Optimize Shipping Costs for Online Stores: 2Ship's Live Rate Solution - 2Ship

Optimize Shipping Costs for Online Stores: 2Ship’s Live Rate Solution

As global e-commerce continues to expand, the integration of online shopping carts with Transport Management Systems (TMS) like 2Ship is becoming increasingly vital. E-commerce businesses aim to boost productivity and enhance website responsiveness. This, in turn, improves the customer experience and boosts sales.

The Challenge of Managing Online Shipping Costs

Managing Freight Costs

For many online sellers, freight costs represent a significant portion of their total product cost of sales value, making effective freight management crucial for success. Traditionally, many businesses have used simplistic approaches to shipping costs, often offering “free shipping.” While “free shipping” can be a valid marketing strategy, if not managed correctly, it can lead to businesses subsidizing costs far beyond their intention, resulting in unprofitable outcomes.

As a response, many online stores provide customers with an average shipping cost estimate per order. While this helps recover some freight costs, it’s often a blunt instrument for effective freight cost recovery. Flat-rate shipping can lead to cart abandonment if the estimate is too high, or an unprofitable outcome if it’s too low, effectively causing some customers to subsidize others. An average flat-cost shipping policy is generally ineffective, especially with significant disparities in shipping locations, order size, or product type/value. For instance, a $25.00 average shipping cost might overcharge local customers while undercharging those in regional or remote areas.

Another common approach is offering free shipping for high-value or high-volume orders. This policy is more effective than a blanket average, as it incentivizes customers to increase their order value. However, customers unable to order in bulk are disadvantaged, and significant freight cost differences still exist for large shipments to diverse locations.

Ineffective freight cost management often leads to customers abandoning their carts when shipping costs or service options seem unappealing. Alternatively, the customer may be satisfied, but the business fails to recover actual shipping expenses.

2Ship's Solution: Live Carrier Rates

2Ship offers a solution that significantly improves outcomes for both businesses and their customers.

2Ship’s live or calculated carrier rates display the actual, precise shipping cost for a customer’s specific order directly in the online store checkout. Key advantages of this capability include:

• Each online shopper sees the actual shipping cost, considering the shipment’s size, weight, and the receiver’s location.
• You can also display various shipping services, showing differences in price and delivery speed. This allows customers who prioritize economy to choose a slower, more affordable service, while those needing speed can opt for a priority service and pay accordingly.
• Many carriers apply surcharges for large, oddly shaped, or heavy items. Properly configured live rates ensure that only customers purchasing these specific items pay the associated surcharge, moving towards a fairer “user pays” principle. This reduces instances of subsidized shipping.
• By presenting specific live rates and services, we believe customers appreciate the transparency of the shipping process, which builds greater credibility for freight costs. Because customers are more willing to accept these “real” shipping costs, 2Ship’s live rates can significantly reduce shopping cart abandonment, boosting your sales and improving profitability.

These examples clearly demonstrate that real-time, calculated shipping rates displayed directly in the shopping cart are significantly fairer for your customers and ensure you are properly compensated for your shipping services. It’s a genuine win-win situation for all parties.

How 2Ship Delivers Live Rates to Your Shopping Cart

2Ship has developed accredited, plug-and-play connections (often a 3-click wizard) for the most popular online shopping platforms. Taking Shopify as a prime example, 2Ship has created a dedicated 2Ship Connect app. This app allows online shoppers to proceed to checkout, request a shipping rate, and in real-time, Shopify returns multiple shipping cost options. These options are based on the actual weight and dimensions of the ordered items and the shopper’s location. This entire process occurs within seconds, significantly reducing the risk of cart abandonment. For this to work seamlessly, product package dimensions and weights must be accurately loaded into the 2Ship Connect Shopify app.

Addressing Live Rate Limitations

Live rates are immediate and require a stable internet connection. Shopify typically allows up to seven seconds for carrier rates to populate in the shopping cart. If a carrier’s rate API is down or there’s another outage, rates may not appear, potentially affecting all carrier options or just one service. This could result in the online shopper seeing an error or limited choices.

To add more agility, the Shopify 2Ship application offers advanced shipping options, such as:

• Flat Rates: This option acts as a fallback system. If live rates fail, businesses can set flat rates to prevent errors and ensure shoppers always have a shipping estimate to choose from.
• Mixed Flat and Live Rates: This allows businesses to display both live calculated carrier rates and flat rates combined in the shopping cart. These flat rates can be determined via business rules within the app. For example, flat rates can be based on order value and/or the receiver’s location. This provides a reliable backup to live rates and allows for tailoring rates based on specific order variables.
• Group Shipping: Grouping services from various carriers into categories is another option with 2Ship. Services can be statically assigned to a group, like with an “Express” group or dynamically assigned to groups based on estimated time in transit, Like a “2 Day” group. 2Ship then returns the best performing or cheapest service (as always, it’s your choice) for each group to the customer.

By using 2Ship, you gain access to diverse options and solutions, catering to virtually any scenario in serving your online shoppers‘ needs. This sophistication and agility ensure your online shoppers have the best opportunity to complete their order, helping you secure sales quickly and easily.

In today’s highly competitive e-commerce landscape, 2Ship empowers businesses to maximize every sales opportunity. And live rates are just the first piece in 2Ship’s slick end-to-end fulfillment solution.

We believe 2Ship is a key component for any successful e-commerce strategy and we welcome you to reach out and discuss how integrating 2Ship’s live rates into your shopping cart to reduce cart abandonment and boost your profitability.