Online stores are increasing as more industries are migrating to ecommerce platforms. If you are an online business owner, then ecommerce shipping will inevitably be a large component of your business. A company’s ecommerce shipping strategy covers all the processes from when an item is dropped into the shopping cart to how the inventory is sourced from the warehouse to how the shipping carrier gets the product to its final destination.
Here is a detailed guide on how to go about choosing the right ecommerce shipping and fulfillment solutions that align with your company’s needs.
Ecommerce Shipping Considerations
The smartest business decisions always begin at the research phase. Lookup a few shipping companies and see how they compare in the following areas:
Shipping rates and methods
Different shipping options come with different shipping rates and expenses. Which options will work best for you depend on the size and needs of your business.
Calculating shipping costs
While shipping rates vary for different options, the actual shipping costs depend on where the product is being shipped. Tariffs and taxes, among other expenses, need to be factored into the shipping costs.
Depending on the product's type and dimensions and where it is being shipped to, particular shipping packaging might be required. It is important to research the costs of these materials before finalizing the shipping process.
Insurance and tracking
Shipment tracking, integral to the customer experience, is critical. Additionally, another important aspect of the shipping process is insurance so that in the worst-case scenario, you can recoup the cost of the item in case of an accident. It's also smart to offer insurance options to customers when shipping high-value items.
International considerations from both the sending and receiving countries need to be fully understood. In some cases, tariffs may need to be paid, or customs forms might need to be filled out.
Shipping Rates and Methods
The ecommerce shipping methods you chose will come with different shipping options and rates. Depending on what your business setup allows you to do, you can choose to offer different shipping methods and rates to your customers, as listed below.
Offer free shipping
If you can, offer free shipping to your customers. Free shipping is a great way to reduce cart abandonment at the checkout process, where the customers often see hefty shipping charges.
Strategies to offer free shipping:
- Increase product prices to cover costs for shipping (customer pays).
- You pay the full price of shipping out of your margins (you pay).
- Increase product prices slightly to cover partial shipping costs (you and your customer pay).
- Offer a discount code to certain customers for free shipping.
Real-time carrier rates
For this type of shipping method, the shipping rates are calculated in real-time and reflect the expenses incurred at the time of the product's purchase. The total shipping rates will depend on the weight and dimensions of the package and the product; shipping carriers will calculate the price according to the specified shipping rates at that time.
Another shipping rate option that could work for you is flat-rate shipping, where a fixed rate is set for each order, regardless of the package's dimensions and destination.
Local delivery and pickup
Local delivery is usually easier and less pricey for both the customer and the company. It's also a great option for customers in the area who need to receive the item as fast as possible.
Calculating Shipping Costs
How much you pay for shipment ultimately decides how much your customers will pay in their total expenses. Shipping couriers base their shipping rates on different factors. These are the factors that determine shipping costs:
Shipment package dimensions play an important role in how the package is going to be shipped and handled. Smaller packages can be shipped easily, but larger packages containing appliances, for example, will come with their specific policy for total shipping costs.
In addition to dimensions, the weight of a package also determines what sort of shipping methods are available. For example, lighter and more urgently required packages are often sent through airmail or post, whereas heavier items are usually sent through couriers.
The shipping options available to you depend on where your shipping origin. If you are shipping from a remote area, there might not be plenty of options available to you other than the postal service in your territory, and it might be more expensive.
Like the origin address, the destination address also determines your total shipping costs. If the destination address is quite remote, the shipping company might need to take additional measure to deliver the package, that incurs more shipping charges.
Check each carrier's shipping calculator
Each carrier has its shipping calculator to help determine the cost. Compare each platform and then decide on your shipping partner according to which shipping company has the most compatible shipping policy.
Another factor that goes into shipping costs is the packaging in which online retailers choose to ship their products.
Branded or generic
Generic shipping materials such as plain boxes will obviously be cheaper than branded packaging. Additionally, you may choose to ship luxury or more expensive items in generic packaging for security purposes.
Consider your product and adapt
The type of product that the customer has ordered determines what sort of packaging is required. More fragile products need extra cushioning to keep the product intact during transit, whereas other products might be flexible when it comes to packaging. You can adapt to the product you are shipping and choose your packaging accordingly. For example, clothing items might not necessarily require boxes for the packaging and can easily be shipped in waterproof bags, cutting down on weight.
