Principles of Shipping & Handling

Maintaining effective shipping prices is one of the key factors in running a successful e-commerce store. If your shipping costs are too high you could discover that your store suffers cart abandonment issues. Whereas if they’re too low, you’ll soon be eating into your profit margins, which is also the case if you don’t maintain your shipping settings as costs increase.

For many start-ups, and even seasoned retailers, getting shipping right can quickly become confusing and all too often we pluck figures out of the air. So getting to grips with the principles of shipping and its terminology in Evance will be our first step before exploring a few ways in which you can manage shipping costs in your store.

Terminology

There are two important terms to understand in Evance when it comes to shipping:

Postage

Describes the service, duration or method by which goods are transported by courier to your customers. 

Your Postage settings should not be courier specific but will depend on your couriers’ service and whether you are shipping within the UK and/or overseas. For example common postage settings might be:

It’s always a good idea to take a look at well established e-commerce stores to see how they describe available postage options on their sites’, but keep in mind that Postage by itself does not determine the cost of shipping.

Shipping Class

Classifies how easy, or how difficult, a product is to pack and ship to a customer.

Each product within Evance can be associated with one Shipping Class. If all of your products are of a similar size, weight, robustness or fragility, you may find that you only need the default “Standard” Shipping Class. This is normally the case for specialist or niche stores, but if your products have varying considerations when shipping you may need to set-up multiple Shipping Classes.

Calculate Your Own Shipping Costs

Many e-commerce start-ups only consider courier costs when calculating shipping, but there are several costs in shipping and handling that you should consider:

Packaging

You should maintain a list of packaging suppliers and their costs for boxes, document sleeves, tape, bubble wrap, tissue paper or any other packaging materials you’ll stock for packaging products during your dispatch process. Buying in bulk from wholesalers will reduce your costs dramatically compared to buying from high street stores in small quantities. 

Labour

Often overlooked, the time taken to pack a box is a valid contributing cost in shipping and handling. If you have packing staff this is particularly critical in maintaining effective shipping costs. Calculate the average time to pack a box and thus the cost of labour per delivery per order. 

Courier

Many UK couriers will have a large matrix of costs for various areas of the UK often based on postcode, consignment weight and/or size. It may not be worthwhile attempting to mimic your courier’s costs. Instead you can choose a structure that suits you with larger shipping zones encompassing multiple courier delivery areas. If you can achieve a blanket price based on weight for the UK Mainland you’ll be making your life simpler long-term.

Note : some couriers calculate their prices based on volumetric weight, which is based on both the consignment’s dimensions and weight. You should speak to your courier, or obtain appropriate literature, which tells you how they calculate their prices. 

Maintain Weight of each Product

As most couriers price their services based on weight or volumetric weight you’ll find it increasingly important to maintain accurate shipping weights against each product in your store. Product weight can be maintained in Evance under the specifications of a product. Remember that the weight in specifications is used purely to calculate shipping and is not displayed in your store, so you can opt to maintain either volumetric weight or gross packaging weight.

Start with one Shipping Class

Understanding shipping may take time and you may want to experiment with one Shipping Class before adding more. Shipping Classes are flexible and a single class can accommodate different postage options, shipping zones, weight thresholds, order values and costs.

Choosing a Strategy

There are various strategies that on-line retailers use for Shipping, but based on what we've already discovered there are two popular views. 

Shipping Included

Some retailers offer free shipping by including the cost of delivery in product prices. Whilst this seems like a simple and effective policy it limits free delivery to a specific shipping zone and can bloat product prices making multiple quantities less attractive unless your profit margins on higher value products can absorb the costs. 

Shipping Excluded (recommended)

This is more common and allows you to be a bit more dynamic by offering incentives for free shipping e.g. Free Delivery on orders over £50 and in our experience these types of incentives work well when advertised in your store. This helps you to maintain more competitive unit prices as well as shipping costs and is more sustainable as shipping costs vary where margins are tighter.

Questions to ask yourself before delving in

Before setting up your shipping settings in Evance you should now have a clearer idea to answer the following questions:

How Evance Calculates Shipping

There are 5 conditions that Evance takes into account when evaluating delivery costs:

If these conditions are matched during calculation then the following calculation is performed where:

Q = Total quantity of items in the cart.
P = Price per item being packed.
D = Cost of delivery per order, which should encompass packaging, labour & courier costs.
K = Cost per additional Kilo, which is based on the cart weight minus threshold.

(Q x P) + D + K = Total Shipping Cost

Multiple Shipping Classes in Evance

Creating multiple Shipping Classes may be required if you have products where delivery costs of shipping and/or handling escalate due to bulk or fragility. 

If you choose to add additional Shipping Classes you should try to keep a similar set of available Postage options in each Shipping Class so that Evance can locate like-for-like Postage options when the cart contains multiple products with different Shipping Classes. In this event Evance will choose the Shipping Class with the highest overall Shipping Cost.

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