How to Calculate Shipping for Online Sales

How to Calculate Shipping for Online Sales

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Selling a tangible product on your own website means shipping it, and the shipping strategy impacts sales. In fact, in ecommerce the shipping cost should be part of the product pricing strategy.

What is the Best Shipping Tool for an eCommerce Website?

The number of products, transactions and delivery area determines the best tool or ecommerce platform to support competitive shipping rates and backend operations.

If selling only a few products and shipping them domestically, then knowing your shipping costs and charging a flat rate can keep things simple.

But there are software tools for larger ecommerce sites or for those who ship internationally that calculate shipping costs, integrate with your ecommerce solution for checkout, and also help keep you productive by printing mailing labels and working with your inventory system.

Some ecommerce platforms have basic shipping rate functionality built-in. Others use plugins and extensions to do the job. Some use a combination of both giving online shoppers more options.

There’s also a big difference between small business and enterprise ecommerce solutions. Enterprise ecommerce systems have advanced shipping software that can calculate shipping costs worldwide. It lets you configure flat-rate shipping, bundle shipping, and even complex shipping scenarios with multiple warehouses.

Examples of Online Shipping Rate Tools

From small to large, simple to complex, software that calculates shipping rates and other functions varies from free and built-in to specialty extensions added to more sophisticated ecommerce platforms. Below are a few examples:

Woo Commerce Shipping Rate Calculations

Great for a DIY or small website Woo Commerce is a WordPress ecommerce plugin. It has built-in settings for specifying shipping zones, flat rate shipping, and even free shipping. Extensions (add-ons) fetch current shipping rates
from various carriers.

Woo Commerce has a marketplace of extensions, both free and paid starting at $79 per year, that handle shipping rate calculations – and everything else. There are extensions for shipping outside the USA, extensions that track shipments, or all-in-one extensions that calculate taxes and shipping rates, integrate with your inventory system and help print invoices and labels.

How Magento Calculates Shipping Costs

Like Woo Commerce, Magento uses extensions to expand functionality, but has more powerful tools built in. Magento lets admins setup Shipping Experiences to create rules that automate the shipping process. For large sites with lots of items each shipping experience starts with the user checkout. The admin creates the experience with warehouse locations, preferred carriers and other rules.

Using more sophisticated tools for shipping rates and scenarios helps you implement your shipping as part of your overall pricing strategy and stand out in the market. For example, the ability to specify free shipping on selected items, with a minimum order amount, to a particular delivery area could move product out of the warehouse faster when nothing else works.

Shipping and Order Mangement Tools

Once the shipping is calculated and the order is submitted, some online sellers use a shipping and inventory management solution to consolidate the work.

For example, ShipStation is full-service online shipping and order fulfillment software. It works with multiple carriers and sales channels, and has subscriptions starting at $9.00 per month.

ShipStation lets online sellers combine their orders from multiple sales channels, print labels, automate tasks, and eliminate double data entry by intergrating with most popular ecommerce solutions. Plus it’s web-based software so nothing to download.

Other shipping solutions can be added to or are included in ecommerce solutions, depending on the business needs.

Shipping Strategy for Competitive Advantage

The shipping strategy – like those shown below – determines the need for shipping tools. When shipping is important, part of the pricing strategy, and delivery options are complex, it can pay to start with an ecommerce solution that meets your shipping management needs out of the gate rather than upgrade later.

  1. Free shipping
  2. Flat rate shipping
  3. Table rate shipping – complex scenarios
  4. Display rates from carrier
  5. Shipping as profit source

Flat rate shipping and free shipping can be powerful marketing tools that help drive traffic and conversions. If you are willing to average your shipping costs to offer an attractive flat rate, or absorb shipping into the product price; then basic controls for setting shipping options are fine.

But you can also find specific extensions, plug-ins, and other tools that offer advanced options and shipping rate features for bundles, bulk shipments, and etc.

Straight-forward shipping policies keep things simple, but shipping charges can also drive profit and competitive differentiation. Taking full control of your online store’s shipping means that you can offer the lowest shipping rates possible while covering costs, and offer the options your customers want.

Best Online Shipping Rate Calculation Software

The best solution for calculating shipping rates on your ecommerce site depends on your strategy, the number of products, the ecommerce platform, the delivery area, the packaging and weight, and the competitive landscape too.

Shipping rate calculation for a small website can be done on the cheap. Free extensions and good research into your shipping costs for a limited delivery area and number of products can save money. But for sites with the following:

  • Higher volume transactions
  • Medium to large product catalog
  • International customers
  • Price-sensitive competition

Invest in a more powerful and expensive ecommerce solution with these crucial shipping features built in.

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