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 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 basket abandonment is 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 fulfilment provider, like Amazon Multi-Channel Fulfilment (MCF), can help you scale while lowering fulfilment costs to stay competitive, no matter on which channel you are selling. This blog will help you determine the right pricing structure that best suits your needs as well as and your customers’ needs, and show you how to estimate 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.

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 an average of 25% discounts on multi-unit orders, allowing you to cover shipping for your customers.

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

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 in the UK currently has two shipping speeds. MCF can fulfil your orders at 1 business day (Expedited) or 3-5 business days (Standard) from when the order ships, and orders are delivered 7 days a week. Tiered shipping prices let your customers choose how fast they would like to receive their product and how much 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 basket abandonment.

Calculate shipping costs

Plan your business better with predictable fulfilment costs. Our ratecard transparently provides one fee for pick, pack, and ship. You only pay only for fulfilment and storage.

How much do I pay for multi-units in an order?

The per item fee for a multi-unit order will be charged at the corresponding multi-unit rate. If an order has 3 units in that order, then all three units would be charged at the 3 unit per order (UPO) rate. For example, for a 3 UPO order going to UK standard ship speed where the units shipped are 1 Small Envelope item and 2 Large Envelope items 950g, then the fulfilment cost for this order will be: £2.20 + £2.20 + £2.20 = £6.60. vs. Shipping 3 orders separately which would cost £3.31+£3.48+£3.48 = 10/27.

Standard Shipping

Local shipment (domestic, Multi Country Inventory, Pan-EU)

Size tierDimensions1 Unit Per Order (UPO)2 Unit Per Order (UPO)3+ Unit Per Order (UPO)
Small envelope to 80g≤ 20 X 15 X 1 cm£3.31£2.81£2.20
Standard envelope to 60g≤ 33 X 23 X 2.5 cm£3.41£2.85£2.20
Standard envelope to 210g≤ 33 X 23 X 2.5 cm£3.45£2.88£2.20
Standard envelope to 460g≤ 33 X 23 X 2.5 cm£3.47£2.89£2.20
Large envelope to 960g≤ 33 x 23 x 4 cm£3.48£2.90£2.20

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