A Beginner’s Guide to eCommerce Shipping and Fulfillment
As an eCommerce business owner, you’ve likely put in a lot of blood, sweat and tears towards optimizing your website experience. You’ve invested in beautiful photography, SEO driven headlines and descriptions, and determined how much to charge for your products. While all of this is important, one thing that can make or break your businesses is your eCommerce shipping strategy.
While we’re living in unprecedented times, your customer’s expectations haven’t shifted around shipping. Yes, they will have empathy about your situation. However, they still want shipping that’s affordable and fast (and free if possible). That’s not going away anytime soon, especially if you’re a U.S. business owner.
eCommerce shipping can be intimidating as a newbie. It’s the point where a customer finally gets to touch what they ordered from online. And shipping can be a big expense, depending on where you’re located, the carriers you work with and the products you sell.
Remember though, a lot of other people have been in the same position as you. The nice thing about shipping is all it really takes is proper planning to work to your advantage. That’s why we’ve broken down the basics for building out your online shipping strategy.
We’ll discuss key eCommerce shipping terms, different carrier and shipping options and a few other shipping considerations. Additionally, we will also go through tips on how to balance shipping costs, and how to leverage shipping to meet your specific business goals.
eCommerce Shipping Terms You Need to Know
To fully understand eCommerce shipping, there are some foundational terms you need to know so you can follow this article properly.
- Shipping rates – The amount you charge customers for shipping. This is the price that appears on your cart and checkout page.
- Shipping methods – The service type a shopper sees at checkout, such as ground, expedited, 2-day shipping, overnight.
- Shipping carriers – These are the shipping service providers you work with. The most common carriers include FedEx, UPS, USPS and DHL.
- Shipping origins – The destination where a package originates, such as a warehouse or your brick and mortar store.
- Shipping regulations – Restrictions instituted by a country’s government on what can and cannot be shipped domestically and internationally.
- Fulfillment – The process of receiving, packaging and shipping orders to customers. This typically happens at a fulfillment center, warehouse, or through a dropshipper.
- Small Package Shipping – Alternatively referred to as parcel shipping, small package shipping occurs with envelopes or packaged shipments that weigh under 150lbs.
- LTL Shipping – Less than truckload freight shipping (LTL) is the transportation of relatively small freight that does not require a full trailer to transport goods. This is typically used for heavy, bulky or oversized items.
Factors that Impact eCommerce Shipping Costs
While there is no one-size-fits-all ecommerce shipping strategy out there, every business needs to consider the following to determine shipping costs.
- Customer Expectations – What do your buyers want to see at checkout?
- Product Size and Weight – Are you shipping small packages, or large, bulky items?
- Shipping Zones – Where are you sending your products – domestic or international?
- Restrictions and Requirements – Are there state/country regulations in place for the products you sell?
- Unique Challenges – What are the best shipping services or carriers for your business?
Essentially, you need to think about how far a package is going, how much room it takes in a delivery truck and how heavy it is. Plus, the providers you will use to deliver packages and any additional handling required to get it into a buyers hands.
1. Customer Expectations
Offering the right shipping rates to your customers is crucial to your success as a retailer. And it’s a balancing act. You don’t want to lose a customer if you charge too much, or lose your shirt if you charge too little.
And it’s not just cost that makes a difference. The shipping options you provide, and the amount of time it takes for them to get their package, plays as much of a role in reducing cart abandonment.
Customer experience drives everything in commerce these days, and buyers are getting accustomed to faster, cheaper and more convenient shipping options. You may need to consider alternative services like store pickup, curbside pickup,or same-day shipping in order to stay competitive.
By taking full control of your eCommerce shipping, you can offer the lowest rates possible, cover your costs, and give your customers the options they want.
2. Product Size and Weight
The size of your products is an obvious consideration, and can also have the biggest impact on your shipping strategy. Heavy, bulky items typically need LTL, while smaller, lighter packages can be taken by small package providers.
Sometimes a standard approach can work for you. If all your products are relatively uniform, going with a per-item, shipping zone-based approach is a simple solution. You can also use table rates or flat rate shipping in this case as well.
Alternatively, if you offer products with more varying sizes and weights, getting live rates directly from the carrier is a great way to go. Why? All major carriers use a pricing technique called dimensional weight (DIM) to calculate shipping costs.
Dimensional weight is a calculation used by carriers to convert a package’s length, height and widge into a weight figure. By calculating this number, you will get more accurate shipping rates, preventing overcharges and undercharges. This can happen if you frequently send packages that don’t weigh too much but take up a lot of space.
