If you own a Shopify store, choosing the right shipping carrier can be tricky. Knowing which carrier to use alongside picking competitive shipping rates can potentially reduce or increase your profits. With a Shopify shipping calculator, you can get real-time rates offered by different partner shipping carriers. Once you have the calculated rates for different carriers you can simply choose the option that suits you the best.
You can also benefit from the Shopify Shipping app as long as you're shipping from the United States, Canada, or Australia. Here's how different factors contribute to shipping costs and how you can manage them to get the best value for you and your customers.
How shipping costs are calculated
Shipping costs are calculated by taking into account a variety of factors like distance from the pick-up point to the destination, the weight of the package, the delivery speed required by the business, custom duties, and any other special handling needs.
Package weight & dimensional weight
Package weight refers to how much the package weighs in kgs or other units of weight, while dimensional weight refers to the amount of space taken up by the package. If you are looking to save money from shipping you should consider ways to control both the package and the dimensional weight of the package.
Package weight can be controlled by using lightweight materials for the packaging of your product. For example, if you are selling watches you can consider packing them in cardboard boxes, which will add lesser lbs to the total weight, rather than plastic or glass boxes to control the package weight. The dimensional weight of a package can be controlled by packing it in such a manner that it takes minimum space.
A shipping option like same-day delivery or two-day delivery can be a great way to keep your customers happy but it comes at a cost. Shipping carriers charge more for urgent deliveries as compared to normal delivery speeds.
When offering quick delivery services you must take into account the affordability of the service and should not do it at the expense of being at a loss.
Fulfillment locations affect the travel distance that needs to be covered for order fulfillment. When the shipping destination is far away from the pick-up location it increases the transit time and cost for order fulfillment thus causing shipping rates to increase.
In order to reduce the cost of sending shipments to different locations, a smart strategy is to store your inventory in different locations that are near to your customers.
When it comes to international shipping custom duties can immensely increase the cost of shipping. Online stores can choose to split the cost of the shipping with their customer, bear it themselves, or ask the customers to pay the full cost of shipping themselves.
If your products are not very diverse and the customs duties are not likely to vary a lot from product to product you can offer flat shipping rates to your customers.
Shopify shipping carrier rates
Shopify has partnered with a number of trusted shipping carriers including DHL express worldwide, USPS, FedEx, and UPS. Each of these carriers offers its own rates for different kinds of shipping services. Shopify merchants can log in to their Shopify accounts and choose their preferred carriers from Shopify shipping settings.
- If you're looking to ship a one-pound package from Los Angeles to New York, USPS will charge you $2.80 for delivering it within two days using USPS Media Mail (this service doesn't offer insurance).
- If you use the USPS Priority Mail the package will have insurance and will be delivered in the same amount of time at the cost of $8.42.
- If you choose a one-day delivery option the shipping will cost you $38.05.
- UPS will charge $40 to deliver a 1 pound package from Los Angeles to New York City by the end of the day.
- Second-day delivery will cost $25.50 and third-day delivery will cost $19.25.
- You can calculate the shipping rates offered by UPS for different delivery speeds and shipping destinations by using the Shopify shipping calculator.
- If you use FedEx Standard overnight service it will charge $78.8 to ship a one-pound package from Los Angeles to New York.
- Using the second-day service will cost you $35 and using the FedEx Express Saver to deliver within a week will cost you $29.40.
- UPS will charge $89.43 to deliver a 1 pound package from Los Angeles to New York City by the end of the day.
- For more delivery options use the DHL shipping calculator to get a quote.
Ways to reduce shipping rates for your Shopify store
Reducing shipping rates can be a great way to cut down your expenses, offer competitive prices to your customers, avoid the problem of abandoned carts, and increase profit margin. Following are some ways in which you can manage rates and reduce the cost of shipping for your Shopify store.
Negotiate volume discounts with shipping carriers
If you are making a lot of sales you are not only benefitting yourself but also benefitting your shipping carriers. Use this position to your advantage and negotiate discounts with your shipping carrier if you manage to get more than a certain volume of orders.
This is a mutually beneficial situation for you and your shipping carrier and can help you reduce shipping rates to a great degree if your sales are high.
Only offer free shipping with a minimum order amount
Some sellers offer free shipping without any condition to encourage sales. This can sometimes negatively affect your growth especially if you are also selling low-cost items with little profit margins. A smart strategy that will not only keep your customers happy but also encourage high-volume sales is to offer free shipping with a minimum amount of order.
Use the Shopify Fulfillment Network
Using the Shopify Fulfillment Network for fulfillment services will enable you to benefit from the advanced technology and infrastructure offered by Shopify without having to invest in it. Shopify Fulfillment Network handles your fulfillment process from the point of inventory storage and management to the point of shipping and returns management. Its distributed network of fulfillment centers allows you to keep inventory at places that are near to your customers thus cutting down transit time and hence reducing shipping costs.
Outsource fulfillment to a 3PL
Another way of reducing the shipping rates can be to outsource order fulfillment to third-party fulfillment provider. You can compare different 3PLs and compare their shipping service to choose the one that provides discounted rates for the shipping zones you are most interested in. Different 3PL services can charge differently for different shipping services and shipping zones, in order to reduce your shipping rates, you must choose the one that suits your customer needs the most.
To ensure that your customers don't abandon their shopping carts at checkout it is important to provide them with reasonable shipping rates. If the shipping is worth more than the purchase buyers usually end up abandoning the cart. Therefore it is important to provide your customers with the best and explore options like free shipping rates and flat rate shipping to ensure that your customer will not abandon their shopping cart.
The best way to choose what is best for both you and your customers is to compare and consider all available options and then only after a thorough cost-benefit analysis of each option choose the one that matches the long term goal of your business.