Many online small businesses might aim to start out with a simplistic approach to shipping. They might even believe that their ecommerce platform has everything you need to manage the whole logistics process.
There is no all-in-one platform for ecommerce that will manage logistics, ERP, CRM, and so many other things. The good news is that starting small is fine — you have to walk before you can run. But when you get to that point, take some time to learn some of the ins and outs of logistics.
The most successful business owners are using strategic shipping options to differentiate themselves from the competition and increase their profit margins.
After the increase in digital shopping due to the coronavirus outbreak, 51% of retail leaders said they’d be increasing investments in logistics and supply chain, per a report from BigCommerce and Retail Dive from late 2020.
Of course, while shipping can be a powerful point of differentiation for your brand, you can’t just create a strategy and call it a day. You have to be prepared to execute — both operationally and in terms of pricing strategy.
That requires the coordination of multiple teams, from marketing to fulfilment and many others in between.
Establishing your shipping policy isn’t just about what options you’ll offer. You have to also ensure that everyone involved in the pipeline understands their part in the process.
So let’s look at the absolute must-haves in your shipping strategy, and what you need to know to make it happen.
Ecommerce shipping encompasses receiving and processing orders, picking and packing the purchased product at a warehouse, printing shipping labels, and even managing returns. That might sound simple enough. If you’ve seen a well-run warehouse, it might even look simple. But in fact, all the moving pieces create a level of complexity that depends on the types and sizes of products you sell, to which regions you’ll deliver, the delivery options and shipping speeds you choose to offer and more.
The ecommerce shipping process encompasses everything from receiving and processing an order to pick, pack and ship it for delivery to the customer’s doorstep.
Once your business receives the order, you’ll first make sure you have the inventory in stock, then verify the customer’s shipping address and any other pertinent information attached to the order. Finally, the items will be picked, packed and prepared for shipping.
Every person in your organisation has a job in relation to making shipping work for your online store. Get them in alignment with you, set a clear strategy and document your SMART (Specific, Measurable, Achievable, Relevant and Time-based) goals.
Then launch! You’ll surely want to make improvements later, but the best way to learn is from experience, so get out there and start garnering feedback from shoppers and customers.
To tackle any big challenge, the first step is identifying the right people to help make decisions about your shipping strategy. Who are the stakeholders in this project, and at what level will each be involved?
Here’s a list to get you thinking:
Your customer service team members are perhaps the most important team members of all. Nothing sparks an angry customer call like a missing or delayed delivery.
Support needs to know how your approach to shipping will affect customers at each stage in the customer lifecycle — especially if it has any impact on product prices — so they can plan to satisfactorily answer customer questions.
Now that you have your team assembled, define what you want to achieve with your shipping strategy. There are plenty of areas you could focus, but here are some common examples:
You might be overwhelmed by all the options at first, but don’t worry — we’ll break them down one by one.
Successful online stores implement several of these shipping methods into a complete strategy that works for their unique business.
If you have a number of brick-and-mortar locations or a very strong local business, offering free in-store pickup could be a win-win for you and your customers.
Getting live rates in real time directly from carriers like UPS, FedEx or DHL will often get you the best possible rates while still covering your shipping costs. It’s difficult to use this approach as a promotional tool, because the rates may vary significantly.
Same-day delivery is exactly what it sounds like — but it’s a lot harder to achieve than it is to define. Successfully serving your customers with same-day delivery requires a seriously smooth logistics operation and plenty of resources.
But unless you’re only doing local business, this shouldn’t be your first go-to strategy. You have to walk before you can run! A slightly easier goal to achieve could be two-day or overnight shipping.
“We’ve seen two-day and next-day delivery transform merchants’ websites in terms of ads efficiency, customer lifetime value and average order size,” said Michael Krakaris, co-founder at BigCommerce fulfilment partner Deliverr.
Free shipping has become, for many consumers, an expectation after becoming spoiled by Amazon Prime.
But, while free shipping is free to your customers, it’s not free for you. You still have to pay the carrier and make sure your margins are high enough to cover the associated costs. Even if you’re making more sales, you’re not getting ahead if you’re losing money on each one.
Using a flat rate or table rate can be a customer-friendly way to avoid some of the challenges of free shipping.
