Shipping doesn't have to be free. However, studies have shown that 91% of ecommerce customers rethink their purchases from online stores when they realize that the shipping wasn't priced well or it wasn't fast enough. What's more, about 43% of those consumers go right to marketplaces as alternatives. The reason for this is because consumers have been trained to know that places like Amazon and Walmart have reliable, and inexpensive, shipping practices. But what does this mean for small and midsized ecommerce stores? We'll show you how to calculate shipping costs for full transparency and competitiveness, without cutting too much into your own profits.
The key is to remember that the marketplaces, like Amazon, have already set a standard. Customers go to those sites and expect free/cheap shipping and rapid store-to-door delivery.
But… Marketplaces Have Also Set a Standard of Lower Quality
This situation is as old as industrialism itself. Henry Ford created an incredibly efficient way to make cars with the assembly line. It allowed for an average person to buy a car that's reliable and affordable, and they didn't have to wait around for a custom order to come through.
However, some argue that although it began a revolution in efficiency, it also launched the decline of American automobile quality. Today, Japanese and German cars have reputations for lasting longer and having better overall engineering. Not to mention, BMWs and Audis are often seen as more stylish and luxurious, even when you ask American consumers about the topic.
The point is that you can still run an online business and make lots of money in the age of Amazon, Alibaba, and Newegg. Even though consumers often desire free shipping, they also know that it's typically offered when they want something cheap and effective, like a cable for their TV from Amazon being sent to them in one day.
However, when they stumble upon a new invention, or buy custom leather shoes, or even get an art project on Etsy, paying for shipping isn't as strange. After all, they're paying for the uniqueness and quality.
Yes, offering cheap shipping is still desired. But as a smaller online store, you're far better offering free shipping when people reach the $50 or $100 purchase mark. This way, you're upselling in the process, while still providing some sort of free shipping for those who pay.
But How Do You Calculate Shipping Costs to Make It Easy for Your Customers to See What They'll Have to Pay?
So many questions arise when it comes to shipping rates:
- Are shipping rates generated through your ecommerce platform?
- Do you have to go pay for another plugin to generate a shipping rate?
- How are the shipping rates synced with your shipping partners like UPS and FedEx?
We'll answer all of your shipping rate questions to ensure that both you and your customers are happy.
How to Calculate Shipping Costs – Based on Several Factors
When you try to send a letter through a post office, how do they calculate how much it costs? Much of the time, it seems like a weird, random number, like $14.23 or $5.02.
The reason for the lack of round numbers in shipping is because various factors are taken into account before showing a shipping rate for that particular item.
A unique equation is used by each shipping carrier to come up with a shipping rate, and they typically tie-in all, or some, of the following variables:
- How fast you'd like the package to get to the destination.
- How valuable the package is.
- Where the package is going.
- How much the package weighs.
- The physical package dimensions.
- Extra costs for unexpected issues and fees.
Using Shipping Cost Calculators
The popular shipping carriers, like UPS, USPS, and FedEx, all have their own shipping calculators to guide companies in figuring out what they can expect to pay for their shipments. You obviously wouldn't use these online calculators for finding rates or every one of your sales, but the calculators often have integrations to place on your websites.
Furthermore, the online shipping cost calculators are excellent tools for checking and comparing average rates based on what you plan on shipping. This way, you have a general idea of which shipping carrier is most affordable for your business.
The USPS Shipping Cost Calculator
Click here to use the USPS shipping cost calculator online.
The USPS has a simple page with three price calculator options:
- Domestic shipping cost calculator.
- International shipping calculator.
- Business price shipping calculator.
Online stores should start with the business calculator to understand what rates look like when you manage large batches of shipments on a regular basis. You can type in details like the type of packaging, dimensional weight, sizing, and more.
The domestic calculator is also important for ecommerce in the United States. It's essential to check the international rates if you plan on shipping overseas from the United States. Keep in mind that you can't use the USPS if you're shipping to countries outside of the US from another country outside of the US.
So, if your business runs outside of the US, your best bet is to start with one of the shipping rate calculators below.
As for US businesses, you'll find that USPS has the best rates for smaller items when shipping in the United States.
Steep discounts are given for online stores when shipping for business. Apply to receive a free shipping kit and to compare pricing.
The UPS Shipping Cost Calculator
Click here to learn how to calculate shipping costs with UPS.
This page allows you to type in information about package and freight shipping. It delivers results for a multitude of services like next day air and UPS Ground.
UPS provides ecommerce fulfillment and shipping services to give you an affordable and easy solution when sending out your packages.
