Marketplace Shipping FAQs: Enhance Your Shopify Multivendor Stores

Simplify Marketplace Shipping Options With Shopify + Shipturtle

Cart abandonment is a serious issue in any multi-vendor marketplace. You can only imagine how frustrating it is for customers to find confusing shipping options, hidden fees, and unexpected delays after adding items from various sellers.

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There are various decision points here for you to work on the right shipping marketplace options.

The right answers may depend on the maturity of your marketplace, vendor skillset, customer behavior on your marketplace website, location of your physical warehouses, and your preferred logistics and shipping partner.  

Welcome to our comprehensive guide to marketplace shipping FAQs. Whether you're a seasoned seller or just starting out, understanding the ins and outs of shipping on online marketplaces can be crucial to your success.

In this blog, we'll cover a variety of topics related to marketplace shipping, including:

Q1. What Kind of Marketplace Shipping Methods are Best for My Customers?

There are broadly three kinds of shipping options that you can offer to your customers:

I. Ship standard or expedited

The most common option that lets you ship customers by surface or air and charge accordingly.

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Expert advice - You may configure it easily with Shopify’s native feature of Shipping Profile. Login into your Shopify partner account and make appropriate changes.

II. Ship using the preferred carrier

Here, you may offer the customers their choice of Shipping carriers like FedEx or UPS. This can be a great feature for time-sensitive and expensive products as it gives your customers complete freedom to view which shippers are safer or cheaper.

Expert advice - This option needs a feature for “Carrier calculated shipping rate” or “3rd party live shipping rate” - available only on advanced Shopify plans, and needs a custom app. Read more - 3rd party rate calculator.

Find a curated list of the best shipping rate calculators here.

III. Pickup the product from the warehouse

You may offer the ability to pick up the goods directly, usually for free. This is usually the standard in hyperlocal, community, or peer-to-peer marketplaces.

Expert advice - This is a complex solution and requires custom development.

Shopify by default requires pickup settings to be configured at the Location level where Products need to be assigned to that location. This cannot be managed by the Vendors themselves. Also, this does not work in cases of checkout baskets having products belonging to different sellers.

However, using Shipturtle’s Split Cart feature and 3rd party rate calculator can help you configure the same.

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Now, when your customers fill their carts with products from various vendors, magic happens:

• Seamless division: Their cart automatically splits by seller, creating organized sections for each.
• Vendor-focused checkout: They can review and pay for each vendor's items separately, simplifying the process.
• No more checkout chaos: Bid farewell to the stress of managing mixed products at checkout.

Further, by enabling 3rd party shipping rates, you're unlocking a world of transparency and choice for your customers. During checkout, they'll see live rates from your integrated shippers – think USPS, UPS, FedEx, and more – specific to their order's weight and destination. This means:

• No more hidden fees: Customers see exactly what shipping will cost, leading to trust and informed decisions.
• Flexibility reigns: They choose their preferred carrier based on price, speed, or familiarity, boosting satisfaction.
• Accurate costs for you: Say goodbye to relying on estimates and potential overcharges. Pass on real shipping costs directly, streamlining your operations.

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Q2. How Much Should I Charge My Customers on Checkout? And How Do I Calculate it?

Customers across the world are often more sensitive to the shipping cost rather than the product cost since while the latter is something they “get”, the former is something they “spend”.

With that important insight out of the way, you may base your shipping options on what most multi-vendor marketplace owners do in decreasing order of frequency:

I. Bake shipping price into the product

You may offer flat or free shipping at checkout.

Expert advice - Shopify’s native feature of Shipping Profile allows the same. Login into your Shopify partner account and make appropriate changes.

II. Offer tiered shipping prices

You may vary shipment pricing options based on the order value in the cart or the weight of all the products in the basket.

Expert advice -  While Shopify’s native feature of Shipping Profile may allow tiered pricing, it is not possible to set different rates at the Multi-Vendor level.

To sell vendor-specific shipping Profiles, use Shipturtle’s Marketplace Shipping Profile.

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You may tailor rates to each vendor based on unique factors like:

• Warehouse location: Proximity influences shipping costs.
• Product size and weight: Bulky items require different handling.
• Shipping speed: Air vs. surface options cater to diverse needs.
• Vendor policy: Choose between order value or weight-based pricing.
• Pricing strategy: Free or discounted shipping options supported.

III. Charge actual shipping prices

You may simply collect the actual shipping rate charged by the shipper at checkout.

Expert advice - This option needs a feature for “Carrier calculated shipping rate” or “3rd party live shipping rate”.

However, it is available only on advanced Shopify plans and needs a custom app like Shipturtle on top of it. Read more - 3rd party rate calculator.

I. Cloud dashboard

Here, all options outlined in the article so far are possible where they can integrate their accounts or take shipping labels made by the merchant.

II. Vendors syncing their website

In this case, it mostly makes sense that the vendors fulfill their orders on their website admin. Later, Shipturtle does an automatic sync of the tracking information with your marketplace.

There are possibilities for the marketplace to also make the shipping labels in this case, but it may lead to complexity and is not suggested.

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Q4. Who Pays for the Shipping / Whose Shipper Account Is Used for Creating Labels?

The selection for this impacts both commercials and operations. As can be expected there are only two options here:

I. Shipping borne by self

The go-to option for most marketplaces when starting and working with small vendors.

II. Shipping borne by vendors

Typically used by mature marketplaces where they work with large vendors whom they can trust or those who have their websites, which can use the Vendor sync feature (more on this later)

Shipturtle is integrated with over 200+ carriers. You may want to learn more about it in our detailed article on configuring shippers and access.

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Q5. How Do You Account for the Shipment Charges at the Time of Payout?

At the time of generating payout to the vendor for the orders fulfilled, your dropshipping business or marketplace on Shopify may consider any one of the following shipping options:

I. Transfer shipping charges collected to the vendor

Applicable when the vendor pays for the shipping.
Expert advice - Take a look at the Manage Product Commissions feature of Shipturtle.

II. Keep the shipping charges collected

Applicable when the marketplace merchant pays for the shipping
Expert advice - Take a look at the Manage Product Commissions feature of Shipturtle.

Shipturtle allows you to set commissions with precision, ensuring fair compensation for vendors and optimal profit margins for your marketplace.

Here's your guide to the five commission levels:

1. Global Commission: Your default setting is applied to all products unless overridden.
2. Vendor Commission: Set specific rates for individual vendors based on their needs and performance.
3. Category Commission: Tailor commissions to different product categories, reflecting varying costs or margins.
4. Product Commission: Control the commission for individual products for special promotions or unique items.
5. Channel Commission (Advanced): Leverage your online channel's cost prices to automatically calculate product commissions (overrides other levels).

Commission Precedence: Global < Vendor < Category < Product < Channel Commission

III. Charge the vendor for the actual shipping cost incurred

In many cases, the marketplace does not charge the customer for shipping or charges a nominal amount (covered above).

In such cases, they may choose to pass on the cost of the actual shipping label to the vendor.

Expert advice - This is a use case that Shipturtle supports only as a custom development due to its high complexity.