Quick Guide To E-commerce Delivery Pricing
One of the questions I get asked most by beautypreneurs setting up their e-commerce business is,
“How should we price delivery (shipping)?”
I’m sure if you have an online business you have faced this same question and debated about the best way forward.
Should you offer free delivery?
Will people be put off by paying for delivery?
What’s acceptable to charge?
How the heck do I price international deliveries?
Sound familiar?
I’ve worked in beauty e-commerce for 15 years and so I thought it would be pretty cool to pull together a kind of 101 on delivery pricing.
I hope you enjoy and find it super useful!
I’m going to start with the BIG question first!
FREE DELIVERY
There is enormous pressure for online brands to offer free delivery (shipping). The likes of Amazon with their all singing all dancing next day free service, lead us to believe that we need to offer the same level of convenience and price. But stop right there! Amazon are HUGE. They have their own logistics operation and a network of hubs not just across the country but across the whole world. There is no way you can compete with them and more importantly there is no need for you to compete with them.
I’m just going to come out and say it. Indie beauty brands do not need to offer free delivery. You have premium, niche, specialist, artisan products and people are perfectly prepared to pay to receive them. Consumers don’t just buy your products because they need a cleanser. They buy your products because they enforce a lifestyle; this is particularly relevant in the organic, natural, clean beauty sector. They really value your product and what it adds to their well-being. They have no problem paying for delivery and you should have the confidence to charge for delivery.
Now that being said free delivery can be used as a selling point and there are plenty of established beauty brands like Pai Skincare who do not charge. I also know smaller and start up brands that make the deliberate decision to offer free shipping to entice custom. A couple of things to think about here though, brands that offer free delivery tend to be well established and selling a whole lot of products and shipping a whole load of orders. It’s highly likely they will have negotiated discounted rates with Royal Mail and courier companies. I’m also pretty confident that brands that offer free shipping do build some of the cost into the overall price they charge for the product.
Action: My advice for any e-commerce brand is to spend some time looking at the webshops of similar businesses and checking out what kind of prices they are charging. Your customer will be happy to pay for delivery but they will know if your prices aren’t competitive.
USING FREE DELIVERY TO DRIVE SALES
Even if you charge for delivery you can still use the free delivery option to drive sales.
One idea is to offer free delivery over a certain basket value. Neal’s Yard do this offering free delivery on orders over ￡40. I love this one. Come on; be honest how often have you bought just one thing more to get free delivery. It’s crazy, I know! You don’t need that other item but human nature means we just can’t help ourselves. So this option can really drive up the value of your basket.
Action: Do the math. Sit down and work out at what point your margin is acceptable enough to offer free delivery.
Another idea is to offer free shipping at certain times of the year like Christmas, Father’s Day and Mother’s Day. The aim being to encourage a spike in sales.
Takeaway: Don’t be afraid to play around with ideas and test things out. The amazing thing about being an indie brand is that we are agile and able to make changes swiftly. Experiment and see what works for you.
GUIDE PRICES
Here is a quick guide to the sort of prices you can charge for both UK and international shipping.
TAKEAWAY: Delivery prices change all the time so it’s important to understand that this is a guide and important to check your delivery prices regularly to make sure they have taken into account any Royal Mail or courier price hikes.
Do not use delivery pricing as a way to generate a little more profit! Your customers are way to savvy for that. They will pay for delivery but they know when charges are too high. Be honest and be transparent.
DELIVERY LEAD TIMES
One of the most important aspects of delivery is to be clear with your customers exactly what they are paying for. Every website needs a page dedicated to delivery. A page where it is obvious exactly what you charge and how long it will take for a customer to receive their order.
Being clear and managing customer expectations is massively important when it comes to customer service and creating a customer journey that delights.
If you check out any of the established beauty brands like Pai Skincare or Neals Yard you will see what I’m talking about.
PACKAGING
Many brands forget to factor in the cost of their delivery packaging. Prices for packaging vary. The simpler the packaging the cheaper it is. A basic off the shelf box will cost you around ￡0.30- ￡1.50. If you want bespoke printed shipping cartons then you can expect to pay several ￡’s per unit. Build this cost in somewhere.
CONCLUSION
Don’t let delivery and packaging eat up your profit!
You offer premium quality, niche products that add real value to your customer’s lifestyle. They will pay to get their hands on your goods.
Be honest, transparent and informative in order to manage customer expectations and provide a seamless experience.
As your brand grows experiment with delivery pricing. The day will come when you will be established enough to offer free delivery if you choose.
Use free delivery to drive basket value and sales at peak times.
Wow, that was quite a long blog!
I hope you find it useful. If you have any comments or questions just email me on [email protected]
Till next time!
Rachel xxxxx