Shipping rates: Why an aggregator might not be right for you

2022-10-10

Written by David Renwick

If you were to write a list of the ingredients for a successful retail business, chances are shipping wouldn’t be at the top. But despite often being something that runs in the background, a lot of your success depends on it.

It’s also quite intimidating – especially if you’re just starting out. There are couriers to deal with, shipping rates, label printers and a seemingly never-ending list of things you need to sort out before you can get orders going out the door on a regular basis.

So, that’s why we’ve written this article. To give you an overview of an important part of shipping – and one that can have a huge impact on your bottom line – shipping rates. We’ll explain what they are, the different types, and how you can get the best rates for your business.

What are shipping rates?

Shipping rates are the amount you charge your customers in addition to the cost of the products they order. This additional cost is added to a customer’s order total at checkout.

It’s up to you to decide which shipping rates – and methods – you offer to your customers. Or, you may just want to provide a single option to keep things simple.

You also have a lot of control over which rates display and when. For example, you might choose to display certain shipping methods only to customers in specific locations or offer free shipping if the value of their cart is over a certain amount.

How shipping rates are structured

A shipping rate can be thought of as having two distinct parts:

  1. What the courier charges you to deliver your order. We’ll explore how to get the best rates further on.
  2. The amount you add on top of the courier charge (or not). How you price your shipping rates is entirely up to you. You may want to add a small additional charge or just offer free shipping.

Let’s explore the different types of shipping rates below.

What are the different types of shipping rates?

Flat shipping rates

Flat shipping rates are specific amounts that you charge based on the order. This gives you complete control over what the customer gets charged at checkout. For example, you might charge your customers a flat $10 for shipping every time they order.

General shipping rates

General shipping rates give customers a flat rate regardless of what they’ve ordered. If you want to give your customers a choice of standard shipping for $5 or same-day shipping for $15, you would set two general flat rates for both options. Then, when a customer is at the checkout, they’ll see both shipping options available.

Price-based shipping rates

Price-based shipping rates allow you to set maximum and minimum values on flat shipping rates. As an example, you could charge a different shipping rate for orders above $50 and below $50. In practice, you might charge $5 for orders below $50 and $10 for orders above $50.

Alternatively, we find that many retailers use price-based rates to offer cheaper shipping for customers purchasing more.

Weight-based shipping rates

Weight-based shipping rates allow you to set minimum and maximum amounts based on the weight of the order. Using weight-based rates, you could set different flat rates for orders below 5kg and over 5kg (as an example). You might want to charge a flat $5 for orders below $5kg, and a flat $10 for orders over 5kg.

Free shipping rates

You can set any flat shipping rate as a free shipping rate by changing the cost to $0. You could offer free shipping on all orders, for example, by creating a general flat shipping rate with a cost of $0. We see many retailers offer free shipping as an incentive for orders over a certain price, for example orders over $100.

Calculated shipping rates

Calculated shipping rates are provided by couriers, which you then add to your store. When a customer is at the checkout, the cart information is sent to a courier and the shipping charge gets returned. This is a good option if you want to provide exact shipping costs.

Choice at the checkout matters to your customers

The shipping rates you provide to your customers can have a huge impact on your business. One shipping trends study from Shopify found that 74% of customers want to see shipping costs upfront when they’re making a purchase decision. A whopping 75% said that free shipping had a significant or very significant impact on their decision.

Regardless, it’s clear customers value choice and transparency when it comes to shipping. It’s helpful to think of shipping as just one part of your customer experience. And, as we all know, getting the customer experience right is the difference between customers that buy once and never come back, and those who will come back again and again.

How to compare shipping rates?

Comparing shipping rates is easy with the right tools. If you’re just starting out or sending orders infrequently, simply weigh your package and use an online shipping cost calculator. Then, you’ll want to send your order using the courier you’ve selected.

But this isn't scalable. How do you compare shipping rates when sending multiple orders as part of your business? And how do you manage multiple couriers without hopping between different online portals, multiple times per day?

This is where shipping and fulfilment software comes into play. Besides being a great way to reduce time spent dealing with shipping in general, shipping automation tools (like ours) can integrate with multiple couriers. This means you can easily select from different shipping rates and give this same choice to your customers right within your store checkout.

Simplify the process with shipping and fulfilment automation

Shipping isn’t exactly an easy process to get your head around, whether you ship 50 orders per week or 500. There are many moving parts to coordinate, costs to manage and constant improvements you can make, not to mention the human element.

This is where shipping and fulfilment automation can introduce serious efficiencies and cost savings.

But, a note...

Different businesses have different requirements when it comes to shipping. For example, you might operate purely online, shipping all your orders from a warehouse. Whereas another business selling the same product could use a mixture of retail stores and warehouses to get orders out.

The point is, shipping is certainly not one-size-fits-all – and the same goes for any solutions designed to automate or simplify the process.

Shipping tools: Enablers vs aggregators

You’ll want to choose your shipping solution carefully, as there are two types of shipping automation providers – enablers and aggregators.

What is a courier aggregator?

Courier aggregators are all-in-one shipping solutions where courier rates are provided for you, from a set list of couriers. This means the aggregator marks up the courier price for shipping and then “clips the ticket” on each order you ship.

In practice, this means that while there is less to think about when it comes to shipping, you can only pick from a small selection of couriers and must accept the prices the aggregator provides for you.

So, what’s the alternative?

What is a courier enabler?

Courier enablers are shipping solutions where you can integrate with any courier you like and use your own courier rates. Basically, you get to set the terms by negotiating your rates directly with your couriers. You still get all the benefits of a shipping solution but save more money.

Courier enablers also have relationships with couriers which you can use to your advantage. In many cases, enablers can send you directly to a courier rep to start the negotiation process, instead of going in blind.

Picking the best shipping option for your business

It’s a common scenario. You’ve just started your eCommerce business and you’re asking yourself “So how do I actually get my orders out the door?”.

For this reason, many retailers opt for shipping aggregators as they feel they'll save time by not dealing with the courier directly. But eventually, the equation no longer works. The peace of mind of having shipping handled by an aggregator doesn’t justify the substantial savings you can get by using a courier enabler – a shipping provider who will let you use your own courier rates.

Unless you’re sending a small handful of orders each week, the benefits of an enabler over an aggregator always win out.

The best courier enablers manage the entire fulfilment process for you, giving you the tools to reduce manual labour and human error when it comes to shipping. Basically, one dashboard to manage your entire shipping operation, even if you’re using multiple couriers and shipping from different warehouses and stores.

Starshipit: The courier enabler designed to help you do more

Starshipit is a shipping enabler which integrates with all major couriers and eCommerce platforms, as well as featuring a robust API to integrate less popular platforms. This means you’ve got immediate access to a wide range of platforms (like Shopify) and couriers (like Australia Post).

We’ve also got relationships with the couriers, which means that if you’re using Starshipit, you can negotiate the best shipping rates directly with your chosen couriers.

Wrap up

And that’s shipping rates! We hope you found this guide useful. If you’d like to learn more about the benefits of Starshipit’s automated shipping and fulfilment, we recommend checking out our features pages or booking a demo with one of the team. Or, if you’re more hands-on, sign up for a 30-day free trial to see what Starshipit can do for your business.

David Renwick

David Renwick

David is Starshipit's Content Marketing Lead. When he's not whipping up a fresh new product update or chatting to customers for an exciting case study, you'll typically find him scoping out coffee spots and talking about what's on at the movies.

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