Get Your Site Into Shipping Shape This Season

With gas prices higher than imagined, retailers will be turning to low flat-rate shipping and free-shipping promotions to convert price-sensitive shoppers.

With the holiday season approaching and gas prices still higher than anyone could've imagined, analysts predict more consumers will shop for Christmas gifts online this year to save at the pump. Low flat-rate shipping and free-shipping promotions may be the most effective means to attract and convert price-sensitive shoppers.

Consumers consistently rate free shipping as their most sought-after promotion. "Sticker shock" from higher than expected shipping charges is considered the top reason for abandoned shopping carts. Last year's economic conditions prompted online sellers to be very aggressive with shipping promotions -- offering lower qualification thresholds, free overnight shipping and even free return shipping.

Controlling shipping costs
How can you control costs when offering online shipping deals to your customers and prospects? Think about how to work with carriers. You could work with several carriers and ship each order based on the cheapest option, or develop loyal relationships with fewer carriers. Opinions are mixed on which of these options is better.

Patrick Sedlak and Jeff Mueller of Sedlak Management Consultants, a Highland Hills, Ohio-based logistics and supply chain firm, advise against putting all your accounts in one basket. These days, they say, with carriers' rates constantly changing, having a choice allows you to cherry-pick deals in real time and can save you money in the long run.

What's more, rate-shopping software like AnyRate or Logicor integrates with warehouse management systems to help determine the lowest rate from a number of carriers on a per-parcel basis. Prices are quoted according to dimension, weight, destination and delivery date.

Zachary Applegate, search and marketing manager, and Ryan Douglas, Internet marketing manager, for PlumberSurplus.com, a Riverside, Calif.-based online seller of plumbing supplies, prefer to build relationships with carriers.

The more volume you do with a carrier, the more leverage you presumably have to negotiate better rates and better service. Price is not the only consideration; speed, reliability and customer service all are important as well -- especially for fragile or oversized items. The costs of damaged goods, return shipping and unsatisfied customers can outweigh the cost savings of a cheaper carrier.

In terms of controlling costs, also understand that free shipping doesn't have to be universal. There are several ways you can offer free shipping. Consider these four: