable sometimes! Definitely something to take into consideration.

Unfortunately, I don't live in the US and I'm marketing to the US market. So fulfilling order myself seems not to be a better choice. Maybe you can recommend me other (cheaper) fulfillment centers other than Amazon ( I don't sell on Amazon, for now)?

If you use Amazon's cheapest shipping price, which is something like standard shipping, it can take 5-9 days. You basically get the same service as Free Standard Shipping, which means that your order sits around for 1-3 days before it's shipped if Amazon is busy. During the holidays, Amazon is going to ship all their prime orders first and leave the non-prime orders to sit around until they get to them.

I just did a multichannel fulfillment order on Amazon and the cheapest method had a delivery date of March 23, today is March 15. So 6 business days.

Yes on one of my stores that is all I offer.

On another store, they can choose to pay Fedex prices for overnight to 3 day shipping which costs between $25-$60.

Thank you very much. Very useful information to keep in mind, especially that Amazon gives priority to Prime orders. Maybe I have no choice but to look for another fulfillment company.

So if I understand it correctly, Amazon promises 4-5 days shipping for the Standard Shipping method, but often it takes longer?
Amazon 4-5 days shipping claim.

So I can't even claim free 4-5 days shipping on my store...?

It occasionally ships faster than 4-5 days, but I wouldn't say frequently.

Thank you, good to know!

 

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[biophase]

So if I understand it correctly, Amazon promises 4-5 days shipping for the Standard Shipping method, but often it takes longer?
Amazon 4-5 days shipping claim.

So I can't even claim free 4-5 days shipping on my store...?

I think you are reading that link wrong. That is the shipping time that Amazon promises to deliver a shipment fulfilled by Amazon to their customer when they place an order on Amazon.com.

Nowhere does that say that Amazon promises to ship a seller's fulfillment order to their customer in 4-5 days.

 

[hughjasle]

Yea not being in the area you are serving does limit your options.

Maybe you can recommend me other (cheaper) fulfillment centers other than Amazon ( I don't sell on Amazon, for now)

I can't recommend any as I found them all terrible and did what Biophase does and just brought it all in house. There are LOTS of fulfilment centers out there. It will be a lot of leg work calling around, telling them your product type, weight, and dimensions and getting quotes.

Things to consider when shopping around:

• Storage fees
• Minimum monthly order fees
• Picking fees (cost for initial pick, and more)
• The Actual shipping costs and type of shipping
• Cost of box
• Cost of the other shipping materials
• Return Fees (if they return to you)
• When do they ship after the order comes in
• Who is verifying bad addresses
• How do you get in touch if the customer gives a bad address or needs an order change
• When are you charged and what payment methods are accepted
• Defective product/product inspection - do they even check for obvious defective or damaged product, if so, what do they do with them or do they just ship out obviously damaged goods (customer service nightmare -> been there done that )
• IF the experience is bad, what is the cancellation period and process like? Any fees involved there?

I know there is a lot more but that's all i could come up with at the moment. Skype is blowing up so a bit distracted.

Also note that some of these fulfillment centers took weeks to get back to me. I didn't even bother continuing discussions with them as I figured if it takes 2 weeks to answer a potential client, then my dealings with them would be just as bad. I could have been very wrong. Choice is up to you.

 

[LPPC]

I think you are reading that link wrong. That is the shipping time that Amazon promises to deliver a shipment fulfilled by Amazon to their customer when they place an order on Amazon.com.

Nowhere does that say that Amazon promises to ship a seller's fulfillment order to their customer in 4-5 days.

I see. Looked up the delivery times for multi-channel fulfillment and this is what I found:
"With Multi-Channel Fulfillment’s cost-effective one-day and two-day delivery options, you can offer both alternatives to your customers, partially or even fully charging them for the shipping option they choose. Alternatively, standard three- to five-day delivery is available. "

So here it says three- to five days. I do believe you that it takes longer in practice.

Thanks Kenric!

Yea not being in the area you are serving does limit your options.

I can't recommend any as I found them all terrible and did what Biophase does and just brought it all in house. There are LOTS of fulfilment centers out there. It will be a lot of leg work calling around, telling them your product type, weight, and dimensions and getting quotes.

Things to consider when shopping around:

• Storage fees
• Minimum monthly order fees
• Picking fees (cost for initial pick, and more)
• The Actual shipping costs and type of shipping
• Cost of box
• Cost of the other shipping materials
• Return Fees (if they return to you)
• When do they ship after the order comes in
• Who is verifying bad addresses
• How do you get in touch if the customer gives a bad address or needs an order change
• When are you charged and what payment methods are accepted
• Defective product/product inspection - do they even check for obvious defective or damaged product, if so, what do they do with them or do they just ship out obviously damaged goods (customer service nightmare -> been there done that )
• IF the experience is bad, what is the cancellation period and process like? Any fees involved there?

I know there is a lot more but that's all i could come up with at the moment. Skype is blowing up so a bit distracted.

Also note that some of these fulfillment centers took weeks to get back to me. I didn't even bother continuing discussions with them as I figured if it takes 2 weeks to answer a potential client, then my dealings with them would be just as bad. I could have been very wrong. Choice is up to you.

Got it, thank you very much! You've already gave me plenty of information so no worries

 

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[Nik Krohn]

I personally NEVER offer free shipping on any of my commerce sites. I would rather lower the price a tad on the front end which usually gets them in and generates more traffic and charge standards shipping.

The reason I do this is because I can always run a retargeting ad offering FREE SHIPPING to get them to complete their purchase (or use abandon cart emails to do the same).

Plus you have the option to do free shipping coupon code when you do email blasts and that drives repeat business.

 

[hughjasle]

I personally NEVER offer free shipping on any of my commerce sites.

Not to derail the topic, but do your customers know the shipping price before getting to the checkout?

 

[Nik Krohn]

Not to derail the topic, but do your customers know the shipping price before getting to the checkout?

They find out when they get to the cart. Most people know that there is usually some form of shipping when ordering a specialty product (Amazon excluded). Even when they buy my product on walmart.com, groupon etc there is usually shipping.

Keeping shipping makes a person feel special when you give it to them free. I have VERY little conversion rate drop when I add permanent free shipping

 

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[LPPC]

I personally NEVER offer free shipping on any of my commerce sites. I would rather lower the price a tad on the front end which usually gets them in and generates more traffic and charge standards shipping.

The reason I do this is because I can always run a retargeting ad offering FREE SHIPPING to get them to complete their purchase (or use abandon cart emails to do the same).

Plus you have the option to do free shipping coupon code when you do email blasts and that drives repeat business.

Very interesting! Lowering the price on the front end makes the product look very cheap indeed and may attract more customers in the end. Definitely worth experimenting with! Thanks a bunch.

 

[amp0193]

They find out when they get to the cart. Most people know that there is usually some form of shipping when ordering a specialty product (Amazon excluded). Even when they buy my product on walmart.com, groupon etc there is usually shipping.

I've got my shop set up the same as yours, except that I offer free shipping on orders over $39 (basically, if they purchase 2-3 items).

Like you, my conversion rate did not drop at all when I added the cost of shipping. I just added more to my bottom line.


I sell lowish priced products, $15-25. When I was doing free shipping, I was just above break even after marketing costs. Adding shipping has really been a nice boost.

 

[Nik Krohn]

I sell lowish priced products, $15-25.

I even more recommend shipping when you are in this price range because chances are your product is on the smaller and lighter end which usually results in an increase in revenue when charging shipping. I think I make about $1.30 for each item I ship and that is more then the product itself costs lol

I don't currently have a "Spend X and get free shipping" but I may enforce that. I have a 3 pack of my product that I offer and that usually results in a $32 order so I might offer free shipping to push average orders to $39. Good thinking

 

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[amp0193]

I don't currently have a "Spend X and get free shipping" but I may enforce that. I have a 3 pack of my product that I offer and that usually results in a $32 order so I might offer free shipping to push average orders to $39. Good thinking

When I added it, I did see an increase in the average customer order value. They just had to add a $15 product to their $25 order.

Crunch the numbers and see if it makes sense for you.

 

[Shades]

Free shipping only IMO. Shipping cost will makes more people abandon carts then nearly anything else. Its a needless barrier to a sale to me. Build it in to the sales price.

 

[amp0193]

Free shipping only IMO. Shipping cost will makes more people abandon carts then nearly anything else. Its a needless barrier to a sale to me. Build it in to the sales price.

I think it just depends on your sales price.

I had higher CTR on shopping ads displaying a $19.99 price vs. a $24.99 price with a "free shipping" tag. Anecdotal experience, but I think it depends on your products.

 

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[Shades]

I think it just depends on your sales price.

I had higher CTR on shopping ads displaying a $19.99 price vs. a $24.99 price with a "free shipping" tag. Anecdotal experience, but I think it depends on your products.

If you are selling some commodity that people shop around for then they shop around for prices anyway. I think the price on a ad like that matters a lot less then you might think. Probably the least important thing on a ad.

 

[amp0193]

If you are selling some commodity that people shop around for then they shop around for prices anyway. I think the price on a ad like that matters a lot less then you might think. Probably the least important thing on a ad.

Not sure what point you're trying to make.

You've got picture, 3 words of the product name, and the price. Changing the price made a significant difference in CTR in a split test.