Reducing Shipping Shock: How to Make Wine Shipments More Affordable
Wine bottles are delicate, heavy, and require an adults' signature upon delivery. This all comes with a price. The average shipping cost for a single 750ml bottle of wine is $21.80. This equates to over 40% of the total cost of the order, given the average unit price of a bottle is just over $30 (Source: Vinoshipper, 2023).
While shipping costs may be an obstacle to single bottle orders, economies of scale work in favor of both the customer and the producer. It benefits all parties, to “fill the case”.
Getting customers to add a second bottle to an order increases the shipping cost by just $0.30 to $22.10, and reduces the per bottle cost to $11.05. Adding a third bottle increases the shipping cost by another $1.20 to $23.30, and reduces the per bottle cost to $7.77. By the time they fill a 12-bottle case, the shipping cost per bottle reduces by 83% to $3.60 per bottle ($43.68 total shipping cost).
Due to these economies, single bottle orders have the highest cart abandonment rate. Nearly 30% of single bottle carts are abandoned at checkout. On the other hand, three, six, and twelve bottle orders have the lowest cart abandonment rates.
Various strategies can be employed to deal with shipping prices, and some of the best practices include providing upfront information about shipping costs. The most used shipping practices and their outcomes for the customers and producers are outlined below:
Pass the shipping costs onto the customer. If your products are higher priced, then this will have a lesser impact.
Customer: May feel discouraged by shipping costs and abandon their cart.
Producer: May lose potential sales due to shipping costs.
Offer to pay for shipping. Be sure to measure the cost of shipping against your gross margin per bottle and average order size, potentially adding in shipping to your bottle price.
Customer: May feel more incentivized to make a purchase if shipping costs are covered.
Producer: May see increased sales, but need to ensure shipping costs don't eat into profit margins.
Offer flat rate shipping. Offer $15 shipping for 6 or less bottles or $25 for more than 6 bottles. This way buyers will be able to price the shipping into their cart when they are shopping. There is no surprise when it comes to checkout, and so less cart abandonment issues. You need to understand your average order size and gross margin.
Customer: May feel more confident in making a purchase if they know the shipping costs upfront and appreciate the transparency.
Producer: May see increased sales, but need to ensure that flat rate shipping costs do not eat into profit margins.
Offer flat rate shipping if they reach a minimum spend. Once they add $150 or more in value to their order, shipping is $15. Measure this against gross margin per bottle and average order size.
Customer: May feel incentivized to increase their order value in order to get the flat rate shipping but may abandon the cart if the minimum spend is not met.
Producer: May see increased sales and larger order values, but need to ensure that shipping costs do not eat into profit margins as larger orders also mean more bottles.
Allow for pickups. If you have a production facility, storage facility, or tasting room you can open the doors to customers.
Customer: May prefer the convenience of picking up their order, especially if they live nearby. They will also save on shipping and be excited to meet the producer.
Producer: May save on shipping costs and potentially increase in-store sales as well as building a relationship with their customers.
Encourage customers to join your club during checkout. Clubs can include shipping and product incentives.
Customer: May feel incentivized to join the club for benefits like discounted shipping and exclusive products.
Producer: May see increased club members sign-ups and increased sales.
Encourage customers to join your mailing list. Once connected, you can provide shipping incentives in a welcome email or specials throughout the year.
Customer: May feel incentivized to sign up for the mailing list to receive exclusive discounts on shipping.
Producer: May see increased touch points with potential buyers that can be converted to sales in the future.
Reach out to abandoned cart customers. Review your abandoned cart report for orders and their average size and see if a shipping incentive would close out the sale.
Customer: May feel incentivized to complete the sale as they have received a discount and feel important by the winery.
Producer: May see increased sales but need to ensure they are reaching out to abandoned orders that will still ensure profitability with the shipping incentives.