Shipping Online: The Buck Starts Here

facing the ocean

When customers shop online, a vendor’s shipping costs can become as important as merchandise prices, item selection and customer service. Let’s examine the costs, both financial and figurative, to customers, merchants and the world in general.

Cost to Consumers

In general, domestic shipping for online stores is broken down by shipping destination and weight (this excludes any free shipping deals or flat rate shipping offered by ecommerce vendors). Most online stores based in the US use Fedex, UPS or USPS for their shipping needs, and rates can vary greatly between these services given a particular package’s specs.

Due to changes in the world economy and the rise of fuel prices, most parcel companies have raised their rates in the last few years, which have been passed down to the merchants, and in turn, the consumers.

There are other shipping factors to consider when buying online. If a customer decides to return an item purchased online, charges may be incurred for restocking at either a flat rate or a percentage of the purchase price. Additional charges made to the consumer for their online purchases may include special handling charges for packaging delicate items, additional insurance for items over a certain price, hazardous material charges or special delivery charges (for example, having an order delivered on the weekend). Some odd shaped, oversized, or live items may warrant shipping costs significantly above ordinary ground shipping costs – for example, bicycles, surfboards, live animals or motorized vehicles.

Cost to Retailers

Shipping charges oftentimes hinder sales conversions, as nearly half of shoppers have been found to abandon carts once they see shipping costs added. Rising shipping costs affect retailers as well as consumers, as ecommerce stores may find themselves offering shipping incentives at a loss in order to stimulate weak sales and build consumer confidence.

Small online businesses tend to pay more in shipping costs than larger businesses, in part due to higher rates paid due to lower shipping volume. Many e-tailers also find themselves absorbing the cost when it comes to returns, especially if they have offered any shipping incentives at a loss or if they do not deduct shipping costs when refunding a customer.

Cost to Environment

Beyond financial costs, environmentally-minded consumers and retailers may find themselves at odds with the environmental impact of shipping an item purchased online. For an individual package, shipping by air by far incurs the greatest use of energy and emits the most carbon, followed by shipping by truck, shipping by rail, and finally, shipping by sea. However, overall shipping by sea freight emits the most carbon emissions annually as it is utilized by 90% of global trade.

Have you experienced shipping issues with your ecommerce store, or did you recently abandon an online purchase once you saw the shipping charges? Give us your thoughts in the comments section.

[Photo credit: numberstumper]

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