It is essential to find the right shipping strategy when you start a dropshipping business and open a dropshipping store on ecommerce platforms. Shipping strategy involves shipping time, shipping methods, and shipping cost. Keeping shipping costs down is quite important for both your business and customers. Research your competitors and see what they are offering about shipping price strategy. Even the most loyal of customers can be tempted by potential savings on shipping, so offer something comparable or better. The article will introduce the most commonly used and popular shipping price strategies for dropshippers. Then you can choose a shipping price which increases sales and happy customers so that you can set shipping rates for your dropshipping store.
Shipping Price Strategies
There are four strategies that you can use to handle shipping rates for your dropshipping store.
1. Free Shipping
You may feel pressure to offer free shipping for your dropshipping store. Amazon Prime has trained consumers to not see shipping as a necessary expense when shopping online. In fact, free shipping is not free. It is simply a psychological strategy to make customers feel like they are getting a good deal and encourage customers to buy more. Many dropshippers include shipping costs in their products’ price so there isn’t a loss in profits and still maintaining positive profit margins.
So how to make free shipping a reality? For a small business, it may be difficult to offer unconditional free shipping and returns. But there are three ways that you can refer to create some opportunities for free shipping.
①Offer free shipping only during the holidays
In general, there may be a surge of sales during the months of October through December. During this season, you perhaps have high enough profit margins to accommodate the shipping costs. Offer free shipping during the holidays is also a great way to drive sales to your store, even over your competitors.
②Set a minimum shopping cart value
You can set a minimum shopping cart value so that a customer must reach the lowest amount to be eligible for free shipping. Determine the minimum order value that still allows you to make a profit. Many of the biggest online shopping marketplaces, such as Amazon, Walmart, enforce minimum order values for customers to qualify for free shipping.
③Make shipping free for customers who subscribe to your email lists
It is also a good way to make shipping free for customers who subscribe to your email lists. Subscribers will receive emails and know about your newest products, sales, and marketing efforts. And your customers will become long-term shopping and contribute to more sales.
2. Flat Rate Shipping
Flat Rate Shipping can be easily implemented and offer a calculated way of managing your costs. You can take the average of the shipping costs of the products you are selling on your dropshipping store to decide on your flat rates. If you sell a wide variety of products with different sizes and weights, offer different flat rates by dividing your products into groups. Separate your products by weight or price range and add in all the associated shipping costs and calculate each groups’ average.
With flat rate shipping, you will definitely pay more or less. And when you start getting steady sales, you can find popular products and adjust your shipping rates accordingly. And there are three ways to deal with your internal shipping costs, for you may pay more with flat rate shipping.
①Take the shipping cost out of your profit margin.
To know your profit margins, you need to know the following elements:
Total Orders Received
Average Price per Order
Average Profit Margin
Shipping Fees per Order
Shipping Costs per Order
②Increase the price of the product to include some of the shipping cost.
③Pass some of the shipping cost on to your customer as a shipping line item in the order.
For the average store that ships average-sized, normal products, the best choice is to set a flat rate shipping cost for your entire store. The “sweet spot” appears to be $5.00. Once you know the shipping cost of your product, take $5.00 off that price and increase the price of your product by the difference.
3. Actual Shipping Cost
Pass the actual shipping cost to your customer is the simplest strategies to avoid you losing any money. If you are working with a supplier that calculates and reveals shipping costs per product, you can easily add the actual shipping cost to your dropshipping store.
However, the separate shipping cost that they must pay for each product may lead to many abandoned carts. The other big problem with the actual shipping cost is sticker shock. In fact, the actual shipping cost to you is much more than the average person expects. Something small and lightweight like headphones with an average of about $9 to ship by FedEx. If you pass through the entire shipping price for the order to your customers, they will think you charge too much for shipping. So be careful if you use actual shipping cost and be sure that you are monitoring your traffic to see how people are reacting to the shipping costs.
And when is actual shipping cost OK?
There are certain scenarios that may be appropriate to use it.
①If you sell the exact same product as your competitors and you want to compete on product price, take the entire shipping price out of your advertised product price. You may have an edge in this way.
