What to Expect When Selling on Amazon.com – The Drill Down: Shipping

 

There are many facets of shipping to be considered for Selling on Amazon.com. These include: meeting the promise date, quality packaging, shipping the right item in excellent condition, and how much to charge for shipping. Why are these important?  Each of these impacts the buyer experience and that, in turn, impacts your bottom line. Successfully managing your shipping policies, rates and procedures is a key factor in your overall success on Amazon.com.

When the item is late, the packaging fails, or the product is damaged, that will often lead to negative feedback, refunds and/or A-to-z Claims, all of which negatively impact your order defect rating and your bottom line. To learn more about this, watch Understanding Customer Metrics.Other potential impacts to success occur when your shipping rates are too high and scare away the buyer, or you set them too low and lose money. These are important factors to consider in planning your business on Amazon.com.

Let’s take a look at the decisions you need to make in determining your best practices for managing shipping options on Amazon.com. In this post we’re going to talk about shipping settings and rates and assume that you know how to pack your product. If you want more information on packaging, please review the October 30 post titled Shipping Tips Can Save You Chips.

Why choose one shipping option over another? There are three basic parts to setting up shipping rates: choosing how the shipping cost will be calculated, deciding where to ship or not, and what service levels will be offered for each shipping region. Some sellers become confused by the default settings they find in Seller Central and never change those to suit their company needs. The default option and pricing in Seller Central is only a placeholder, and you have a variety of options to customize those settings for your business. You need to make a choice as to how you will charge for shipping and what rates will apply to provide the optimal customer service, and please be aware you can change these at any time (plan ahead, the change takes 4 hours to display in the system).

For the Selling on Amazon program there are three methods for setting up your shipping: charging per item and per order, charging by weight and per order, or scaling the charges by revenue band (called banded shipping). When choosing a method, remember that you are setting up your Amazon Seller Central account with processes and policies as they relate to doing business with Amazon.com customers. Think about your business on Amazon holistically and establish the best process for this channel, as well as one that works with your existing systems.

Per Item and Weight-based Shipping are both managed in the same area of the shipping settings tool. If you offer item/weight-based shipping, you set a flat per-shipment charge and either a per-pound charge or a single per-item charge for handling. Only choose the weight-based option if you know the shipping weight of all your individual products – and don’t forget to enter that data in your product upload or the system will multiply the charge times zero. The flat per-shipment charge is for you if your business can charge a single price to ship any item. Keep in mind the additive factor when setting the per order charge as it will be added to the weight or per item charge and the total needs to be something that isn’t going to scare off your buyer while covering your costs. In other words, do a bit of planning.

Banded Shipping is another option within the shipping settings tool. If you offer banded shipping, you create revenue bands, such as $0 to $25, $25.01 to $50, $50 and up. Each revenue band has its own shipping rates: $X if the value is $0-25, $Y if $25.01-$50, etc. Choose this method when you can set logical shipping weights for those bands and still keep the customer happy and make money. This is especially useful where you do not know the weight of your products, understanding that heavier products will cost more and take more money to ship.

What are the shipping promises on Amazon.com? What does that term mean – shipping promise? When you set up a shipping option you are agreeing to a Service Level Agreement (SLA) that is a promise that the order will arrive within the number of days as established by Amazon. Check your shipping options chart or Seller Central help topics to view the various SLAs, or promises, for each region and level of shipping.

Once you’ve reviewed those, take the time to figure out what that means within your business practices. Don’t do business by default. Instead, plan and prepare for best results for you and the buyer. Questions you might consider: Will you need to make some adjustments to your policies for Amazon sales? Are there considerations to manage with drop shippers? What are the lead times you need to meet these promises?

Lead time to ship. Another facet of the shipping settings is your lead time to ship, also known as handling time. This refers to the time that it takes the product to get into the shipping cycle (sometimes called processing time). The default is 1-2 days. This means you have 1-2 days to get it to the actual shipping company and that is added to the SLA or promised shipping time per the charts. For example, the SLA for Standard shipping in the Continental U.S. is 3-5 days. If your customer places an order and wants Standard shipping, you are responsible for delivering the order within 3-5 days business days from when the order ships (the 1-2 days), so they will expect it in 4-7 days from the time they ordered.

It’s not complicated, but it does require management, especially considering how often you pick up your order report and do your shipping. When you miss those shipping promises the clock starts ticking on customer frustration and all the results that follow. Note: you can change the lead time to ship from the default to other options. More information here.

Shipping Policies. An additional best practice is to post information about your shipping policies. For buyers who dig a bit deeper, it’s great to give them the confidence of knowing you’ll take great care of their order. In the Info & Policies shipping section, you might explain how often you intake orders, how frequently you ship, what carriers you use, and other pertinent information that help set buyer expectations.

When you set up your shipping options, you’ll choose the regions and the types of shipping (standard, expedited, two-day and one-day) so that only those you choose are displayed for the buyer, but it’s always good to re-iterate those in your policies. Other decisions you’ll be making are whether or not to ship internationally or whether or not you can ship to post office boxes or APO/FPO addresses. If you cannot, it is often good to explain that so buyers understand their options as well. Again, not complicated but good customer service and good for the overall buyer experience.

Amazon policies. Chronic late shipping will weigh negatively in your performance standing. A late order is one whose shipment confirmation is overdue by 3 or more days. Late shipment rate is the number of late orders divided by the number of orders in the time period of interest. It is important to confirm the shipment of your orders by the expected ship date so that customers can see the status of their shipped orders online. Orders that are confirmed late may lead to increased customer contacts and negatively affects the buyers’ experience.

Overall, the message here is that you want to manage your shipping options just as you manage your pricing and the rest of your business. It is all part of the total cost the buyer considers. Then too, how you manage your shipping processes and policies can set you above the crowd when those comments in feedback say “great packaging, arrived safe and sound, and on time!” If you can ship faster than the promised service level agreement, why not? Always best to beat or meet expectations whenever possible.

An extra resource: In some cases you might want to alter your default shipping settings for a product or a set of products. For example, if you sell electronics, you might not want to ship a 200 lb TV to Canada. You can override shipping rates for selected products with a Shipping Overrides file. This option is only available through the use of a template. Find more at Override Shipping Settings Using a Text File Feed. Again, this is great information to put in your Shipping Policies section.

In this series, we’ve been covering the basics of What to Expect when Selling on Amazon.com. Next we’ll tie that together to explore why how you set up your store influences your performance and why these are important for winning the buy box. Also coming soon: matching to existing products, promotions, gift services and everything you need to know about managing orders.

Cathi C.

Comments

[Amazon Seller Support]

You can upload a shipping overrides file to override the shipping calculation methodology for specific products. Use the Shipping Overrides Template to create a shipping overrides file.

See this Help page for more information about Shipping Overrides: http://sellercentral.amazon.com/gp/help/891

[Mainbrain]

The weak link about Amazon shipping is when you have varied items that have varied shipping costs. You cannot create different shipping profiles to match different sized/weighted items.