The important thing to focus on here is making sure your products have correct weights and dimensions. This ensures that the rate you get back from a carrier is the best it can be.
3. Shipping Zones
Depending on where your customers are located, shipping zones can be just as crucial as product dimensions and weight.
Carriers use distance to calculate shipping rates, based on where the shipping origin is located. In general, the wider your shipping area (where you ship to), the more varied your costs become. And if you work with multiple warehouses or dropshippers, then you also have to take into consideration which origin is the most cost efficient to ship from.
To balance this out, your shipping rates should be based on zones.
To illustrate, if your warehouse is located in Boston, offer a cheaper rate for the mid-Atlantic region. Then, you can incrementally increase the rate as you radiate out to the Southern states and the West coast.
Another thing to consider is the type of destination i.e. whether you’re shipping to another retailer or a customer. B2C shipments can come with extra last-mile costs that may not apply for business deliveries.
Of course, if you are shipping cross-border, you may need to use different carriers than the ones used locally. It’s also possible that you’ll need to use a variety of logistics partners to cover all international destinations.
4. Shipping Regulations
As a merchant, you probably have unique shipping regulations and requirements for your industry that impact who you can ship to and how quickly you can deliver.
Maybe you sell fireworks and can’t ship via certain methods due to legal restrictions.
You want to make sure buyers aren’t given a shipping option at all if they live somewhere that restricts your products. Or, that they aren’t shown rates and delivery times for restricted shipping methods or carriers.
Allowing customers to complete an order on something they’re not allowed to buy can cause a negative customer experience. The last thing you probably want to deal with the administrative headaches of canceling an order. Not to mention, face huge fines and penalties.
No matter the case, crafting rules for your products is a way to keep you compliant with industry regulations. And, make your shipping experience as smooth as possible for your customer.
5. Unique Challenges
Identifying your unique shipping requirements helps define what specific services you need.
Think about the special conditions around your products. If you ship dangerous materials, perishable goods or furniture, find a carrier that can accommodate your needs.
On top of this, you also need to make sure you’re in control of when and where your shipping options are shown to customers. For example, it doesn’t make sense to offer free shipping for oversized items like machinery, or overnight delivery on customized items that involve an additional production time.
In order to expand your customers options at checkout, you can also explore other innovative, alternative shipping methods that fit your specific product needs. These include options like same-day delivery and in-home delivery. Even making small changes can pay off when it comes to cart conversion, controlling your shipping costs, and generally delighting customers.
Steps to Building Your Online Shipping Strategy
Now that you’ve thought through the factors that impact your eCommerce shipping, here are the steps to build out your strategy.
- Choosing Carriers – What providers do you want to work with? Are you focusing on domestic sales or expanding internationally?
- Picking Delivery Methods – Do you need LTL or small package delivery?
- Optimizing Your Checkout – What information do you want included at checkout? Estimated delivery date? A calendar for pickup/delivery?
- Setting up Shipping Promotions – Does free shipping make sense for your business? Is there a holiday you want to use to promote it? Or offer discounts?
We’ll discuss all of these steps, including any other additional considerations you need to be aware of to build out a strategy that best fits your business’ dynamics.
Deciding What Carriers to Work With
Having a better understanding of what carriers have to offer can help you decide which works best for your eCommerce business. The four major U.S. carriers – UPS, USPS, FedEX and DHL – each have their own strengths.
The oldest of the three major carriers in the U.S., UPS has a presence in 220 countries and territories with over 2,500 facilities worldwide and maintains over 28,000 Access Point® locations. They have many cost-effective shipping options, offer negotiable rates and have total control of the entire shipping network. UPS also offers alternative pickup through their Access Point program, where retail locations will securely hold packages.
A few of the most used UPS services include: UPS Ground®, UPS Standard®, UPS Worldwide Saver®, UPS Worldwide Express®, UPS Worldwide Expedited®, UPS Next Day Air®, UPS 3 Day Select®, UPS Access Point®, UPS LTL Freight®, UPS Ground Freight®
USPS has lower costs and is a great option for small businesses or those that ship small and light products. As a government agency, the USPS provides postal service to all residents in the U.S. including mailboxes and PO boxes. However, it does not have the same variety of short-term expedited options as other carriers and has limited tracking.