Discount shipping rates are included if you apply for the UPS Small Business program. It's also common to find shipping discounts with apps from Shopify and other ecommerce platforms.
The FedEx Shipping Cost Calculator
Click here to see the FedEx shipping rate calculator.
Several calculators are actually provided on this page, including options for packages and freight, along with rate tools, package weight calculations, and ground service maps.
FedEx is useful for online stores located all over the world, especially when sending products to countries overseas.
We encourage you to check out the FedEx Ecommerce Center. It's designed for integrating with your online store and for fulfilling orders with complete automation. Packaging and pickup help is provided, and you receive rates and transit times to send out to your customers.
The DHL Shipping Charges Calculator
Click here to see the DHL shipping calculator.
This is a quick quote tool for evaluating the cost of DHL for your future shipments. DHL has a reputation for handling international shipments at reasonable postage prices. This doesn't make them cheap, but they get the job done. However, DHL is often the most expensive and least practical for local shipments.
We suggest going to the DHL Ecommerce Logistics page to get a quote for your entire operation and to understand how integrations work with your online store.
How to Calculate Shipping Costs With Ecommerce Platform Integrations
A key part of getting the best shipping rates for ecommerce is working with an ecommerce platform that makes it easy to get those discounts that we all desire.
No online store that ships on a regular basis should be paying full shipping prices.
That's why you have two options.
- Check to see if there are any shipping apps with discounts and other services to link to your ecommerce platform.
- Ask your fulfillment company if any shipping deals are provided.
The second point above is usually simple, since third-party fulfillment companies have shipping discounts built into their pricing. Sometimes you don't even have to worry about shipping rates because it's all packaged into your monthly fee.
On the other hand, you may consider some apps that provide better shipping practices and discounts for the major carriers.
- ShipBob – This is a great solution for streamlining your order fulfillment with same-day delivery for some cities and two-day shipping all over the US. ShipBob is an official Shopify partner, with free software and integrations for managing your orders and tracking inventory.
- ShipStation – Available for multiple ecommerce platforms, this app allows you to get deeply discounted rates from the major carriers. You can also integrate with your website and offer realtime shipping rates and times.
- EzySlips – Connect your store with options like FedEx and Aramex. Automate your fulfillment, show shipping rates, and expedite your returns.
- Advanced Shipping Rules – An app that shows shipping rates for different products. This is a great solution if you need advanced rate types and would like direct links to UPS, FedEx, and more.
- AfterShip – A solid app for establishing shipping rates on your site, sending out tracking codes, and finding deals for popular carriers like USPS, DHL, and over 400 other options.
- ShipBob – You'll notice that ShipBob is one of the most popular order fulfillment options on the big ecommerce platforms. The Bigcommerce app is similar to the Shopify one, where you receive an integration between the two systems and some great software for managing your orders and offering affordable and fast shipping to your customers.
- Ordoro – Use this app to track inventory and shipping, while also saving money on your shipping and delivering the right shipping costs to all your customers.
- ShipHero – This is a one-stop solution for shipping, receiving, returns, and inventory management. Connect with the right carriers, calculate optimal shipping rates, and reduce risk when it comes to returns and overselling.
- WooCommerce Shipping – A free extension that lets you print labels right from the WordPress dashboard. It also has pre-negotiated USPS rates.
- Shippo – Receive awesome discounts from the top carriers, and get shipping cost calculators on your website.
- Table Rate Shipping – Generate advanced and dynamic shipping tables based on elements like cost and size of the order. It's also great for learning how to calculate shipping costs with your site.
Methods for Reducing Your Ecommerce Shipping Costs
There are several methods for cutting down on shipping rates:
- Compare shipping rates for your products and locations with the calculators from major shipment companies.
- Sign up for small business or ecommerce programs when you locate carriers you like. These programs are meant to significantly discount and expedite shipping.
- Utilize a shipping app in your ecommerce platform. These app companies often have pre-negotiated rates with the big shipping providers.
- Utilize a third-party logistics provider so you don't have to pay high prices for storage, shipping, and packaging. This also frees up your workers to focus on other elements of your business.
How can you lower the cost of shipping with a third-party ecommerce fulfillment company?
Shipping Fees Are Lower With Third-party Fulfillment
There's a chance that you don't ship enough product to get a great rate from FedEx and UPS. However, Third-party ecommerce fulfillment companies ship plenty of items, and they have deals set up with the carriers. So, the savings get passed onto you and your customers.
Shipping Times Are Faster With Third-party Fulfillment
Fulfillment partners have networks of storage facilities. This means that you save money on storage, and your customers are bound to get their products faster. This is because the items can ship from the closest facility.
