Understanding Flat-Rate Shipping vs Live-Rate Shipping (Infographic)

AMANDA MARTINYUK Apr 05, 2023 • 4 Min read
Benefits & Drawbacks Flat-Rate Shipping vs Live Rate Shipping

As eCommerce continues to grow in popularity, businesses face the challenge of providing reliable and cost-effective shipping options for their customers. 

A study from Statista showed that high shipping costs is the number one reason customers abandon their cart when online shopping.

One of the most significant decisions businesses have to make is choosing between flat-rate shipping and live shipping. Both options have their pros and cons, so it is essential for businesses to understand the differences between them and decide which one is best for their specific needs. 

In this article, we'll break down the differences between flat-rate shipping and live shipping and help you make an informed decision about which shipping method to use. So, let's dive into the details and figure out which option is best for you.

What is Flat-Rate Shipping?

As the name suggests, flat rate shipping is a method where a fixed shipping rate is charged to customers, regardless of the weight or size of the item. 

Flat-Rate Shipping

With flat-rate shipping, carriers set the rate, and businesses can choose to pass on the costs to their customers or absorb some or all of them into their pricing strategy.

Benefits of Flat-Rate Shipping

Flat-rate shipping offers several benefits to businesses that choose this shipping method. One of the most significant advantages is the predictability of shipping costs. With flat-rate shipping, businesses can calculate the exact shipping cost upfront, eliminating any surprises or unexpected fees. 

This predictability allows businesses to budget and plan their expenses more effectively, which can be particularly helpful for small businesses or those with limited financial resources–and lends well into creative pricing structures. 

Additionally, this method saves time and effort since businesses do not have to calculate shipping costs for each order individually or pay for software to do this. This streamlined process can help businesses process orders more quickly, leading to greater customer satisfaction and repeat business.

Another benefit of flat-rate shipping is that it is suitable for businesses that ship heavy or large items. With flat-rate shipping, the cost remains the same regardless of the size or weight of the item, making it an ideal option for businesses that regularly ship items of varying sizes and weights. This way, your customers will feel confident and happy to buy any of your products, big or small. 

Overall, flat-rate shipping can make the most sense for eCommerce companies in the following scenarios:

Products of similar size and weight: If your eCommerce store sells products that are similar in size and weight, then offering a flat-rate shipping option can simplify the checkout process for customers and increase conversions.
Domestic shipping: If you primarily ship products domestically, then offering a flat-rate shipping option can be a great way to attract customers who are looking for predictable and affordable shipping costs for their eCommerce orders.
High volume of orders: If you receive a high volume of orders, then offering a flat-rate shipping option can streamline your fulfillment process and reduce the time and cost associated with calculating shipping rates for each eCommerce order.
Limited shipping options: If your store has limited shipping options or carriers, then offering a flat-rate shipping option can provide customers with a sense of security and predictability in their shipping costs for their eCommerce purchases.

Drawbacks of Flat-Rate Shipping

It's important to note that offering a flat-rate shipping option can also have some downsides, such as potentially higher shipping costs for customers who only purchase small or lightweight items on eCommerce platforms.

The lack of flexibility is probably the most significant drawback of flat-rate shipping. Since the cost is fixed, it may not be cost-effective for lightweight items, as the cost of shipping could be significantly higher than the actual shipping cost. 

For example, a small item that weighs only a few ounces, like jewelry, may have to pay the same shipping fee as a larger, heavier item, like a full winter coat. In this case, the fixed fee could deter customers from purchasing lighter, smaller, or cheaper items, leading to a loss in sales for the business.

Moreover, businesses that sell fragile or perishable items may need to use specialized packaging or shipping methods to ensure that the items arrive at the destination intact and in good condition. In this case, flat-rate shipping may not provide the necessary protection for the items, leading to damages and losses.

What is Live Shipping?

Live shipping, also known as real-time shipping, is a shipping method that calculates shipping costs based on the weight, size, and shipping destination of the package. This option is typically used by businesses requiring more flexibility in shipping options.

Live Rate Shipping

Benefits of Live Shipping

The biggest benefit of live shipping is accuracy. Because the cost is calculated based on weight, size, and destination, businesses and customers can be sure that they're paying the correct and fair amount for shipping. If you ship large or heavy items, then offering live rate shipping can help you identify cost-saving opportunities by comparing shipping rates from multiple carriers and selecting the most cost-effective option for each order.

Live shipping also provides flexibility in shipping options, allowing businesses to choose from a variety of shipping services based on their individual needs. For example, if a company requires extra protection and wrapping for some of their products, this may be the right shipping method. 

Live rate shipping makes the most sense for eCommerce companies in the following scenarios:

Products of varying size and weight: If your store sells products of varying size and weight, then offering live rate shipping can ensure that customers are charged the appropriate shipping cost based on the exact dimensions and weight of their order.
International shipping: If you ship products internationally, then offering live rate shipping can help you accurately calculate the shipping costs associated with each order based on the destination country and the shipping carrier.
Real-time shipping rate API: If your eCommerce store is integrated with a real-time shipping rate API, then offering live rate shipping can provide customers with up-to-date and accurate shipping costs that reflect the latest rates from shipping carriers.

Drawbacks of Live Shipping

The drawbacks of live shipping can have significant implications for shoppers. When shipping costs are based on weight, size, and destination, it can be difficult for shoppers to anticipate and budget for shipping costs. The unpredictable nature of live shipping can also result in unexpected shipping costs that shoppers may find frustrating or even prohibitive.

Moreover, the added complexity of managing multiple shipping options and calculating costs for each package individually can result in delays in shipping, which can be frustrating for shoppers who are eager to receive their purchases. The lack of ease and clarity in the shipping process can also negatively impact the customer experience and lead to lower customer satisfaction.

At eShipper, we understand the importance of providing a seamless and transparent shipping experience for both businesses and shoppers. That's why we offer a range of shipping solutions that are easy to use and provide clear and upfront pricing – that you can pass along to your customers.

Which Option is Best for Your Business?

When it comes to selecting between flat-rate and live shipping, it's essential to consider several factors that can help you make the best decision. 

The weight and size of your products are crucial as they play a significant role in determining shipping costs. While live shipping provides accurate rates based on package dimensions, flat-rate shipping may not be cost-effective for heavier or bulkier items.

Another factor to consider is shipping volume. For larger volumes, flat-rate shipping is an efficient option as it streamlines the shipping process and eliminates the hassle of calculating shipping costs for each package.

Customer expectations are also crucial to consider. While some customers prefer flat-rate shipping for its upfront simplicity, others prefer the accuracy of live shipping to pay for the exact shipping cost. By considering the advantages and disadvantages of each shipping method, you can provide your customers with a reliable and efficient shipping service that meets their needs.

Infographic Flat-rate shipping, calculates shipping costs, Shipping method, Shipping costs, Shipping options

Bottom Line

Shipping doesn't have to be a headache for your eCommerce business! With the right approach, you can choose a shipping method that meets your unique needs and supports your growth.

At eShipper, we're passionate about making shipping simple and stress-free. Let us help you streamline your shipping process so you can focus on what you do best – growing your business!

Contact us today to learn more about our expert shipping services and how we can help you take your business to the next level. 

Our team of experts is always here to answer any questions you may have and help you find the perfect shipping solution for your eCommerce needs.

Thanks for reading, and happy shipping!

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