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How to Optimize Shipping Charges to Increase Conversions

Mar 22, 2017 9:44:59 AM / by #Fulfillment

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Optimizing your sites and sales funnel for maximum profit is a top concern for all online entrepreneurs. One of the elements that can drive customers away and lower conversion rates is e-commerce shipping prices .

No matter what type of model you are operating under, whether it be subscription/continuity, e-commerce, or Amazon, you still want to be testing and optimizing your shipping so that you’re seeing the best conversion rate possible.

In recent years, there have been a variety of studies touting results like 61% of respondents would be somewhat likely cancel a purchase if not offered free shipping (ComScore) and that offering free shipping can boost revenue by 10 percent (Stitch Labs). Other studies, like this one from Rejoiner, conclude that 36% of online customers abandoned a shopping cart because the “cost of delivery was too high.” Checking these studies are a perfect opportunity to analyze current offering and think about how to optimize your shipping practices.

Lowering or eliminating shipping charges to your customers may seem like giving up money, but it can be done strategically and making you much more revenue in the long run. One tactic is to raise your prices slightly to offset free shipping and effectively lose no current cash flow. Finding the right balance between shipping price and product cost be a task, but when the right median is found your business will be that much more profitable.

While eliminating shipping charges is cited in many of these studies, that is not always viable for all types of business. Many in the continuity marketing space may see the thought of free shipping a non-starter, since the shipping charge is the way to setup billing with a customer. One way to get around this is test different amounts for the shipping to lower it as much as possible and test conversion rates. When you find the optimal price that people are willing to accept, the data in your conversions will make this clear.

For sellers who operate on a more traditional e-commerce model, the cart abandon rate is already at the forefront of your mind. Getting that balance of product price vs shipping charges is the best way to lower the cart abandons and convert potential customers. People who have already added an item to their cart, are telling you that this is an opportunity to make a sale, getting them over the hump and removing barriers to purchase is the crux of shipping cost optimization.

Entrepreneurs who rely on data to make informed decisions can test a variety of methods to optimize effectively for conversions. Adjusting shipping pricing methods and making small changes to your landing pages or campaign elements can be a great test that completely changes your revenue. Depending on the reach of your campaigns, raising your conversion rate by fractions of a percentage can mean exponential amounts of new revenue.

Running a profitable business, especially in the online space, is all about testing and optimizing to make your operation as profitable and efficient as it can be. Shipping prices are one of the main points that potential customers use to make a purchasing decision, so make sure to be thinking about the best way to satisfy this concern for the most people.

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Written by #Fulfillment