eCommerce shipping and fulfillment is an extremely important factor to consider if you want to deploy a successful online store. Now that you’ve put all the time, money, and effort into your eCommerce website, it’s time to solidify the customer experience. While you have a great deal of control over your website and the level of service your customers get when dealing with your online business, the shipping experience is ultimately in the hands of a third party. Pretty scary, huh?
Although you will ultimately use a third party provider to physically deliver your products, you shouldn’t need to feel anxious about the final step in the customer experience. Shipping is a key part of your business. That’s why you need to put as much thought and time into planning eCommerce shipping and fulfillment as every other part of the process.
Depending on your strategy, shipping can be a major expense for your business. That’s why it’s important to plan and map out a well-defined strategy from the onset. While the world of shipping and fulfillment may seem foreign and complex, we’ve created this ultimate guide to equip you with all the knowledge you need to do it right the first time around.
Let’s dive deeper into the eCommerce shipping and fulfillment process and create a plan that helps you balance shipping costs with profitability, streamlines the shipping process, and helps you choose the perfect option for your business.
Shipping Strategy 101
Before you get to the complicated parts of the process, it’s important to set the basic foundation. You can come back and change these over time, but here are the key decisions and steps you need to take to implement a high-level shipping strategy.
- Choose your shipping rates and methods. Are you going to pass the cost of shipping onto your customers? Will you offer free or flat-rate shipping to help your customers save? Will you absorb all or part of the costs? You’ll have all the information you need by the end of this article to make the right choice for your business.
- Keep product weights in mind. To streamline the shipping process, you should make sure each product is up-to-date in its dimensions and weight. This will help you determine your total costs. If you do decide to pass the cost of shipping to your customers, they will have an accurate expectation of shipping costs.
- Decide upon a preferred packaging. Decide what type of packaging is the right option for your products. You want to make sure your customers get their products in the condition they expect. Once you’ve selected your packaging, you can add this information to your third party provider to properly calculate shipping costs.
- Consider sourcing your packaging. You can get free packaging services from USPS, UPS, and DHL. Invest is branded packaging if it’s part of your strategy and source your packaging for the best results.
Choose Your Shipping Rates and Methods
Before you can ship any products, you need to decide on a pricing strategy for your shipping, as mentioned above. There are several common methods. Your choice should be based on your specific business needs and your financial status.
When Offering Free Shipping
Free shipping continues to be on the rise. It’s a great way to reduce shopping cart abandonment and improve customer experience. By offering your customers free shipping, you give them an incentive to shop with your business. But, just because you offer free shipping doesn’t mean you can’t absorb the costs in other ways if necessary. To make free shipping work, you need to choose who is going to absorb the cost. These are your options:
- The customer pays. You will increase product prices to cover the costs of shipping.
- You pay. You cover the full price of shipping.
- You both pay. You will increase your products slightly to cover partial costs.
- You both pay through upselling. Offer a discount code to certain customers for free shipping if they spend a set amount.
Charge Real-Time Carrier Rates
Another effective eCommerce shipping and fulfillment strategy is to charge real-time carrier rates for shipping. This gives customers options to generate real-time shipping prices from various carriers. Customers understand exactly what their options are and what the costs associated will be. Let your customers choose and pay for the exact service they want.
Charge a Flat Rate
This final option is also popular. The best practice used when offering flat rate shipping is to make sure you don’t drastically undercharge or overcharge your customers. Flat rate shipping works best for product lines with items that have similar sizes and weights. The process is less effective if you have a wide variety of products that vary in size and weight.
How to Calculate Shipping Rates
Regardless of what shipping courier you use, a variety of factors come into play when determining the costs of shipping. These include:
- Package size
- Package weight
- Origin country
- Destination country
Since all couriers offer different options, it’s difficult to compare services exactly. Every business will have its own unique variables.
When it comes to your business, you need to consider your margins. To be successful at eCommerce, you need to carefully watch your profit margins. eCommerce shipping and fulfillment represents a significant expense for your business. If you don’t do your research, you will cost your business money in the long run. Before you decide which option is best for you, you should create a chart that maps out all the costs associated with effectively delivering your products to customers.
You will be surprised at how quickly small charges associated with shipping add up. Consider:
- Cost of product
- Shipping costs
- Credit card fees
- Profit margins
Leveraging Your Packaging to Enhance Your Marketing Strategy
The world of eCommerce continues to evolve. As it does, so does the expectations of online customers. Years ago, it was assumed that customers would have to pay for shipping. Today, everything from packaging to shipping is part of the entire eCommerce shopping experience.
What does this mean? Many businesses are competing to impress their customers beyond just their products. You need to exceed their expectations and deliver the ultimate experience. This includes using your packaging and presentation to set yourself apart. In addition to improving the customer experience, packaging can help build brand awareness. When it comes to today’s expectations, small details go a long way to deliver an exceptional impression.