An example of flat rate shipping would be charging, say, $10 for shipping, regardless of the customer’s product selection or order value.
Table rate shipping refines the flat rate strategy. Here’s an example: A merchant with a warehouse in New York City might charge customers near the city one flat rate, with rates getting increasingly higher, the farther the destination from the fulfilment centre.
Another way to do this is based on order subtotal — for instance, charging $10 for up to $50, $5 for orders between $50-100, and free for over $100. You could set these rates by groups of products or order weight, too. You’ll just have to run some calculations and see what works best for your business, then try it and see if the customers like it, too.
Picking one of these strategies that you know will work with your bottom line would get you started, but it’s often worth mixing and matching them for your own holistic, unique approach.
This allows you to balance your revenue needs with promotional opportunities. For example, you could offer free standard shipping alongside other options like expedited shipping at table rates based on order value.
Here are a few common combinations:
Standard + expedited shipping gives you the opportunity to upsell on shipping by showing the estimated time in transit for customers that need fast delivery.
Free standard + expedited shipping: free shipping brings customers in and drives them to check out. Show expedited shipping to entice them to pay for a faster delivery. Standard shipping + in-store pickup + same-day delivery: Local customers love in-store pickup and same day delivery. For non-locals, you can still give them a great standard rate.
Offering your customers the right shipping rates and options is crucial to long-term success as a retailer. It can feel like walking a tightrope between losing a customer if you charge too much or losing your shirt if you charge too little. But it’s not just about pricing. Offering the right shipping options at the right times can help reduce cart abandonment and increase revenue.
Before you select a shipping strategy or decide how much it should cost your customers, you need to understand how much shipping will cost you.
If your products are relatively uniform across your store, going with a per-item, zone-based approach, where the shipping price varies by customer location and not product size or weight, might work well. This is also a great place to build easy-to-understand promotions like $10 shipping per order, $5 shipping per item or even free shipping over $50.
If you sell particularly large products, or those that don’t lend themselves to the typical rectangular box (like the ones we see so frequently from Amazon). Getting rates directly from a carrier like UPS, DHL or others is a great way to ensure you’re offering the best rates to customers.
The important thing to focus on here is making sure your products have accurate weights and dimensions so that the rate you get back from a carrier is as accurate as possible. To do this, break your products into groups and focus on getting weights and dimensions for the heaviest or largest 20% and the smallest or lightest 20%.
Do you sell to customers in Canada? What about the UK or Australia? If so, do you have warehouses there, or do you fulfil all your orders from the U.S.? Or maybe you’re in the UK or Australia, shipping products to America.
Whatever your situation, it will have an impact on the best shipping strategy for your ecommerce store.
If you’re only shipping domestically, it can be pretty simple. Flat-rate or free shipping options tend to work well, as it’s not as expensive for you to ship within the U.S.
If you want something a bit more nuanced, however, you can also set rates by zones. For example, if you’re located in Austin, Texas, you might want to offer a cheaper rate for nearby areas, increasing the rates as you radiate out from there.
Shipping internationally normally necessitates getting a rate straight from the carrier, like U.S. Postal Service, DHL or others. Rates can vary significantly even in neighbouring countries, and it’s difficult to build your own rates for these scenarios.
While not every business needs to ship products in the kind of package that ends up in one of the many unboxing videos on YouTube, the way your shipment presents itself at your customer’s front door is a concrete representation of your brand. That means you need to take a few things into consideration.
When you’re choosing the packaging you’ll use, consider things like the fragility of the items, how the components packed inside will settle or move around, and how the package will be opened. Fragile products will need extra padding in the packages, and there are still more specific considerations if you’re shipping temperature-sensitive or perishable items.
Custom packaging can really set you apart from your competitors and give shoppers a more memorable unboxing experience. And it doesn’t have to be dramatic. Maybe your packaging materials are customised with your logo, or you use a branded sticker to wrap the products in a nice tissue paper.
Ecommerce has been a boon for the world in so many ways, giving people access to more and more opportunities — but all that shipping does have the potential to create a lot of waste. Consider whether you can incorporate some eco-friendly elements, like biodegradable packaging filler or compostable mailers. This will be especially important if eco-friendliness is a value of your brand.
When you hear “shipping,” you may only picture the process as far as getting the package to a shipping carrier. But the shipping process — especially when it comes to customer satisfaction — is so much more than that.
