How to Set a Shipping Cost Video

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How to Set a Shipping Cost

Ivy Hartman: As a small business owner, you might have all kinds of questions about free shipping in your small business. Well, joining me today is the Vice President for E-commerce Marketing for the world’s largest small package delivery company, UPS, Jordan Coletta. Thanks for joining us. Now is free shipping right for everyone? Jordan Coletta: You know Ivy we don’t think it’s necessarily right for everyone. I mean free shipping absolutely has disadvantages. I mean, when you think about the golden rule here in shipping, it’s simpler, it’s better so that’s great but at the same time, you really have to make sure you know how free shipping will affect your bottom line so you don’t go into something that literally affects your viability as a small business. Ivy Hartman: So what are some of the main things to keep in mind when you start to think about offering free shipping? Jordan Coletta: Yes. I mean, I think when we look at this it’s a matter of can you improve your conversion rates and sell more product with free shipping being one of the items you offer, right? Ivy Hartman: Okay. Jordan Coletta: So it could be that all of your products could fall under that umbrella. It could be that maybe only a couple of your products fall under that umbrella. What we like to think about though is it could be free shipping or it could be reduced shipping. You know these are all factors that you may want to really evaluate and then put them to test in your business and see how it affects your sales. Ivy Hartman: Do you have any examples of somebody who might have tried that? Jordan Coletta: You know we do. I was just thinking about a company that we spoke to who did some experimenting in this area. We’re always cautious. Ivy Hartman: Yeah. Jordan Coletta: When you get into this area because we don’t want to prescribe any given solution for any given company. Ivy Hartman: Okay. Jordan Coletta: It’s got to be fine tuned and as an example of this particular company. They wanted to really find out was free shipping, which they were offering, was that really driving their sales because obviously, it was certainly affecting their bottom line but still they were profitable. Ivy Hartman: Okay. Jordan Coletta: So what they did was, they want to had in so it went from free shipping and they started shipping with the flat rate of a $1.99 and then they try to conversion rates and it was interesting for this particular business is they didn’t see a drop off in the conversion rates. So then they notch it up a bit, you know. And what they found is, when they got about $3.00 for them, then conversion rates start to trailing off so what they ended up doing is they established that prize point for shipping. They basically did a way with the free shipping offer and they still maintain the conversion rates. The great thing for them is the $3.00 went right to their bottom line. Ivy Hartman: Is there something for a small business owner to keep in mind as far as the different rates of shipping go when they are starting to think about offering free shipping to their customers? I know that there are different varying rates so those are the flat rate and there are varying things that you UPS offers. So when it comes to looking at that profit margin, is there a shipping method that’s better for a free shipper? Jordan Coletta: You know, I don’t know that there’s any one prescription. Ivy Hartman: Okay. Jordan Coletta: That I would sign up but what I would say is that there are tools that small businesses can really leverage to understand their cost. I mean, there are a couple of examples I want to throw in here. Number one, when you think about shipping costs, don’t think necessarily about the product itself sold out. Ivy Hartman: Okay. Jordan Coletta: Right? So think about it in terms of I’m going to ship it. It’s not just the product. It’s really the package, right? So I have my shipping material. It may have a box. I might put other things in with it when I send it so the idea is when you start modeling your costs, think about it in terms of the ship and itself. Actually max sum up, get them weighed up, go to UPS.com, look up your charges and then you can start if you will start thinking about setting your levers to do what we talked about, you know, find out how that affects your conversion rates. Ivy Hartman: Is there anything else that small business owners should keep in mind when it comes to the topic of offering free shipping? Jordan Coletta: Well, I mean, I think that just the key would be model. Ivy Hartman: Okay. Jordan Coletta: You check it out. You might event think about it in terms of different products, you know, you decided your free shipping, you don’t just have to do to cross every product line. It could be those that you have a higher margin in that you might get a point for your shipping. It might be a certain customer groups, you know, the Buy-More. It could be for orders up to a certain level of purchase to get free shipping. So there are a lot of different ways to set those leverage to model out the best way to improve sales for the small business. Ivy Hartman: And you mentioned something key there with threshold. Now is this really pertinent, everything we talked about, they really adjust to the E-commerce small business or could it apply to somebody who’s got E-commerce as well as retail if they can order sites as far as free shipping goes? Jordan Coletta: Yeah, I think it applies to both and I think as we see more and more, you know, the experience that you have with the company it’s helpful if that experience can be somewhere, it can system across the sales channels. Ivy Hartman: Perfect. Thanks Jordan. Free shipping, is it right for you? You know what? The best way to do is try it and see in and see what works best for your company. If you want more information on shipping in general or other topics in technology that UPS offers, you can go to UPS.com.

