How shipping and handling fees affect customer acquisition, retention and purchase orders
Oct 06, 2016 - GROWTH
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Olivier Stapylton-Smith

Don’t you hate it when you get surprised by an annoying, last minute shipping or handling fee? Can I hear a slight resounding yes... Well so do we! So today, we are going to show you how we avoid those nasty little surprises.

SHIPPING FEES

Shipping fees vary depending on the mail services you use but normally are based on the method of delivery, the weight of the package and the distance it takes to deliver. This gives you an idea for how much it will cost you to send it and then you can set your price. The two most common shipping fees are Flat Rate and Calculated shipping fees.

FLAT RATE shipping fees are where the cost of shipping for your company is the same regardless of the product. This means that you lose some money on larger products but make up that money on smaller products, the aim is to average out the total shipping fees for your company to essentially break even.

CALCULATED shipping fees are used to figure out the specific cost of shipping each individual product and either covering that cost exactly by adding it at the end of the purchase or adding a little extra cost to make a small profit. When looking for a fulfillment partner a seller should look at base costs and shipping fees as well!

HANDLING FEES

Handling fees include the cost of packaging materials (like boxes, bubble wrap and labels), carrier fees (the time it takes to package everything up and drive the package to the mailing service) and the time it takes to design your shirt. But here at Moteefe we believe that the base cost offered on your platform should include handling fees. So we don’t charge you a penny extra for them!

CONVERSION RATES

Shipping fees have a big impact on your conversion rate (your ability to turn a window shopper into a big spender). Remembering to watch your conversion rates is really important because...

  • According to Marketing Charts, 55% of people who left their baskets at checkout, did so because the shipping fees were too high. High shipping fees often leads to people leaving not purchasing anything.
  • Not only do shipping fees directly affect your conversion rate, but they also affect the amount that people will purchase in one go. When your shipping is offered for less, consumers spend more on each product they buy.
  • Moteefe can ship from the EU which means that we deliver with a greatly reduced handling and shipping fee compared to US based platforms. A lower cost means a better conversion rate!

CUSTOMER ACQUISITION

When comparison shopping, UPS found that shipping fees are almost as important as the price of the product with 23% of consumers looking at shipping costs and 26% looking at product pricing. This is important to think about when looking to gain new customers. Lower shipping fees is very important for attracting new customers, for example...

  • New customers will be more likely to place an order if the shipping fee is lower; even lower shipping for first time orders would encourage more products to be bought in each individual purchase.
  • According to comScore, when consumers were asked what the best way to improve online shopping retailers was, 58% said discounted shipping fees
  • Showing your shipping costs early and clearly is a good way to avoid surprising potential customers at checkout since it's not seen as a hidden cost.

CUSTOMER RETENTION

Keeping customers is key to any business. If you have high shipping and handling fees then you aren't likely to have many return customers. UPS and comScore say that, low or flat rate shipping fees make customers 54% more likely to return. If you want to keep your customers around for longer, then check this out:

  • Reducing the shipping cost based on repeat purchases or for buying multiple products in one go means that customers are more likely to come back for more. For example, Moteefe reduces the cost of shipping up to 67% for each added product.
  • Flat Rate shipping fees tend to appeal to long time customers because it means that they know exactly how much everything will cost in the end and they can plan for it.


PURCHASE ORDERS

How much people buy and spend can change based on the shipping fee, as people are likely to spend more if the shipping cost is lower. However, shipping fees that help you gain customers are more likely to result in smaller purchase orders because people need to warm up to you and your company. When customers shop online, they don't want to have to wait weeks for something to be delivered. If you're offering free shipping that means people will be willing to wait longer, but the higher the cost, the less time people expect to wait, so plan it out!

Final thoughts…

Hopefully this gives you an idea of how shipping and handling fees might affect you when you’re selling your designs. Whether you're looking to design a shirt or start your own clothing line, here at Moteefe we want to help you as much as we can so we offer low and reliable shipping fees to benefit you and your fans.

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