Most e-commerce businesses are familiar with the importance of calculating Cost Per Order (CPO) and finding ways to optimize the cost of fulfilling orders. But it’s equally important to break this down to analyze the key costs with a lot of influence over your fulfillment costs – namely, the cost of shipping.
Shipping cost per order is a vital metric in e-commerce to help an online store control its shipping expenditure and find new ways to keep their strategy cost-effective. Calculating shipping cost per order empowers businesses to understand shipping expenses on a more granular level, enabling them to make more informed decisions about their shipping strategy and how to scale efficiently without their shipping costs spiraling.
In this blog, we’re going to explore how to calculate shipping per order, why it matters, and what e-commerce brands can do to lower their domestic and international shipping costs and increase product margins.
What is shipping cost per order?
Shipping cost per order is a metric used to calculate shipping costs incurred by an e-commerce brand to ship a single order to a customer. This is expressed either as a flat figure or as a percentage of total order value.
Your average shipping cost per order can be calculated by dividing your total shipping costs over a certain period of time by the number of orders shipped:
Shipping Cost per Order = Total Shipping Costs / Number of Orders Shipped
Why is calculating your shipping costs important?
If shipping expenses are not monitored closely or used to inform shipping strategies, this can result in e-commerce brands making a loss on some orders and losing profit margins. Taking the cost of shipping into account means that brands understand to what extent they need to offset shipping costs, especially if they plan to offer free shipping or…
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