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Ivy Hartman: As a small business owner, you might have all kinds of questions about free shipping in your small business. Well, joining me today is the Vice President for E-commerce Marketing for the world’s largest small package delivery company, UPS, Jordan Coletta. Thanks for joining us.

Now is free shipping right for everyone?

Jordan Coletta: You know Ivy we don’t think it’s necessarily right for everyone. I mean free shipping absolutely has disadvantages. I mean, when you think about the golden rule here in shipping, it’s simpler, it’s better so that’s great but at the same time, you really have to make sure you know how free shipping will affect your bottom line so you don’t go into something that literally affects your viability as a small business.

Ivy Hartman: So what are some of the main things to keep in mind when you start to think about offering free shipping?

Jordan Coletta: Yes. I mean, I think when we look at this it’s a matter of can you improve your conversion rates and sell more product with free shipping being one of the items you offer, right?

Ivy Hartman: Okay.

Jordan Coletta: So it could be that all of your products could fall under that umbrella. It could be that maybe only a couple of your products fall under that umbrella. What we like to think about though is it could be free shipping or it could be reduced shipping. You know these are all factors that you may want to really evaluate and then put them to test in your business and see how it affects your sales.

Ivy Hartman: Do you have any examples of somebody who might have tried that?

Jordan Coletta: You know we do. I was just thinking about a company that we spoke to who did some experimenting in this area. We’re always cautious.

Ivy Hartman: Yeah.

Jordan Coletta: When you get into this area because we don’t want to prescribe any given solution for any given company.

Ivy Hartman: Okay.

Jordan Coletta: It’s got to be fine tuned and as an example of this particular company. They wanted to really find out was free shipping, which they were offering, was that really driving their sales because obviously, it was certainly affecting their bottom line but still they were profitable.

Ivy Hartman: Okay.

Jordan Coletta: So what they did was, they want to had in so it went from free shipping and they started shipping with the flat rate of a $1.99 and then they try to conversion rates and it was interesting for this particular business is they didn’t see a drop off in the conversion rates. So then they notch it up a bit, you know. And what they found is, when they got about $3.00 for them, then conversion rates start to trailing off so what they ended up doing is they established that prize point for shipping. They basically did a way with the free shipping offer and they still maintain the conversion rates. The great thing for them is the $3.00 went right to their bottom line.

Ivy Hartman: Is there something for a small business owner to keep in mind as far as the different rates of shipping go when they are starting to think about offering free shipping to their customers? I know that there are different varying rates so those are the flat rate and there are varying things that you UPS offers. So when it comes to looking at that profit margin, is there a shipping method that’s better for a free shipper?

Jordan Coletta: You know, I don’t know that there’s any one prescription.

Ivy Hartman: Okay.

Jordan Coletta: That I would sign up but what I would say is that there are tools that small businesses can really leverage to understand their cost. I mean, there are a couple of examples I want to throw in here. Number one, when you think about shipping costs, don’t think necessarily about the product itself sold out.

Ivy Hartman: Okay.

Jordan Coletta: Right? So think about it in terms of I’m going to ship it. It’s not just the product. It’s really the package, right? So I have my shipping material. It may have a box. I might put other things in with it when I send it so the idea is when you start modeling your costs, think about it in terms of the ship and itself. Actually max sum up, get them weighed up, go to UPS.com, look up your charges and then you can start if you will start thinking about setting your levers to do what we talked about, you know, find out how that affects your conversion rates.

Ivy Hartman: Is there anything else that small business owners should keep in mind when it comes to the topic of offering free shipping?

Jordan Coletta: Well, I mean, I think that just the key would be model.

Ivy Hartman: Okay.

Jordan Coletta: You check it out. You might event think about it in terms of different products, you know, you decided your free shipping, you don’t just have to do to cross every product line. It could be those that you have a higher margin in that you might get a point for your shipping. It might be a certain customer groups, you know, the Buy-More. It could be for orders up to a certain level of purchase to get free shipping. So there are a lot of different ways to set those leverage to model out the best way to improve sales for the small business.

Ivy Hartman: And you mentioned something key there with threshold. Now is this really pertinent, everything we talked about, they really adjust to the E-commerce small business or could it apply to somebody who’s got E-commerce as well as retail if they can order sites as far as free shipping goes?

Jordan Coletta: Yeah, I think it applies to both and I think as we see more and more, you know, the experience that you have with the company it’s helpful if that experience can be somewhere, it can system across the sales channels.

Ivy Hartman: Perfect. Thanks Jordan. Free shipping, is it right for you? You know what? The best way to do is try it and see in and see what works best for your company. If you want more information on shipping in general or other topics in technology that UPS offers, you can go to UPS.com.

Transcription by: Scribe4you Transcription Services