You Save Time on Your End With Third-party Fulfillment
Packaging, inventory management, and shipping are all time-intensive and expensive. The third-party shipping company is there to remove all these aspects for you, meaning that you have more time to spend on improving your business in other ways.
Building a Shipping Rate Strategy
Learning how to calculate and display shipping rates is a monumental part of making things easier for your company and customers.
Once that's completed, you need to figure out the ways in which you're going to charge for shipping.
It's nice to give your customers multiple shipping options and provide transparency on shipping times. You don't have to offer all of them, but here are the six ways to charge for shipping:
- Free shipping for all orders.
- Free shipping for some items.
- Free shipping when customers reach a minimum purchase point.
- Free shipping for your most loyal customers.
- Flat rate shipping for all products and customers.
- Shipping that's calculated by order, based on elements like shipping distance and cart price.
Which Should you Choose?
Let's find out your ideal shipping strategy.
Free Shipping for All Orders
It's enticing to go about offering free shipping to match up with Amazon and Walmart and the other big dogs. However, keep in mind that Amazon doesn't actually provide free shipping for most customers. The shipping costs are wrapped into the Prime Membership. So, even Amazon figures out a way to get customers to pay for shipping.
Overall, free shipping for everything is hard to pull off. Consider the following before making this decision:
- Does your third-party fulfillment provider offer free or cheap shipping?
- Do your competitors offer free shipping? If not, you may be able to completely rule this out.
- Do you have the time and resources to advertise the heck out of this offering?
- Does your company have enough cash to afford a free shipping trial run?
Free shipping for some items
Think about this strategy with the following considerations and questions:
- This may work if you have a large selection of products.
- You can still advertise free shipping for many products without risking the loss of all your money.
- This option may confuse customers. Make sure you're clear about which products have free shipping. Talk to a lawyer as well.
Free shipping when customers reach a minimum purchase point
This is very common. Here are some things to consider:
- It's a system that encourages larger purchases.
- You can still advertise it as a benefit.
- Customers are used to seeing this.
- This strategy absolutely must be tested to see if you'll be losing money or not.
Free shipping for your most loyal customers
Although not as popular, free loyalty shipping has its perks:
- The offer is presented upfront for the ultimate transparency.
- You're not risking breaking the bank.
- Loyal customers get the benefit, which means they're spending more money.
- This also requires testing, mainly to make sure the loyalty program works on your site.
Flat rate shipping for all products and customers
Flat rate shipping is terrible for some companies and perfect for others:
- It's the easiest strategy to set up.
- Most carriers provide flat rate shipping.
- Your customers are rarely confused.
- You can save quite a bit of money this way.
- However, many customers hate flat rate shipping since it doesn't reward anyone.
- It's not all that enticing in your marketing.
Shipping that's calculated by order
Many online retailers do this:
- It ensures that shipping costs are completely covered on all orders.
- Most carriers have realtime API systems for calculating shipping costs for your customers.
- However, customers don't usually like this as much, since the shipping is more expensive for them.
- It's one of the more complicated systems to configure and explain. You shouldn't expect to market this as a shipping perk.
Additional Questions to Think About for Your Shipping Costs
Shipping has not been this easy in the past. Okay, it's still not all that simple to figure out the right type of shipping for your business, but there are so many tools and services at your disposal to cut shipping costs and make sure your customers get products on time.
Of course, other questions are bound to arise when handling shipping. Here are some FAQs to try to solve them for you:
Is It Possible to Configure a Flat Rate Shipping Structure?
Absolutely. Many of the carriers (particularly USPS) have pre-measured boxes. If all of your products fit into those boxes you can opt for a flat rate shipping cost.
Which Carrier is the Least Expensive?
It all depends on your situation. The best value for shipping in the United States is the USPS. However, UPS has been known to provide cheaper shipping for larger packages. FedEx and DHL are often utilized for international shipping.
Having said that, please complete your own research, because there's no carrier that is always cheaper than others.
How Much Are Third-party Fulfillment Companies?
Most of the time you have to contact the company to find out. Some have pricing on their websites.
We've reached out to the most popular fulfillment companies, so you can see pricing here. The cheapest we could find starts at $1 per month. Options like ShipBob and ShipStation, which gives you far more for your money, start at $25 per month.
Any Other Questions How to Calculate Shipping Costs?
If you have any questions about how to calculate shipping costs and all of your delivery time options, write us a comment in the section below! We love hearing about shipping experiences from ecommerce professionals.