②If you sell very expensive yet lightweight, small, and easy to ship products, pass through the entire shipping cost to the customer may be alright. It is because the shipping price is just a small percentage of the total order.
③If you offer multiple shipping methods such as ground, 2 days, and overnight shipping and you introduce faster but more expensive shipping methods like overnight shipping, customers can generally accept the actual shipping cost.
4. Promotional or Tiered Shipping
Tiered or Promotional Shipping is a combination of all three that introduced above. Only after you have had significant data and analytics to understand what works for each scenario you can use it. It allows you to offer a promotion right when you know it will make the most sense for your business, such as resonate best and end in more sales. And promotional strategies like free shipping on orders over $50, or free shipping on all T-shirts for the month of January.
You may worry about or encounter to the long shipping time orders with the dropshipping model for the reason that you can’t control the shipping period. If the shipping time is too long, you may be complained by your customers, even it has bad influence on your sales. However, there are some ways to have a better deal with a long shipping time. The article will introduce the typical shipping times, the importance of shipping times, and how to deal with long shipping times when dropshipping.
Typical Shipping Times
The shipping times are depending on where the item is sent from exactly and where it is going. Usually, if you are shipping to the United States with Aliexpress, regular shipping will be 19-39 days and if you do ePacket, it will be 12-20 days. These are very long shipping times. Sometimes, if you are shipping outside of the United States, the shipping can be as long as 60 days. And if the package gets lost, it will be more than 60 days. There is a web page that you can calculate the shipping time according to the item’s weight and size as well as the destination with different shipping methods. And it shows that CJ series are faster and cheaper by contrast.
The Importance of Shipping Times
It is obvious that shipping times are important. Customers are getting used to quite fast shipping these days, especially with Amazon Prime delivery, so there seems to be less tolerance for long shipping times. Usually, the longer your customers are waiting for their order, the bigger the chance is that they are going to ask for a refund.
However, long shipping times actually do not have a drastic effect on your sales if you deal with them well. Compared with worried about the long shipping times, you’d better know how to deal with the long shipping times when dropshipping, then long shipping times will not reduce the conversion rates.
Ways to Deal With Long Shipping Times
1. Choose Right Shipping Method And Suppliers
The best way to deal with long shipping times when dropshipping is to use faster shipping methods, such as use CJPacket and ePacket which provide a fast and affordable shipping option for light packages, if they are available and to look if you can find a supplier with the lowest processing time. Processing time is basically the time it takes before your supplier sends out the order. The lower the processing time, the shorter the delivery time for your customer. Usually, the processing time is between 1-7 days, related to the products and suppliers. You can ask your suppliers for the processing time, and check if there are suppliers using shorter processing time for the same products. In addition, it’s a good idea to choose suppliers who are able to ship with cheaper, faster services.
2. Make Shipping Times Transparent
You should be honest about your shipping times. Don’t make your shipping times a mystery. If the product worthy to be waited, the customer will not care about the shipping time that you have said and they have psychological prepare. However, if you don’t mention anywhere on your site or emails about shipping times, customers will get pissed off and think they’re being scammed, which may potentially ruin your dropshipping business.
So, how to write about your shipping times and where to write your shipping times?
You can have a description like this to show your shipping times, “We know a quick delivery is important to you and we are working hard to achieve that. But please be patient, all orders are normally shipped out within 72 hours and will take approx. 2-4 weeks to arrive from shipment.”.
There are multiple places that you can write your shipping times:
On your FAQ page. You can state your shipping times under a question like “When can I receive my package?”.
On your Product Descriptions. You can add your shipping times to your product descriptions. Or you can show an estimated delivery date.
On the order confirmation page. You can put shipping time after the order details on the order confirmation page, as well as show your sincere service.
Shipping Policy. You can add a Shipping Policy to your store, just like your Refund Policy. Then you can have all the information about your shipping in there.
In the shipping confirmation email. You can also add shipping times in the shipping confirmation email.
3. Have Good Customer Service
Having good customer service is an efficient way to deal with the long shipping times. Customer service could make or break the future of your dropshipping store.
