Shipping Strategy for Amazon Sellers

By Tami Ben-David
Published on October 14, 2014 | 1293 views

Shipping_Strategy

The world of shipping can be a rather complex one for an Amazon seller. If you fulfill your items through Amazon (FBA) then the shipping charge is automatically set to zero, and all you need to do is work out how to price your product in a way that will cover Amazon’s FBA fees. But what if you fulfill your orders yourself? How do you decide on the best strategy for charging your customers?

There are 3 main options for shipping charges and some other alternatives, but you’ll need to think carefully about which is best for you.

4 shipping methods to try out:

1. Free shipping

Free shipping has become an increasingly popular option for online sellers and has garnered a lot of marketing appeal. It has also shown a lot of promise in reducing shopping cart abandonment. However, shipping is never free (obviously!) and someone will have to pay.

If you decide to offer free shipping, you’ll probably only want to do it for domestic orders (since prices can sky rocket for international orders), but know that you’ll then have to do either increase product prices (either fully or partly) to cover costs or pay the full price yourself out of your profits.

Deciding on the free shipping avenue will often come down to what you sell and what your margins are like. Customers who know they’re purchasing unique or luxury products often won’t mind paying a shipping fee, whereas if you’re selling a more competitive item, where free shipping and low prices are the norm, charging an extra fee for shipping may result in the customer looking elsewhere for the same product, shipping fee free.

Doing your research and knowing your numbers about things like how much each of your products actually costs to ship, how your competitors handle shipping, and your allowable profit margin, can help you make the right decision.

2. Real Time Shipping Rates

Another effective shipping strategy is to charge real time carrier rates for shipping. The only problem is that the Amazon platform does not integrate in real-time with various couriers to fetch shipping options and live pricing. This could be due to the fact that since Amazon themselves don?t change their shipping rates based on zone/ distance, they don’t want to confuse buyers by letting third-party sellers do it either.

But, what you could do is every so often (if you have the necessary manpower and patience!), is to check what prices are like using the shipping calculators of various couriers such as USPS, FedEx or the UK’s Royal Mail, and then align your shipping prices accordingly.

Of course, they’ll always be small discrepancies that can happen, but the majority of the time you?ll end up breaking even between the shipping charges you collect and what you ultimately have to pay to ship the package. And more importantly, if your customers question you on your shipping, you can show them that you aren’t inflating your item’s price or shipping fees to cover the charges.

Although it doesn’t necessarily have the same persuasion power free shipping does, real time rates do prove to your customers that you are honest, and it’s also an extremely good option for heavy or oversized shipments that you simply cannot or do not want to allow to ship under a free shipping promotion.

3. Flat Rate

An alternative option is to decide on one flat rate for shipping any of your items to the customer. This will mean that you will not drastically undercharge or overcharge your customers.

Flat rate shipping usually works best when you have a fairly standard product line of similar size and weight products, and it will usually require a bit of preparation as you need to figure out your average cost of shipping a package.

4. International Shipping

Deciding to ship internationally is most certainly an attractive idea. Not only will it open up your horizons by enabling you to reach many more customers in many more destinations, but, if you?re successful, it will also guarantee you higher profits. This is especially true since Amazon does not have a marketplace in every country, yet people in every country shop on Amazon. So if you’re a UK seller who offers international shipping, for example, you are likely to have customers all over Europe and beyond.

Shipping Strategy for Amazon Sellers

However, when deciding to ship internationally, be sure to consider any potential issues. It is not only much more expensive, but you are at greater risk for fraud, and there is a great deal more uncertainty overall.
Whether you ship domestically or internationally and whichever strategy you decide on, take care not to turn your shipping policy into a profit center. Customers will notice if you try to make money off shipping and they will not be happy!

Good luck!

Sources:

http://www.shopify.com/blog/14069585-the-beginners-guide-to-ecommerce-shipping-and-fulfillment

http://madefreshly.com/blog/how-to-sell-online/tips-on-how-to-ship-your-products/

http://smallbusiness.chron.com/estimate-shipping-costs-online-stores-24353.html

 

About the Author

A British ex-pat, Tami been writing and content-strategizing for Israeli tech start-ups for the last 5 years. When she's not writing nerdy content, you can find Tami on open water charity swims or traveling to far-flung countries.

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