Flat rate shipping: advantages and disadvantages for e-commerce

Although working with e-commerce frees the entrepreneur from some worries and expenses (space rental, infrastructure, etc.), online selling presents other dilemmas, such as the definition of shipping prices and order shipping methods.

When it comes to the shipping cost, there are several options that the seller can offer, such as free shipping, real-time quotation, and flat rate shipping.

What is flat rate shipping

The flat rate shipping option allows the merchant to specify a common delivery rate for all products.

This type of shipping is useful for a store that has a delivery system for a specific region, for example.

Online retailers that use flat-rate shipping charge each customer the same amount for delivery, regardless of what the buyer orders.

This is a very interesting option for small and medium-sized merchants who cannot offer free shipping, but want to attract the consumer with another economical delivery proposal.

Furthermore, it is less complicated than calculating shipping per merchandise, which varies depending on several factors, such as the following:

• Weight and volume of products;
• Load characteristic;
• Delivery location or zip code;
• Risk management;
• Taxes and tolls.

However, to determine the value of this fixed fee, it is necessary to analyze your e-commerce shipping data.

You’ll need to take a look at the average shipping cost of past orders to determine the best rate for your business.

From this data, you’ll be able to make sure you’re not undercharging (which could hurt your profit margins) or too much (which could discourage buyers from completing an order).

To reach this value, it is recommended to carry out a study on the best-selling products in your online store and their average weight and size (and don’t forget to limit the delivery distance).

Generally speaking, by knowing that the cost of flat rate shipping does not change, your customers tend to buy more in the same order.

Therefore, when adopting this strategy, it is important to define how many items can be placed in the same order, or make it clear how many products the buyer can place in the cart at once.

Advantages of Flat Rate Shipping

While offering flat rate shipping sometimes means charging less than you pay to ship larger orders, you’ll get the difference on smaller shipments.

As long as you’ve correctly calculated the best rate for your business, your shipping costs will start to even out.

Check out some benefits of offering flat rate shipping:

• Buyers know the total order price before checkout:  Nearly 70% of shopping carts are abandoned, and a quarter of shoppers who abandon their carts cited “unexpected shipping costs” as the reason.

• It’s a compelling benefit to use as marketing: Free shipping is a great motivator for online purchases, which is why it is often used as a lure in online marketing. Unfortunately, offering free shipping simply isn’t an option for every online store. The good news is that ads promoting “$10 shipping on all orders” are still effective. Knowing there won’t be any nasty surprises can entice indecisive shoppers to visit your website.

• Flat rate shipping encourages shoppers to spend more: If a consumer knows that regardless of the number of items ordered, shipping costs will remain the same, they will feel comfortable adding more items to their cart.

Example: After American supplement retailer GNC started offering $3.99 flat-rate shipping, the store noticed that its customers started buying more when they knew the shipping costs in advance.

Disadvantages of Flat Rate Shipping

Although this method of charging freight offers good advantages for both merchants and buyers, it may not be the best option for everyone.

Here are some cons of flat rate shipping:

• May not be profitable if you sell products that vary greatly in size and weight: If you work with items of similar size and weight – for example, clothing or jewelry – this is a good option. However, if your products vary in size and weight – like household appliances – this isn’t the best deal for your online store. You will end up charging the same amount to deliver a toaster and a refrigerator, for example.

• Customers won’t want to place an order if shipping costs are almost equal to the purchase value: If your e-commerce store sells lower-value items and a buyer is only interested in making a small purchase, they may be discouraged if the shipping cost is almost the same as the product’s price. On the other hand, this is also an advantage if you are trying to prevent very small orders.

• Calculating the correct rate requires more research and planning than other methods: Making sure you’ve chosen the best rate for you and your clients means months of testing and lots of trial and error. Therefore, if you don’t have the resources to do this type of data analysis, offering differentiated shipping rates based solely on the individual order value may be your best option.

Flat rate shipping could be just what you need to make your online store even more profitable. Or it could be exactly the opposite of what you need.

To make the best decision for your e-commerce, carefully consider each of the pros and cons listed above.

Best delivery option for an online store

Regardless of the established shipping rate, a successful e-commerce guarantees one thing: safe and on-time delivery of the merchandise.

Many customers prefer to pay some shipping costs if it means receiving their purchase faster.

For this reason, express delivery is a great differentiator for e-commerce businesses that want to remain competitive and achieve a good rating.

Keep in mind that delivery has a direct impact on customer satisfaction, and this influences your sales volume.

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Specialized in e-commerce, the Delivery365 account with tracking technology, own system of online shipping quote, methods for receiving payment online and much more.

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