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Shipping rates are a key factor for conversion, as prices that are too high can negatively impact customer purchasing decisions.
There are two types of shipping rates: those your customers see at checkout, and those you negotiate directly with carriers. These can end up costing the same, as many businesses aim to balance the two. But in a competitive market, matching these prices isn’t always beneficial - shipping rates can in fact be a strategic advantage.
For clarity, in this article we refer to the prices shown at checkout as shipping rates, while the actual costs invoiced by your carrier or partner are referred to as shipping costs.
Shipping rates often play a decisive role in whether customers complete an online purchase. That’s why it’s essential to understand what affects shipping rates, how you can optimize them, and how you can stay ahead of the competition while minimizing your abandoned cart rate.
What affects your own shipping costs?
Your shipping costs are based on the shipping agreement(s) you have with one or more carriers. Shipping volume is typically a key factor for price, as well as your needs in terms of pickup and specific shipping services.
Several factors influence pricing. Surcharges, fees, and physical factors such as weight, delivery method, and destination all impact what carriers charge for their services. That’s why we’ve compiled the most important points to consider in a separate guide.
What can you do to optimize prices for your customers?
Shipping rates can vary greatly, as you decide them yourself at checkout. Prices that are too high can scare customers away right before they complete a purchase, resulting in abandoned carts - while prices that are too low can cut into your profits. And because shipping rates has been on the rise the last few years, it’s important to have them under control.
The key is to offer your customers as much flexibility as possible. If, for example, you sell both bicycles and helmets, you’ll need to differentiate the shipping rates. Often this requires using different delivery methods or carriers, as not all carriers are able to deliver large packages like assembled bikes.
Partial coverage
Depending on your industry, customer expectations around shipping rates can vary. If you’re a B2C e-commerce business, even a 5 DKK difference can impact customers’ decisions - positively or negatively - depending on what they are used to.
You can choose to cover part of the shipping cost yourselves. So even if it costs you 50 DKK to send a package, the customer might only pay 35 DKK. You can look into whether it’s possible to cut costs elsewhere in your business, or slightly increase your product prices to avoid hurting your bottom line.
Offer free shipping
You can also choose to offer free shipping. This could mean completely free delivery, or you could set a minimum order value for eligibility. For instance, if the customer spends 500 DKK or more, they get free shipping. It’s important that you calculate what is most profitable for your business and keep a close eye on how your competitors are pricing their shipping.
Negotiate rates
You can negotiate better rates with your selected carrier(s), depending on your shipping volume. If you’re only using one carrier, you may be able to negotiate attractive prices for both yourselves and your customers. However, not offering multiple delivery options can be challenging, as not all carriers offer enough flexibility to meet your customers’ needs. You can also regularly renegotiate your agreements or explore new options if your volume grows over time.
By understanding your own shipping costs and being strategic about the price your customers see at checkout, you can improve your competitiveness and boost conversions - especially by preventing abandoned carts.
Save time and money on shipping and order management with Shipmondo
You can save time and money on manual tasks by digitalizing and automating them with Shipmondo - allowing you to offset shipping costs through efficiency gains elsewhere.
When negotiating new agreements with existing or new carriers, having a TMS like Shipmondo is crucial. Instead of switching booking systems or developing new integrations when you change carriers, Shipmondo makes it easy to set up new shipping agreements - without causing operational disruptions or requiring internal resources from your team.
With features like automatic label printing, customs documentation, personalized messages, and digital pick and pack, you can streamline your process from packing to delivery.
Offer multiple delivery options
Shipmondo’s Delivery Checkout is a multi-carrier checkout, where you can offer several carriers and delivery options. You can use our pre-negotiated carrier agreements and/or your own shipping agreements - either separately or in combination.
Manage orders quickly and easily
Shipmondo offers complete order management - from order data transfer to shipment creation and returns management via our return portals. Our powerful filtering tool also allows you to tailor your order flow to suit your exact processes. For example, by filtering based on country, product weight, or carriers that pick up at different times of the day.
Pick more in less time
Inefficient order management and pick-and-pack processes don’t just take more time - they increase the risk of picking errors, which often result in costly returns. Our digital pick route includes an order check, where scanning during picking helps reduce mistakes. That leads directly to a healthier bottom line.
Reduce customer service workload
Avoid customer support inquiries about order status and tracking by keeping your customers informed. Improve their experience with personalized messaging from Shipmondo. With custom communication, you can automatically send SMS or emails to update your customers - for instance, if a package hasn’t been picked up at the pickup point.
Want to talk to one of our shipping experts about using Shipmondo as your TMS? Don’t hesitate to reach out. We’d be happy to help you find a stable shipping solution that meets your needs - now and in the future.