You have to be able to offer a positive customer experience all the way from purchase to order fulfilment through to shipping and delivery — and, if necessary, returns.
Order management refers to receiving, processing and order fulfilment. With a strong order management system, whether it’s embedded in your shipping software or not, you can reduce inventory issues, fulfil items in a timely manner and minimise errors. That order management system acts to put all your critical data in one place, so you can streamline your back-office operations and make data-driven business decisions.
It’s not just essential that you know where your shipments are at all times — customers want to know, too. Give them a tracking number so they can follow their shipment and receive updates on delivery times. That helps set expectations, and customers will appreciate your team’s clear communication.
You want customers to be satisfied with their purchase from your store every time, but the fact is, some products are always going to be a challenge — think anything related to sizes and colours that may appear different than they rendered on a computer screen. And sometimes, customer returns just can’t be avoided.
A CivicScience report from 2020 found that the top three biggest pain points for consumers who return online purchases are:
The good news is that a returns process that leaves your customers satisfied is a win in your favour. They’ll remember your high-quality service the next time they need to order a similar product. If you’re concerned about the returns process, find a great logistics partner to help you create your strategy at scale.
Free shipping is a bit like the holy grail in the online commerce business. Just look at the success of Amazon Prime. Subsidising shipping costs can be rewarding if you do a high volume of shipments and it leads to new customer acquisitions and greater loyalty.
But there are risks to your bottom line if you’re not careful to price products in a way that maintains comfortable margins. Offering free shipping isn’t just like checking a box on a website — there are a lot of moving pieces to coordinate and pay for.
That’s why it simply doesn’t make sense for all businesses.
As a merchant, carefully evaluate your market sector and your competition. You might not need to offer free shipping to be competitive in your space — or it might not be cost effective if the cost of shipping to you outweighs your margins on the item.
If you’re serious about offering free shipping, you can consider limiting the geographic regions you apply it to.
You could also offer free shipping but give customers the option to pay a surcharge for expedited delivery. There will be a segment of customers that will pay extra to get their goods delivered faster — and the surcharge can help offset the free shipping you’re offering to other customers.
Another option is to set a threshold to qualify for free shipping or test promotions to see if offering it at certain times increases sales.
With cross-border commerce growing and ecommerce penetration expanding even in developing countries, you may find you’d like to participate in this vibrant international market.
However, many online stores find shipping internationally a nearly impossible feat, given the rules, regulations and risks associated — which are often different for each country. That’s why it’s important to understand your shipping options and fulfilment services and identify which provide the lowest cost and mitigate risk.
Here are the things you need to think about before launching international shipping:
With the right team in place, your goals clearly defined and your approach determined, it’s time to implement your ecommerce shipping strategy.
Each team member should be clear on their responsibilities:
You aren’t alone when it comes to shipping hassles — or the challenge of finding the right solutions. There are businesses out there that dedicate their entire staff to helping you figure out how to ship faster and more affordably — and many of them partner with leading ecommerce platforms like BigCommerce and Shopify.
Each solution helps with a variety of things, but most offer:
Here are a few of the top ecommerce shipping solutions:
Once your new shipping approach is live, make it the responsibility of each team to report on how well things are going for them. You should be ready to iterate when the time comes, but let the strategy play out for a little bit so you have enough data to know what to fix.
Often, a new approach will take some time to nail down. So, if you have the evidence to back up your changes, be prepared to stick with it and make some adjustments as you go.
As you master your shipping approach, it becomes less the ‘last step’ in a customer transaction and instead just one stop along the journey of an entire customer lifecycle.
Given the rules, regulations and risks associated — which are often different for each country — it’s important to understand your shipping options and fulfilment services and identify which provide the lowest cost and mitigate risk.
Here are the things you need to think about before launching international shipping:
When you’re implementing a new shipping approach — or any new strategic approach — you need leaders across your organisation to not only back you, but be ready to do their part to bring the vision to life. Shipping and fulfilment isn’t just back-office; it’s customer facing. And you’ll need marketing, customer service, and of course anyone in your fulfilment team all on the same page.
Each solution helps with a variety of things, but most offer:
There are plenty of options out there to support you, integrating directly into your ecommerce platform to make the whole process a breeze.