The Pros and Cons of Flat Rate Shipping for Online Retailers

The Pros and Cons of Flat Rate Shipping for Online RetailersMost postal services and shipping carriers charge postage by weight, but there is another pricing option called flat rate shipping. Some online retailers prefer it to standard shipping due to a number of benefits, but one should never forget that for every pro there is a con. So what are the pros and cons of flat rate shipping for e-commerce businesses?

We’ve already wrote an article about the difference between standard shipping and flat rate shipping, so here’s just a concise summary of it for you to get the idea. With standard shipping, the cost of shipping is determined either by the dimensional or by the gross weight of the package, whichever one is greater. With flat rate shipping, the shipping rates depend on the size of the standard shipping box or envelope.

In addition, the cost of flat rate shipping sometimes does not depend on the final destination of the package, enabling online businesses to ship packages across multiple shipping zones for the same price, so long as they fit into one of the standard flat rate boxes supplied by the carrier and do not exceed maximum weight. However, this varies from carrier to carrier. Finally, holiday surcharges usually don’t apply to flat rate shipping.

Flat rate shipping helps standardize shipping costs, so many online stores use it to optimize their business processes and find the balance between the needs of their businesses and customer expectations. It does have a lot of benefits for online retailers, but there are a few disadvantages to it too. Let’s take a closer look at the pros and cons of flat rate shipping.

Flat Rate Shipping: Pros

  1. It allows to standardize shipping costs. While shopping online, most people like to know the shipping cost right off the bat for an easier comparison between different online stores. Flat rate shipping allows online retailers to make the shipping cost clear to their customers and avoid surcharges during the peak season, which customers will definitely appreciate during their Black Friday and Christmas shopping sprees.
  2. It allows to save on packaging as it is supplied by the carrier. Most carriers supply flat rate shipping boxes and envelops free of charge (to be more precise, its cost is already included into the shipping rates), which allows retailers to save on packaging. It also makes the fulfilment process easier; since flat rate boxes are standardized, there is no need to weigh and measure every package before shipping it, which saves quite a lot of time.
  3. It makes it easier for retailers to offer their customers free shipping. When it comes to online shopping, most customers prefer free shipping. Due to standardized flat rate shipping prices, which usually increase once a year and stay the same the rest of the time, online retailers can factor the shipping cost into the product prices or calculate a free shipping threshold based on the flat rate shipping cost and their profit margin.

Flat Rate Shipping: Cons

  1. It can be more expensive than standard shipping. Depending on the shipping destination, standard shipping may turn out more cost-effective than flat rate shipping in the long run. Flat rate shipping allows to save on long-haul deliveries, whereas standard shipping is better for short-distance deliveries. In addition, flat rate shipping is not a cost-saving option for retailers that ship mostly small and lightweight packages.
  2. It is not always better for customer experience. Although standardized shipping cost normally does contribute to positive customer experience, there are aspects to flat rate shipping that customers might not like. For example, flat rate shipping usually takes more time than standard shipping and doesn’t have a guaranteed delivery date. This may discourage customers for whom delivery speed is more important than the cost of shipping.
  3. It does not allow branded packaging. Flat rate shipping does not mean that you may use carrier-supplied packaging; it means that you are required to use it. Due to this, flat rate shipping is not the best choice for e-commerce retailers that want to make the most of all the branding opportunities they can get and have full creative control over the customer experience.

To cut a long story short, flat rate shipping has its pros and cons just like standard shipping, and whether the pros outweigh the cons depends on the needs and priorities of each particular business.