What is Shipping Cost Per Order?

Shipping cost per order measures the total expense of getting each order from your warehouse to the customer’s door. It includes carrier fees, packaging materials, labeling costs, and the labor involved in packing and preparing shipments. For most e-commerce businesses, shipping is one of the largest variable costs, making this metric critical for margin management and pricing decisions.

Why It Matters

Shipping costs directly eat into your margins, and they are often the largest variable cost in e-commerce fulfillment. Understanding your true shipping cost per order is essential for setting accurate free shipping thresholds, pricing shipping options, evaluating carrier contracts, and making decisions about warehouse locations. A 10% reduction in shipping cost per order drops straight to the bottom line.

How It Works

• Full Cost Calculation: Shipping Cost Per Order = (Carrier Fees + Packaging Materials + Handling Labor) ÷ Total Orders. Include all components, not just the carrier invoice.
• Carrier Optimization: Compare costs across carriers and service levels. Use rate shopping to select the cheapest option that meets the delivery promise for each shipment.
• Packaging Efficiency: Right-size packaging to minimize dimensional weight charges. Standardize box sizes to reduce material costs and simplify packing.
• Zone Analysis: Analyze shipping costs by destination zone. If a disproportionate cost comes from long-zone shipments, consider adding warehouse locations closer to customer concentrations.

How Nventory Helps

Nventory tracks true shipping cost per order across all carriers, channels, and destinations. The system’s rate shopping feature automatically selects the most cost-effective carrier for each shipment, and provides analytics showing where your shipping spend is concentrated to guide optimization efforts like zone skipping or multi-warehouse distribution.