Some businesses even implement an unboxing strategy that goes beyond the product. They offer customers the opportunity to unlock savings and promotional products if they record the process of opening their packages on social media platforms. This is a great way to build brand awareness through customer’s word of mouth.
Consider All Packaging Options
Before you ship your products, make sure you choose a packaging option that is both safe and effective. Boxes and envelopes are the most common options for packaging. While envelopes are commonly padded or unpadded, most businesses who use boxes add additional packaging materials to ensure the safety of their shipment.
Package cushioning and bubble wrap are common. Shop around for the most cost-effective option for your business. Pick the option that costs you the least amount of money while ensuring the safety of your products. There are several options to choose from if you use boxes. They include:
- Bulk Cargo
- Corrugated Pads
- Easy-fold Mailers
- 32 ECT Lightweight
- Storage File
- Moving Boxes
- Side Loaders
- Wine Shippers
- Insulated Shippers
- Wood Crates
Keep in mind that the best practice for packaging is to keep it light and small. Because cost is based on size and/or weight, you should choose the smallest options to avoid wasting money. Depending on what products you offer, you might need to consider carrying a variety of packaging sizes and materials to meet your needs.
Determine Whether You Need Insurance and Tracking
Depending on what you’re selling and the value of your products, you need to consider whether or not you should implement insurance and tracking as an added security measure for your eCommerce shipping and fulfillment strategy. While insurance and tracking aren’t free, it is relatively inexpensive. That’s why it might be a good resource in case your packages get lost or damaged. Some couriers offer complimentary coverage up to a certain dollar amount. You should always consider purchasing insurance for big-ticket items. This way if your package does get lost in a rare case, you will be covered.
Customs Declaration and Forms
If your eCommerce business ships outside of your own country, you’ll need to include the proper customs documentation. You can easily find these forms online or through your local courier. These forms are essential because they tell the customs officers what is in the package, how much it costs, and whether it is a gift or merchandise.
Check with your country’s postal service to find out which forms are necessary. Fill out and attach all forms to your package. Complete forms to the best of your knowledge and be honest. This will prevent any delays with customs.
What about tariffs, taxes, and duties?
If there are additional customs fees due when a package arrives in another country, your customer will be responsible for them at the time of delivery. It’s important you include this information in the shipping policy page of your website. This will prevent customers from being surprised by unexpected fees. You can use a customs duty calculator to estimate what type of fees your customers will incur.
Setting Up Business Accounts
Once you have decided on the carrier you want to use, you should consider setting up business accounts with the company. There are a variety of benefits to doing this. This is an effective way to save money on your eCommerce shipping and fulfillment strategy. The benefits include:
- Expense tracking
- Online tools
- Effective management
- Preferred rates
- The open line of credit
Time for Labels
Now that you have a presentation, packaging, carrier, and shipping costs set, you need to determine how you want to label your packages. Startup businesses start with writing shipping and return addresses on each package by hand. This isn’t realistic to continue as your business grows because it is time-consuming and tedious.
There are several plugins you can implement in your backend as your business grows. These give you a more effective eCommerce shipping and fulfillment strategy because they allow you to print and pay multiple shipping labels at a time. You simply select the orders ready to ship from your orders list. You then preview the shipment, check carrier, service, and package, and adjust information if needed. You can buy and print your labels with one click. When the budget allows, you may want to consider upgrading to a thermal label printer to print labels directly on self-stick labels.
Using a Fulfillment Warehouse
As your business grows, a fulfillment warehouse may be used to handle shipping for you. This can help automate the process. When you decide to use a fulfillment warehouse for your eCommerce shipping and fulfillment needs, you will store your inventory in the warehouse. Depending on the level of integration, you can seamlessly transfer completed orders from the shopping cart to the fulfillment partner for an automatic pick, pack, and shipment.
There are several advantages to choosing a fulfillment warehouse. These include:
- Cheaper shipping rates. Fulfillment warehouses are integrated with most major shipping logistics companies. This gives you access to a wide range of shipping options lower rates.
- Faster shipping times. When picking a fulfillment warehouse, you should consider where the bulk of your customers are located. This will strategically place your inventory closer to those making a purchase.
Before you pick this option, consider the branding experience and additional costs that might be incurred.
eCommerce shipping and fulfillment is a very important part of the customer experience when it comes to your eCommerce business. While every business has its own unique challenges, the shipping and fulfillment process can commonly be complicated. Take the necessary steps mentioned above to overcome complications and create the most effective shipping strategy for your business.
Once you understand all the variables that come into play and set specific goals for your business, you will be able to determine what works best for you. You can then tweak your strategy to meet all your business needs. This is a necessary step that is vital to the long-term health and success of your online store.
Need assistance implementing your eCommerce shipping and fulfillment strategy to your online store? Our team of experts is here to help!