A few of the most used USPS services include: USPS Priority Mail, USPS Retail Ground, USPS Priority Mail Flat Rate Envelope, USPS Priority Mail International, USPS Priority Mail Small Flat Rate Box, USPS Priority Mail Medium Flat Rate Box, USPS Priority Mail Large Flat Rate Box
FedEx is known for having the most plans on its fleet and is the pioneer for overnight shipping services, package tracking and real-time location updates. Their services are operational in over 220 countries and territories. Within the U.S., you can pick up, drop off and ship at 50,000+ FedEx locations. They also offer alternative pickup via thousands of retail locations nationwide through their Hold at Location service.
A few of the most used FedEx services include: FedEx Ground, FedEx Home Delivery, FedEx 2nd Day, FedEx 2nd Day Saturday, FedEx First Overnight, FedEx Overnight Saturday, FedEx Priority, FedEx Priority Overnight, FedEx SmartPost, FedEx Freight, FedEx Hold at Location, FedEx International Ground
Specializing in international shipping, DHL is the world’s largest logistics company with an established global presence in about 220 countries and territories. While a great choice for international shipping, it’s not a viable option for shipping within the US because domestic flights between U.S. airports are not permitted for the company.
A few of the most used DHL services include: DHL SameDay Jetline, SameDay Sprintline, DHL Express 9:00 Domestic, DHL Express 10:30 Domestic, DHL Express 12:00 Domestic, DHL Express Domestic, DHL Express Envelope, DHL Express Worldwide, DHL Express Easy
Choosing Your Shipping Options
Now that you’re more familiar with these logistics providers, it’s time to figure out which shipping methods and services are best for your business.
A few questions you want to ask yourself here are:
- How quickly do you want to get orders to customers?
- Do your products require assembly? Or are they heavy to lift?
- Do you want customers to pick up online orders in person?
- Do you want to do delivery yourself?
Remember to keep your goals in mind and rely on your team as you work through these questions. Some of the most popular shipping methods buyers look for are: free shipping, time slot delivery, store pickup, same day and local delivery.
Each has its own advantages and disadvantages, and not every method will be right for every store, or every transaction. You’ll want to figure out a mix of offerings that works best for you and your buyers.
No approach is exclusive of another, and any successful online store will integrate several options into one adaptable strategy. Let’s take a closer look at each one.
1. Time Slot Delivery or Pickup
Time slot delivery allows your customers to select what date and time they want to pick up their order or accept a delivery.
This service can be more expensive and difficult to pull off, and you certainly don’t want to make promises you can’t deliver on. But it can also be the difference between having happy and unhappy customers.
How do you know if time slot delivery is right for your business? This option is particularly relevant for holiday shipments, perishable goods, in-home delivery, high-value items or anything else considered time-sensitive, like medication.
2. Curbside / Store Pickup
Curbside, also known as store pickup, allows your customers to pick up their online order in person. This is a great option if you have a brick and mortar location and have staff available to man a pickup counter or hand-off orders at a customer’s car.
Not only is it convenient and caters to the buyer’s schedule, but it lets your customers avoid shipping costs. And in some cases, receive their items more quickly than traditional delivery.
The key here is to make pickup instructions clear, letting buyers know where to go once they arrive. Also, that you keep stock of your inventory (no pun intended). The last thing you want is for an order to come through for something that’s sold out in store.
3. Local Delivery
There are plenty of regional courier options to turn to for local delivery, or you could handle the deliveries in-house. Outside services will probably enable you to get up and running faster, but providing local delivery by yourself is typically more cost effective. If you already have a delivery vehicle available for call-in or in-person orders, then it makes sense to provide this option online as well.
Sure, fuel charges, insurance costs, operations adjustments and updated fulfillment processes need to be considered here. But, there are still plenty of ways to make it an affordable option while offering a positive customer experience.
Local delivery works well if you restrict it based on how much a customer spends, or to certain products only. You can also restrict it to customers within a certain distance from your store, to reduce vehicle wear and tear, and costs too.
4. Same Day Delivery
Online shoppers have demanded same day delivery more and more in recent years, with 56% of 18-34 year olds expecting this option at checkout already.
With the landscape of brick and mortar rapidly changing, we expect interest in same-day delivery to pick up even further, especially for small retailers who largely depend on local customers for business.
In many major cities across the U.S., you’ll be able to find local delivery and courier companies that can transfer goods more quickly to your customers. And, at reasonable prices.
One such company, FedEx SameDay City, is available in 34 markets across the country. It’s a great option if you don’t want to put internal processes for handling same day delivery yourself, like your own delivery van.
