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If you sell products online you need to consider how to get orders to your customers. Businesses may use either delivery or shipping to describe this service.

As a business you need to ensure that delivery of customer orders is quick, safe and affordable. Choosing the right way is important for your business is to remain successful and profitable.

To find the right shipping method for you, you will need to decide on the:

  • delivery companies you'll use
  • shipping rates you'll charge your customers
  • packaging you'll use to send the orders.

Parcel delivery services

Australia has several parcel delivery services available. To decide on which is right for you and your customers, consider:

  • the cost and ease of quoting
  • the need for urgent pickup and express delivery
  • the ability to handle an appropriate range of parcel sizes and weights
  • contract agreements
  • insurance options
  • what other services are available, such logistic management, online integration and advance reporting
  • overseas delivery options and export help
  • what your customer will want to use.

Shipping rates

A simple way to handle delivery costs is to offer free shipping. The cost of delivery should then cover profit margins of your product sales. This is easy to put in place and can be an effective marketing tool to attract customers.

This method works well if your products are of a similar, smaller size. This allows you to accurately predict the cost of your shipping.

Free shipping may not work well if your products are larger and heavier. Large or heavy items often need more expensive shipping. Which may mean losing profit margin. Or you will need to increase the price, making your products less competitive.

Using a flat rate method is another simple shipping pricing option. Instead of including the shipping cost within the product price, customers pay a fixed charge during checkout.

Whilst this is not as attractive as free shipping, it still allows customers to be aware of the final cost. It also helps keeps costs down for the customer as the costs is only applied once, and not attached to each product.

The flat rate method works well if your products are similar in size and weight. If they're not, you may end up undercharging for shipping and lose money. Or else have to overcharge and lose potential customers.

Using tiered rate shipping allows you to blend free and flat rate shipping.

For example, if the order is less the $100 you may charge a flat rate of $10 shipping. But if the order is above $100 the shipping would become free for the customer.

This method allows you to balance the benefits from free and fixed cost shipping. Customers contribute to the delivery costs for smaller, less profitable orders. But you also get the promotional opportunity of free delivery for larger, more profitable orders.

Many shipping carriers offer the ability to get the exact shipping costs direct from them at the time of order. You can do this using a plugin or widget that you add to your e-commerce platform.

This method means that the customer pays the exact cost of delivery. They don't pay more than they need and you don't lose profit margin.

Packaging

You'll need packaging for your customers' orders. The packaging needs to:

  • keep your customers' orders safe during the delivery process
  • be part of your customers' buying experience (consider it as part of your brand and marketing goals).

Delivery companies base shipping costs on size and weight. Keep packaging as small and light as possible. But the packaging still needs to be protective.

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