Thinking of an Online eCommerce Store? Part #1: Freight Costs

Freight Costs & your eCommerce store:

As with everything in business you need to make sure you have planned properly and researched thoroughly, as a wrong decision in the design stage will cost you thousands and will lead to dozens of hours a week in maintenance, inventory control and double handling.

Determine freight & postage fees early on

Setting shipping costs can be rather difficult. You need to research the fees and costs involved in shipping around Australia and the world. There are numerous shipping options available, live shipping rates may work for a large firm, set-fee might work for small eCommerce stores.freight-costs-shopping-cart

Things to consider when setting your Freight fees:

  • Will you selling overseas?
  • How long does it take to pack each item? If packaging and handling takes an hour (such as artwork) then this needs to be factored in
  • How urgent do your customers want their product?
  • Can you use various carriers in different situations? For example you would use Australia Post for Australia-wide delivery, and a courier company for local delivery if its more cost effective.

Six Options for your freight costs:

  • Live Shipping Rates: Some advanced eCommerce stores have a live shipping rate ie. the customer types in their postcode and the goods they are purchasing, the weight is calculated which informs the customer how much they owe in shipping fees. This has been fairly limited in Australia but Australia Post is slowly coming around.
    • Issues: Customers don’t know the full cost of a purchase until the last minute in a sales process
    • Benefits: You can accurately keep on top of your shipping costs
    • Issues: The development time and budget to design a live shipping rate will be greater than other freight cost options.
  • Free shipping: If you know how much shipping will cost, you can factor freight costs into your cost margins. This approach suits larger dollar sales.
  • Free Shipping for orders above $100: This is an incentive for customers to increase purchases.
  • Flat Shipping Rate: One fee for all orders no matter how big or small.
    • Issues: This can get costly if many customers order from far flung places
    • Benefits: Easy to understand costs for the customer so they know immediately how much costs will be.
  • Various Shipping Rates: Depending upon your main delivery locations you can set shipping rates according to weight or general location.
    • Benefits: Accurate shipping costs so you’re not out of pocket
    • Issues: Can be complex to the casual viewer.
  • 2 Different Rates: You can have one rate for standard 3-4 day delivery but you could have a second price for next day delivery.

As you can see there is no simple solution to creating an eCommerce store.

If you’d like to discuss the various aspects of setting up an eCommerce store further, why not get in touch?

 

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