How to Cover the Shipping Cost in Dropshipping Business?

Finding the best shipping solution is one of the most important aspects of running an eCommerce dropshipping business. It is critical for both your business and your clients to keep shipping costs as low as possible. This article will show you how to cover the shipping cost in dropshipping business.

Who Pays for Shipping Costs in Dropshipping Business

The answer is that the shipping costs will be paid for by you, as the dropshipping business owner.

It isn't as straightforward as it appears. The shipping costs in your dropshipping business are deducted from your profit. It is not, however, something that occurs immediately. Rather, as a business owner, you can choose whether to charge your customers individually for delivery or include the cost of shipping in the product price.

With so many various methods to pay for shipping, it's clear to understand why developing a shipping plan that works for your business is critical. The cost of shipping has a significant impact on whether customers are willing to pay for your products.

However, you only have control over the price you charge the consumer, not the cost of transporting the products. Depending on the scale of your business, you may deal with a number of different carriers, each with different fees for their service, which may be quite complicated.

How to Calculate Shipping Costs When Dropshipping

It's better if you figure out how to calculate your shipping costs ahead of time. You want a model that benefits both you and your client. Let's take a look at some of the most popular dropshipping shipping calculations.

Real Shipping Cost

The real shipping cost will be calculated for customers to consider the price of shipping for themselves. You just need to check the shipping costs from the suppliers and announce them to your customers on your online store.

When clients buy many items from different providers, this computation of real shipping costs becomes more difficult. This can easily become too pricey for your target consumer. Remember that your clients are unaware that you are doing dropshipping. If they have to pay for shipping separately for each product, this may result in more abandoned carts, which should be avoided in online businesses.

If you're going to base your shipping plan on real shipping costs, keep an eye on your abandoned carts rate to watch how buyers respond to the costs.

Average Shipping Fees

An average shipping fee or flat-rate fee is another fee to make your delivery plan easier. Because all of your customers pay the same shipping rate, it's simple to budget for shipping expenses. The most efficient approach to figuring out your flat-rate price is to add up all of your shipping costs.

If you sell a large range of products in various sizes and weights, divide your products into groups and assign each group a distinct flat fee.

You will lose money on certain transactions and win money on others when carefully calculating the flat rate shipping, depending on the products ordered. The long-term objective of this strategy is to break even.

Free Shipping

These days, eCommerce businesses are under a lot of pressure to provide free delivery. Free shipping, on the other hand, isn't actually free. It's a marketing approach that aims to persuade customers to spend more and feel like they're getting a fantastic bargain. In actuality, most merchants, even dropshippers, incorporate shipping charges in their final pricing to avoid a financial loss.

Include shipping expenses in the product price and offer "free shipping" to get people to buy from you while retaining healthy profit margins.

Promotion / Tiered Shipping

This technique combines all three of the shipping calculating strategies mentioned above. It's an excellent strategy to keep clients pleased while avoiding a business loss due to shipping expenses. However, it's only useful if you have a lot of data and analytics to figure out which method is ideal for each situation.

Shipping Fees for Returned Products

This is one of those areas where your suppliers have a role. In this scenario, various suppliers have varied regulations about who pays for shipping charges. If the item is broken or faulty, it is usually removed from the supplier's pocket; nevertheless, in this instance, you are not accountable in any way. The item would be returned to the supplier and there would be no return freight.

You can make the consumer pay for return shipping expenses if the client decides they don't want the product after it has already been shipped. If you are prepared to give free returns, though, your consumer may be impressed with you and more ready to purchase from you.

This is one of those situations when you may have to sacrifice earnings for the time being in order to drive sales. You might be able to strike the correct balance after you have a better understanding of the costs associated with an online dropshipping business.

6 Ways to Cover the Shipping Cost When Dropshipping

When you have knowledge of how to calculate shipping costs for your dropshipping business, keep reading to find out which of the most popular dropshipping options will work best for your online store.

1. Increase Product Price to Cover Shipping Costs

Based on the shipping calculation mentioned above, there are several approaches to raising your product price in order to reduce your delivery costs over time. You have three options: charge what you spend, use a simple flat-rate fee, or utilize the tiered shipping system described in the preceding section.

2. Anticipate Any Shipping Fee Changes from Suppliers

The shipping costs fluctuate throughout the year. They can even rise by 10% to 30% around the holidays. Every year, all carriers alter their shipment pricing for labor and fuel costs before and throughout the Christmas season.

To maintain track of shipping pricing changes, keep an eye out for notifications from your dropshipping suppliers or shipping firms.

3. Understand Your Customers’ Expectations on Shipping

Customers are the most important aspect of any dropshipping business. You must be upfront about your shipment times to keep customers wanting to return. Always provide your consumers with a tracking number, so they can know when their package is on its way.

Furthermore, be open about the shipment time, even if it is longer than most people are willing to wait. It's preferable to them, assuming their stuff arrived late.

4. Reduce Size of Packages

The size and weight of your package is a sure-fire strategy to save money on shipping charges. Your objective is to make your product as light and tiny as feasible.

The more expensive it is to send your product to your consumers with the bigger and heavier boxing. Larger products can take longer to reach buyers, making them less likely to make repeat purchases on other items.

Controlling the weight of a product is challenging, but the packaging you use is something you can do. Many drop shipping beginners believe that at the start of their adventure, they should go for a bespoke carton box, but this needs a minimum order quantity (typically 500) and results in a lower profit margin.

It may be costly to package items. Fortunately, dropshipping vendors offer complementary packing. Until you have enough funds to customize your own packaging, it is sensible for drop shipping novices to use white label packaging offered by suppliers.

Take advantage of every opportunity to save money. Now that you know how to acquire free boxing, you can concentrate on minimizing its weight and size in order to save money on dropshipping shipping expenses.

5. Choose a Proper Shipping Carrier

The carrier you choose might be the difference between breaking even and profiting. There are various top-rated shipping providers to work with if you're dropshipping. Typically, dropshipping providers collaborate with a number of shipping businesses to offer a variety of price and shipping options.

As a result, as a drop shipper, you may analyze the various prices offered by those organizations and select the best alternative for you.

6. Measure Shipping Fees in Different Countries

Shipping to different nations can have a significant impact on shipping prices. Another factor to consider is that many international shipping companies refuse to transport to remote islands.

Set up distinct shipping zones for all the nations you wish to send to avoid this. Take the time to look into the different shipping charges for these various nations. Adjust the shipping cost for consumers based on their location after that's done.

Customers who live in countries where shipping is less expensive can receive free shipment, giving them an added incentive to complete their orders.

As a result, you must be open and honest with your consumers regarding shipping prices. Don't offer "free shipping" just to have the buyer discover at checkout that they must pay to ship. Make it clear that delivery is only free in a few countries.

Final Words

Every drop shipper needs to cope with the shipping costs in dropshipping business. It may eat into your profits and become a bothersome expenditure. However, with a little study, time, and effort, you may discover a solution to reduce shipping expenses and reinvest the savings in developing your business.