Shipping Products
Episode #7 of the course How to start an online store by Patrick Rauland
Welcome back!
You got paid and collected taxes. Let’s look at how you can deliver products to your customers.
One of the bigger mistakes I’ve seen is new store owners forgetting to include shipping costs in their business models. They go from making a profit with each order to making a loss. And they quickly close the business.
So today, we’re going to look into how exactly you can ship your products, as well as how much it costs. You’re going to need to know both to succeed.
How to Ship
Believe it or not, I’ve worked with people who thought their e-commerce software would ship their products. Not sure where they got that idea, but you actually have to think about shipping by yourself.
Once you get bigger and have a warehouse, you can schedule a shipping provider to stop by and pick up packages. But until then, the best option is to drop off packages at a shipping provider. The rates are all relatively competitive, but if you live in the United States, I recommend the US Post Office. They tend to be just a little bit cheaper, especially if you can fit your products into their Flat Rate boxes.
Free Shipping
Remember one thing: Free shipping is a must. Customers love it and they vote with their dollars—81% of shoppers research before buying a product, and during that research, they’ll find three stores. If you don’t offer free shipping and your competitors do, you’ll lose the sale.
You don’t have to offer unconditional free shipping. You can offer free shipping at certain price points, such as $25, $50, $100, etc. In fact, you can use free shipping to get people to spend more. In a study done by Forrester, they discovered if you set your free shipping price above the average order value, you’ll get an increase in average order value.
Basically, people hate paying for shipping, so they’re willing to buy more to unlock free shipping.
This is part of the reason why I advocate for high margins on products you sell. You need that margin to pay for free shipping.
Calculation of Rates
Even if the customer sees free shipping on the backend, you’re going to be paying for it. And one of the most efficient things you can do with your time is automatically calculate the shipping costs for your orders. Almost every e-commerce platform has built-in tools for this. You’ll need:
• dimensions (height, width, and depth) for every single product
• weight for every single product
• dimensions for the boxes you use
If you have all of these, you can calculate live rates automatically. And once you get big enough, you can negotiate rates with a service provider (UPS, USPS, FedEx, etc.) and even get them to come to your office/house and pick the products up.
Third-Party Fulfillment
If you don’t want to handle the storage and fulfillment part of the business, you can actually outsource this. There are companies that will store and ship your products for you. The best known is Amazon’s fulfillment program, called Amazon FBA.
You can ship your products to Amazon’s warehouse; they’ll automatically pack and send all your packages. They’ll do this not just for your products listed on their site but also orders placed on your own website. It’s a convenient way to outsource this work so you can focus on the business. This, of course, costs money, but again, that’s why I recommend a product with a big margin.
Key takeaway: Plan to pay for shipping. It’s what customers expect. If you don’t want the hassle, you can try outsourced fulfillment.
Recommended video
An interview with a merchant who sells on Amazon.
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