①Reply to customers ASPS
Sometimes, customers may ask questions like where their packages are, you should keep in mind that try to reply them as soon as possible and when you are replying to customers, try to be polite and send tracking information to them.
②Update delivery to customers
You can also keep your customers updated about their delivery. Update to your customers as soon as the shipping status of their order changes. Some Shopify apps, such as Aftership, Trackr, Tracktor can help you update the shipping status.
③Make the refund policy
It is also a good idea to make the refund policy very clear which will increase your customer trust when the return policy is clearly stated on the product page. Kindly explain that you will make 100% refunds if the product is not delivered within this period of time of 30 - 45 days or 60 days.
4. Offer A Discount For The Serious Delay
If there is a serious delay, you should offer a discount on your own initiative which can reduce the customers’ complains and even make them happy. There is data that 99.5% of shipping complaints can be resolved in this way. And if your customers ask for refunds, follow your standard returns and refunds policy, as well as offer a discount.
It’s important to choose the right shipping method for your store. And it’s a first-impression indicator of what type of service you’re equipped to deliver your customers. You should choose the shipping method that can offer you the best deal which not only includes cost but also involves prompt timing, location, an impressive service quality, etc. Choosing the right shipping method means that you can offer the lowest shipping rates possible, still cover your costs, and offer the options your customers want. The article will introduce what to consider when choosing the shipping method and some of the pros and cons of the most common shipping methods to instruct you to compare shipping methods and choose the right shipping method.
Factors to Consider
1. Type of Products
The first factor you need to consider is what type of product you will be selling. You should consider the sizing and weight of your products. What’s the difference in size and weight from your smallest, lightest SKUs to your largest, heaviest SKUs? And you should carefully examine the size and weight restrictions, shapes, and offered services when reviewing different shipping methods. Some shipping methods may not be shipping very expensive or fragile items. And some may have certain restrictions like UPS have a weight limit of 150lbs (68kg) and shipping restrictions for products of certain sizes. Shipping large products that exceed the weight and size limit of certain shipping methods are subject to additional charges or special pricing.
If you plan to ship products both nationally and internationally, your store will need to incorporate both international and local shipping methods. It’s a necessity to combine both international and national shipping methods to ensure your packages can make it to your desired destination on time.
It’s important for you to review the expected time of delivery from local and international shipping methods. Customers have great demand for timely demands. They want to know when to expect their package and have it delivered to them fast. For local shipment, you may include same day shipping at a slightly more expensive rate to present your customers with the convenience of additional options. And for international shipments, you may be looking at a period of three days to two weeks, depending on the countries and shipping methods involved.
The shipping cost is mainly related to the size and weight of products, destination, as well as the shipping method. And for the same product to the same destination, the shipping method will have a decisive effect on cost. If you want to offer free shipping, the shipping cost will be especially crucial for computing profits and potential losses. It is necessary to find the right shipping method that provides services at a favorable price so that you can offer your customers the best shipping rates which will also secure their trust and loyalty.
You can research the shipping method’s tracking record to see if it has a good reputation and can rely on. In case that you choose a shipping carrier based on their cheap rates alone, but end up in deep waters that an item gets lost or delivery is delayed. Conduct a background check by reading FAQs and user reviews to learn which shipping methods have the least history of losing items and delaying packages. You can also find out additional benefits it offers and what other users think of it.
6. Tracking Services
It’s a remarkable sign to choose a shipping method with remarkable tracking services. Most reputable shipping companies have a website where customers can use tracking number to check on the package’s delivery status including sent out, already delivered, on the way, or have been delayed as well as the locations of the packages so it can be tracked at all times. It’ll also allow you to monitor deliveries and easily coordinate with customers if a shipping or delivery concern arises.
If insurance is an essential shipping feature for your store and products, take some time to compare shopping methods to find one that offers an affordable rate. The insurance generally doesn’t cost much but will bring peace of mind to both merchants and customers.
