At Intuitive Shipping Inc., we believe the first step to building a shipping strategy is understanding the tools you need to do the job right.
A common theme we come across is that unless someone works in eCommerce shipping, they tend to lump the multi-step shipping journey into one step. In reality, eCommerce shipping has three key stages, and all are equally important. Your shipping strategy should take each stage into account so you can ensure you are using the right tools for each job, creating a streamlined process for yourself and your customers.
The calculation is the first step of the customer’s shipping journey but is the last step to implement in your store. It is where the cart contents, rules, and shipping destination in a cart all come together to let the customer know how much each shipping option will cost. If the calculation is wrong, it means that customers will not pay the right price for shipping.
Where it happens
Shipping calculations happen in the cart by using a shipping calculator, or during checkout when the shipping costs are displayed.
The right tool for the job
It is important to understand the difference between the two tools used for calculation. A cart calculator will not display shipping rates at checkout, and a checkout calculator will not display shipping rates in the cart.
The Customer Cost
The customer cost is selected at checkout and determined by both the calculation and the shipping option a customer ultimately selects. In most cases, customers will choose the cheapest shipping option available to them, however, this is not always the case. Some customers will choose expedited shipping or prefer a specific carrier and select a rate that is not the cheapest option shown. You can guide your customers to choose a specific rate, but ultimately, the choice is up to them and what they are willing to pay.
Your checkout shipping calculator will determine the shipping options and costs your customers have available to them at checkout. Whether you require an app for this area of the shipping journey is completely dependent on your shipping mix and how much you want to control the shipping journey.
The Merchant Cost
The merchant’s shipping cost is determined at checkout when a customer selects their shipping option/cost. It is determined by the items purchased, where the order is going, the shipping method a customer selects at checkout, and handling fees associated with an order. In a sense, shipping is paid for twice; at checkout when the customer pays for shipping, and during fulfillment, when the merchant pays for shipping.
It is important to recognize that the merchant cost to ship is out of their control, making it especially important to ensure that the calculation and rates displayed to customers are accurate. If there is an error in the calculation, the customer will not pay the right price for shipping, and the merchant can lose profit on a sale.
If you are processing more than 20 orders/day, Shopify’s built-in fulfillment options may become cumbersome and not offer the options you want for the final mile of your customer’s shipping journey.
The calculation, the customer cost, and the merchant cost are the three key stages of the shipping journey. By understanding this foundation and the different tools available, you are on your way to designing a shipping strategy for your store that scales.
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