Add a package insert for branding
With more companies investing in the customer experience to build customer loyalty, adding a package insert can be a cost-effective way to add a more personal brand touch rather than using more expensive branded packaging materials and labels.
Keep it light and small
Do your best to limit the dimensions and weight of the total package being shipped. Also, today's conscious consumer is hyper-sensitive to excessive packaging that may be bad for the environment.
Eco-friendly product packaging and also shipping materials adds to your brand's reputation and attract eco-conscious consumers. The trend now is moving toward cardboard and paper tape made from recycled paper.
Insurance and Tracking
Offering insurance on top of shipment tracking can be a nice detail for customers anxious about transit reliability.
Buy insurance for high-value items
Insurance can rightfully provide both business owners and customers with a sense of security and relief during the shipping transit of expensive items. Just make sure to do your research on cost-benefit.
Shipment tracking software
Choosing the correct shipping software is critical. Online shoppers today expect easy and clear shipment tracking.
Turn your shipment tracking experience into your best marketing channel.
Malomo lets ecommerce businesses create beautiful shipment tracking experiences that also help cross-sell and up-sell products. Request a demo to learn more.
If your customer base spans different countries, you must understand the laws and tariffs in those countries. International shipping is usually costlier than domestic shipping due to the greater distance, the need for air freight, and differing tax laws.
Customs and declaration forms
For international shipments, proper customs documentation and declaration forms are usually required. These forms are available online or at your local post office or shipping retail locations. These forms carry details about the content of the imported package and its cost and other details. These forms should be properly and correctly filled out and attached to the package to avoid delays and hold-ups in customs.
Tariffs, duties, and taxes
In case there are additional customs fees due when the package reaches the destination country, the customer might need to eat these expenses, depending on what shipping company you choose. To set customer expectations and provide the best possible experience, these extra expenses need to be clearly outlined in your shipping policy, and it's a good idea to remind customers at the time of purchase as well.
Finding international fulfillment partners
Finding quality international fulfillment partners can make or break your business. Shop around and make sure to compare pricing. Also, consider only offering international shipping based on the location of your fulfillment centers.
Using a Fulfillment Warehouse
Order fulfillment is probably the most important part of any transaction, and it sets the basis for future orders as well. So how exactly does fulfillment work?
Fulfillment - What is it?
Fulfillment is the term that describes the entire process of transporting an item from the inventory warehouse to the doorstep of the customer. It starts from the moment an order is confirmed online. For most businesses, a third-party fulfillment company will handle the order fulfillment. Major fulfillment companies often offer warehouse storage facilities in addition to handling the packing and shipping process. Depending on your budget and geographic location, many third-party logistics (3PL) companies offer different ecommerce shipping solutions.
Benefits of a 3PL
Outsourcing your order fulfillment comes with certain benefits for sure. This is why many businesses are turning to external fulfillment companies for their online orders. But there are pros and cons.
Lower shipping rates
By negotiating a deal with your fulfillment partner, you can lower the shipping rates and protect profit margins. This translates into lower shipping expenses and overall higher revenue, and for customers, this can lower shipping expenses if they are asked to pay for them.
Faster shipping to customers
Investing in a reliable shipping partner will reduce your package’s transit. For example, by working with a reliable fulfillment center, Amazon Prime can offer same-day shipping to its customers. The faster an order is processed and shipped, the faster the customer will get it, and fast shipping is one of the most critical components to meeting customer expectations.
Now for the cons:
Less customizable branding control
More often than not, outsourcing your shipping and order fulfillment means that the products are sent from the fulfillment company’s warehouses directly. Thus, getting an external fulfillment partner means that you might not have as much control over branded packaging options, or you will have to pay a premium for these services.
Pick and pack fees
If your inventory is not being stored in the fulfillment company’s warehouse, and you are not drop-shipping, then you might need to pay for the pick and pack fees. This means that the fulfillment company will need to source the products and then package them for further processing to the shipped. Pick and pack fees can be very costly.
Selecting the right shipping fulfillment policy and partner for your ecommerce business is critical for cultivating the highest customer satisfaction possible, and it can severely impact your bottom line.