[HCD Review]: 4 Awesome Shipping Tactics

With 59%* of shoppers saying they consider shipping costs when purchasing on-line, and 44%* abandoning their cart due to high shipping costs, determining what to charge for delivery just might be the second most important decision that an eStore will ever make (after deciding to launch in the first place).

Here's our 4 awesome shipping tactics:

1. Keep it Simple: Flat fees are best
2. Offer Incentives: Offering free or discounted shipping based on minimum order totals is a proven tactic
3. Be competitive: Know your opposition and respect your customers - they'll know if you're gouging them
4. Use a disclaimer: Reserve the right to re-negotiate shipping costs post-order if necessary

We all know it ACTUALLY COSTS money to ship orders, but with customers voting with their wallets, what is the Goldilocks amount to charge for delivery?

To help you decide, we reviewed some Australian eStores to see what they are doing... (Note: HCD has no affiliation with any of the businesses reviewed. We have chosen websites randomly. All amounts are in Australian Dollars).

Target charges $9.00 for delivery of small orders under $75.00, or free shipping for small orders over $75.00. Their delivery charge for large items is $15.00, or $30.00 for 3 or more large items. Target also offer a "Click and Collect" option, which allows the customer to pick up their order from selected Target stores depending on the items in the order. This option is free for orders over $40.00 or $5.00 for orders under $40.00. 

HCD Note:A $5.00 administration fee to collect a pre-paid order in-store...really?

Myer offers standard delivery for $9.95 for orders under $100, and free delivery on orders $100 and over, except for Goods that require Special Delivery. There is also the option to pick up the order from selected Myer stores dependant upon the items in the order, which doesn't have an additional fee.

HCD Note: 5 Stars from us Myer - Target take notice!

The Iconic offers a few choices. Customers can pick up their order from a Parcel Point for free, which is useful if you are living in a major city. Otherwise, the cost for shipping by Australia Post is $7.95 anywhere in Australia. Free overnight shipping is available for orders over $50.00. For an extra $2.00, delivery is available within 3 hours to metro areas in Sydney or Melbourne.

HCD Note: We love the express options and with a low $50.00 threshold for free delivery, this is about as good as it gets.

That Online Shop offer free delivery for orders over $100.00, otherwise they charge $7.00 per item for standard delivery or $15.00 flat for express delivery. They also provide free gift wrapping with a gift tag. The terms specify that a surcharge may apply if delivery is to a non metropolitan postcode and the item is bulky or fragile, dependant on the excess charges applied by the courier. Delivery is available to international addresses at the rate of $40.00 to NZ, USA, UK or Asia, unless the items are over 2kg, where shipping costs are negotiated personally with the customer.

HCD Note: Full marks for the free gift wrapping and gift tag, and the incentive to make a minimum $100.00 purchase or select express shipping is commendable. Alas, $40.00 for international shipping for orders less than 2Kg may discourage many overseas customers from purchasing, and, as there are no weights included with any product details, customers have no way of knowing whether or not they have exceeded the 2Kg limit.
Sadly, we experienced technical problems on subsequent visits to this site, which we have pointed out to the website operators. This highlights the importance of technology that works.  

Oxfam Shop has a different approach to delivery fees. They have set shipping fees at 15% of the order total, limited to $7.00 minimum and $17.00 maximum, or $25.00 for express delivery. They also specify that large items may incur a delivery surcharge. Oxfam offer international delivery too, which is 15% of the order total, set between $40.00 and $100.00.

HCD Note: At first glance we weren't sure about this approach, however, the actual delivery costs are reasonable. Our recommendations would be to offer free shipping once the order total exceeded a nominal amount.

The T2 Tea on-line store have set delivery fees to $10.00 flat rate for standard delivery, and $20.00 flat for express delivery. Orders over $60.00 are shipped free within Australia. International orders have a different set of fees which change dependant upon the order total.

HCD Note: Full marks - but remember - this website does not need to factor oversize or bulky orders, in which case, a disclaimer would be strongly recommended.

Summary
While there are variations, the current trend for delivery fees is a flat rate ranging between $10.00 and $20.00 with an offer of free shipping for more expensive orders of around $100.00.

Remember, customers shop around to get the lowest price possible, which includes the delivery fees. Customers will justify buying an item that is a few dollars more than on another website, if the total including shipping still ends up being cheaper. Having a flat fee also makes the process a lot easier. Customers know up front what they can expect the shipping costs to be.

HCD Tactic: Review the cost of sending an average order to each of the major cities in Australia through your preferred courier(s).

Set flat fees that cover most bases while remaining in line with your competitors. Aim for a delivery fee of $10.00 - $20.00 for orders within Australia and encourage customers to spend more by setting a free shipping threshold amount.

HCD Tactic: If you find you simply can't compete with shipping costs offered by your competitors, consider investigating out how they do it...do they have a better deal with a courier or lower cost packaging and warehousing costs?  

HCD Tactic: Where necessary, use a disclaimer to reserve the right to adjust shipping costs (after the original order is placed) for oversize or bulky orders, or orders being shipped to remote or otherwise difficult delivery areas.

HCD delivers enterprise e-commerce and mobile commerce solutions to customers serious about maximising return on investment. Our proprietary technology caters for just about any shipping configuration imaginable. For more information please contact us for a confidential discussion.

* Statistics from VoucherCloud's infographic Consumer Psychology and the E-Commerce Checkout.