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How to price and calculate shipping to grow your ecommerce business

Find out if offering free shipping is right for your business. Read an overview of shipping pricing strategies and use the cost calculator to estimate fulfillment costs for using MCF with your multi-channel sales.

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How you price shipping can have a major impact on your business, and there are many factors to consider. Shipping can be expensive, especially last mile delivery, and customers are price sensitive to shipping. Research shows that 64.3% of customers think price is the most important factor related to shipping and 49% of all cart abandonment were due to unexpected shipping prices. It’s important to strike a balance between offering shipping prices that are attractive for customers and sustainable for your business. Working with a third-party logistics provider, like Amazon Multi-Channel Fulfillment (MCF), can help you scale while lowering fulfillment costs to stay competitive, no matter on which channel you are selling. In this blog, you can find the right pricing structure that best suits you and your customers’ needs, and get an estimate for your MCF shipping costs.

Pricing strategy

Free shipping

Free shipping is becoming an increasingly popular pricing strategy. You can offer free shipping to your customers for some or all of your products. In a recent survey, 79% of respondents were more likely to shop online when there’s free shipping. With the right planning, offering free shipping can actually help your business. Advertising free shipping on your website is powerful, and might persuade customers to choose your business over a competitor. See how Ring used free shipping to improve their customer experience.

In order to offer free shipping without impacting your profit margin, you can factor the shipping cost into the selling price of your products. Although this may increase the price of the item, it will help meet customers’ shipping expectations. An alternative is to offer free shipping with a minimum purchase value. This helps offset the cost of covering shipping, and acts as an incentive for customers to buy more items to reach the threshold. With MCF, you can take advantage of up to 50% discounts on multi-unit orders, allowing you to cover shipping for your customers. Learn how Hatch saved money with MCF and passed their savings on to their customers by offering free shipping.

Tiered shipping

Another pricing option for ecommerce businesses is tiered shipping prices. You can provide different shipping prices based on how quickly the product is delivered. MCF currently has three shipping speeds. Amazon fulfills your orders at 1 business day (Priority), 2 business days (Expedited), or 3 business days (Standard) from when the order ships, and orders are delivered every day of the week. Tiered shipping prices let your customers choose how fast they would like to receive their product and how much are they would like to pay for it. MCF’s Prime-like shipping speeds and competitive rates help you give your customers access to the fast shipping they want. MCF also allows you to show upfront delivery promises to your customers on your website’s checkout page, based on customers’ location and order items. This helps set expectations, elevate the customer experience, and decrease the risk of shopping cart abandonment.

Stay up to date with new Amazon Multi-Channel Fulfillment features, best practices, and more.

Calculate shipping costs

In order to make the right shipping pricing decision for your business, you can use a cost calculator, like the Algopix cost calculator, to estimate your fulfillment costs with MCF, which are fully inclusive of pick, pack, and ship. Algopix is a market intelligence engine that helps online brands to make data-driven decisions. Since 2016, Algopix users have analyzed over 226 million products across 17 marketplaces. The Algopix dashboard gives you a comprehensive look at average pricing for products, and estimated profit after deducting expenses like fulfillment. MCF has simple, transparent pricing, with just one fee for pick, pack, and ship, to make your decision-making easier. Create your free account with Algopix to access the cost calculator.

screenshot of expenses breakdown from algopix cost calculator

Tags:  3PL Pricing, Ecommerce, Multi-Channel Fulfillment, Article
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