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The impact of shipping costs on pricing: how to incorporate them

Shipping costs have a significant impact on the decision-making process for online shoppers. Consumers are often hesitant to purchase if shipping costs are too high, and sometimes even refuse to complete the checkout process. Ultimately, customers want a simple, hassle-free shopping experience with free or low-cost delivery. They don't want to calculate how much shipping will cost before finalizing the purchase.

So, as an ecommerce seller, what is the best way to handle shipping costs and pricing? In this article, we'll explore the different strategies you can use to ensure you keep your profit margins high without alienating potential customers. It's a delicate balance, but with a bit of planning, you can see to it that everyone wins.

Why are shipping costs so important?


Shipping costs can have a huge impact on the success of an ecommerce business. It's important to get the shipping cost right, as it can make or break a sale. If the cost of shipping is too high, customers may abandon their carts and look elsewhere for a better deal. On the other hand, offering free shipping can be a great incentive to encourage customers to make a purchase. Research shows that your shipping policy can have a significant impact on conversion rates and total order value. Here are some interesting statistics:

  • A massive 68% of online shoppers in the United States, surveyed from 986 participants, reported they did not buy when a retailer failed to provide free shipping.

  • Free shipping is a powerful tool that has been found to significantly increase average order volume (AOV) by an astonishing 97%.

  • Free shipping has also been shown to reduce cart abandonment by 18%.

It's clear that if done right, shipping costs can be a great way to increase sales and profits. Also, when done wrong, shipping costs can be a major deterrent to customers and lead to lost sales. It's not rocket science, but it is something that requires careful planning and consideration. Your shipping choices can make or break a sale, so it's important to proceed strategically when determining the best shipping options for your ecommerce business

Incorporating shipping costs into pricing strategies


When you're trying to figure out how to incorporate shipping costs into your pricing strategy, your main goal is to not deter customers without sacrificing your profits. Online shoppers want simplicity, and one way to provide this is by including the cost of shipping as part of your product prices. This way, customers know exactly what to expect when they place an order and won't be surprised by any hidden fees.

Of course, this makes free shipping an attractive option because it eliminates any additional costs that could potentially deter customers from completing their purchase. However, it isn't always feasible – particularly for sellers with a low margin or low-cost items. So how do you integrate the cost of shipping into your pricing and still make a profit? Let's explore some of the ways you can tackle this challenge below.

  • Offer free shipping when customers reach a certain order value. This encourages them to buy more items, and the cost of shipping can be spread across all items in the order. For example, you could offer free shipping for orders over $50. This strategy has been shown to boost average order value, as customers are more likely to add more items to their basket to qualify for free shipping.

  • Use promotional codes to offer discounts. This is a great way to incentivize customers to make additional purchases. Promo codes could be issued for bulk orders or in exchange for signing up for a shipping subscription.

  • Offer a flat rate shipping fee. This can be beneficial for smaller items that don't require much in the way of packaging. A flat fee also makes it easy for customers to calculate the cost of shipping before they make a purchase.

  • Provide different shipping options. Sometimes your customer doesn’t need a product to arrive quickly. As such, offering different shipping options – such as standard or express delivery – can be a great way to offer them the flexibility of choosing an option that suits their budget.

  • Create a shipping loyalty program. Many customers are loyal to retailers that offer great shipping options. It's not just a great way to retain customers, but also encourage them to shop more often. You could offer your loyalty program members lower than normal shipping costs or even free shipping for all orders in exchange for a monthly or yearly fee.

Partner with an affordable third-party delivery provider like Gelato. When your shipping partner offers affordable shipping rates, you can keep your overhead costs down and pass these savings onto customers. Read on to learn more about the benefits of partnering with Gelato and our Gelato+ shipping discounts.

Sign up to Gelato+ for great shipping discounts

Gelato gives ecommerce store owners an effective way to provide their customers with customized products, on-demand. You can integrate Gelato with your ecommerce store, allowing your customers to pick their products and leaving us to handle all the customization, packaging, and shipping for you. The best part is that we offer fantastic shipping discounts when you sign up for our Gelato+ plans.

Gelato also offers live shipping rates, which provide your customers with the most accurate and transparent shipping prices. Unlike fixed shipping rates, live shipping rates consider multiple factors such as the destination, package weight, and shipping method. They then display the most accurate pricing possible to the customer in real time. You can also choose to display a free shipping option so that your customers will be able to purchase items with the shipping costs included. 

Depending on your average number of orders, you can pay a monthly or yearly subscription and get between 30% and 50% off shipping costs. What does this mean in real terms? You can offer your customers cheaper shipping rates and fast-track your ecommerce growth. If this sounds interesting, click here to learn more.

Shipping – your secret weapon


Shipping is a great way to increase sales and profits, and with the right strategies you can use it to incentivize customers and create loyalty. By carefully planning your shipping costs and partnering with a third-party logistics provider like Gelato, you can turn shipping into your secret weapon for success. It's time to start thinking outside the box and get creative with your shipping strategy!