The Most Common Shipping Methods
EPacket is a popular shipping method to ship items that are under 2 kilograms from China conveniently. It can ship to 35 countries in the world and must originate in China. The price for the parcel will depend on the weight of the item and the destination the item shipped to. Its shipping time is generally faster than most other methods originating from China. Most often, customers receive their packages in 10 days, with 20 days being on the slower end. You can track your ePacket item.
However, it is still a Postal Service which means that it can be affected by many political factors as postal strikes, postal treaty. So there are often variables depending on where the package is sent.
CJPacket is also a popular shipping method to ship small items from China and it is a part of CJDropshipping which is a dropshipping platform that provides products sourcing, order processing, and shipping to dropshippers from China to all over the world. It can ship to most countries and regions all around the world. It is cheaper when the same product delivered at the same time. And it also provides a logistic tracking from origin to a destination that you can enter the tracking number and check the package’s logistic information. In another world, it provides complete logistics chain.
3. China Post
China Post is China’s Official Postal Service and is tied in with China EMS. It is a very common delivery service due to the fact that it is often the cheapest for the shipper, especially for companies who offer free shipping.
If you’re in China and speak Mandarin, it might actually be a good solution for you. And you can track packages online and call a help number to speak to a live person.
However, it is bad to ship internationally for it offers no help in English which makes it difficult to inquire about a package. And China Post will switch packages to a different carrier once it leaves China which causes even further confusion about where the package actually is. And it is often incredibly slow that customers receive their packages in 4 weeks, even 8 weeks.
4. AliExpress Packaging Service
AliExpress Packaging Service is typically free if you droshipping from AliExpress unless the customer pays for premium shipping. In some cases, the site may charge customers $1-$3 to use the service. A customer can pay $8-$10 extra to have the package get to their home as quickly as possible. It offers the customer the option to track the package and is fairly accurate.
However, there are some problems. They use several shipping services include Singapore Post, Posti Finland, Correos, DHL, Direct Link, and SPSR instead of one standard shipment service which makes shipping time vary immensely. And its delivery is quite slow that customers receive their packages in 20 business days, even 6 weeks.
Actual Weight: The weight after weighing, including the Gross Weight (G.W.) and the Net Weight (N.W.). The most common Weight is Gross Weight.
Dimensions Weight/Volumetric Weight: Weight calculated by the volume of cargo according to certain conversion coefficient or calculation formula.
Chargeable Weight(C.W.): The weight to calculate freight charge or other incidental charges.
Its general calculation method of express delivery and air transportation:
Dimensions Weight = Length( cm)* width (cm)* height (cm)/6000,
Means the conversion coefficient of volume and weight is usually 1:167, that is, one cubic meter is about 167 kilograms.
Chargeable Weights = either Gross Weight or Dimensions Weight. Compare the Gross Weight and the Dimensions Weight, whichever is heavy is Chargeable Weight, also called Full Throwing Weight.
Chargeable Weight= (Gross Weight + Dimensions Weight)/2, also called Half Throwing Weight.
Chargeable Weight= Gross Weight (If the Dimensions Weight is no more than 20kg), also called Free Throwing Weight.
Generally, for heavy goods/deadweight cargo, the charge shall be based on the Gross Weight, while for light goods/bulky cargo, the charge shall be based on the Dimensions Weight.
For express delivery and air transportation, the goods that Dimensions Weight is heavier than Gross Weight are light goods/bulk cargo, such as cotton, that’s to say if the goods’ weight of per CBM is heavier than 166.67 kg, the goods are heavy goods/deadweight cargo.
Gross Weight: 15kg
Dimensions Weight: 50CM X 50CM X 48CM /6000 =20kg
If Full Throwing Weight: Chargeable Weight=20kg;
If Half Throwing Weight: Chargeable Weight=(15+20) / 2 = 17.5 kg=18kg;
If Free Throwing Weight: Chargeable Weight=15kg.
For sea transportation, its calculation is simple than air transportation, the LCL business in China basically divides heavy goods and light goods according to the standard of 1 cubic meter equals to 1 ton. Among LCL, heavy goods are rare, and almost are all light goods, and the freight charge is calculated according to the volume.