5. Free Shipping
From a merchant perspective, free shipping seems like a no-brainer strategy to implement because it’s easy to explain to customers, gives you a competitive advantage and has a positive effect on conversion rates.
However, we all know free shipping is free to your customers, but not to you. You’ll need a free shipping strategy that allows for a big enough margin to cover the associated shipping costs. If you’re losing money on each sale, free shipping is no benefit to your bottom line, regardless of whether you’re making more sales.
So what can you do to mitigate these costs? Shift your budgets a bit to make free shipping a marketing expense, only apply it to customers who spend a certain amount (like over $50), or limit it to high margin items. You can also surcharge your product catalog a little bit if needed.
Additional eCommerce Shipping Considerations
On top of what has already been mentioned, there are a few more things that need to be considered to optimize your online checkout experience to your target customer.
Estimated Delivery Dates
Including estimated delivery dates at checkout adds credibility to your store. The more information you can provide about your delivery process, the more likely a customer will purchase from you.
In order to do this correctly, you need to define clear cut-off times, lead times and blackout dates for delivery dispatch, especially if there’s production involved. Because there are several factors currently affecting delivery times right now, you may also want to lengthen your lead times to allow for production and packing delays.
Another thing you can do is change the language on your checkout page to something like “Earliest Possible Delivery,” so customers know it can take longer than usual. It’s extra important right now to set the right expectations for buyers, even in the wake of uncertainty.
Transparency is so important when it comes to your shipping and delivery process, both on your website and in post-purchase communications. Create a FAQ or shipping policy page on your site outlining your policies, including how you manage returns, lost items or damaged goods.
Be direct about how each of the delivery options you provide works, including curbside pickup. This includes information like if a signature is required or a phone number to call ahead (for those that want contactless delivery or pickup).
After a customer has placed an order, you also need to make tracking available so customers know where items are at all times. This will cut down on emails and phone call support so your team can focus on other things.
B2B eCommerce Shipping Requirements
As a B2B seller, offering the same experience offline and online requires a bit more thought. You want to match the same level of customer service experience that your loyal customers have grown accustomed to, which means customizing your checkout as much as possible.
To do this, you need to be clear about your shipping costs and options. Include details, like free shipping minimums or flagging products that ship via a freight carrier, on all your product pages. You should also offer popular B2C shipping methods, like ground delivery and same-day delivery, alongside B2B specific ones, like warehouse pickup and LTL freight.
Additionally, instead of having your customers pick up and call you for a quote, provide them with real-time rating that takes into account their geographic location, product weights, cart quantity and more.
Most importantly though, you need to make sure that any shipping agreements, like negotiated rates, remain valid. The options and fees your customers see should always be consistent with those contracts.
What about International Shipping?
During these unpredictable times, service disruptions and regulations around international shipping are constantly changing.
Some countries are not even allowing international shipments to come through their borders, which complicates things if you think customers there would be interested in your products.
The best thing to do here is to check the status of each carrier, as updates are made. You can check out our status update blog here to stay informed.
In the meantime, it’s still important to know about the forms you need to fill out for international shipping, how much it will cost you and the way customs work. Our beginner’s guide to cross-border shipping can help you answer these questions.
We’re living in a complicated time for online sellers. Social distancing has shifted customer behavior and influenced business dynamics for the foreseeable future. Keeping up with every aspect of your business can feel overwhelming right now, especially the shipping piece which is most affected by change in regulations and policies.
However, it’s absolutely vital that you stay on top of this news. As carriers make updates to their services, you will want to make sure your shipping strategy matches.
It’s also important that you be transparent about changes to your shipping policies. Create a clear place on your website for customers to get updated information about shipping delays, adjustments in delivery day estimates and how your operations or order process has been altered.
We understand that for many of you, the quickly evolving retail landscape is a source of anxiety and uncertainty. And sometimes, you just need a little bit of guidance. Whether you’re getting your store off the ground, or looking for ways to optimize your eCommerce shipping experience, ShipperHQ is here to help.
From setting up shipping rules catered to your unique products and customers, to automatically getting rates from multiple shipping origins, and offering different delivery choices at checkout like store pickup and same day delivery, we can help you pull off complex shipping scenarios. And not to mention, easily manage and make updates to your shipping whenever change occurs.
At ShipperHQ, we put the merchant front and center. Our eCommerce shipping experts are here for you, if you need help figuring out how to pivot your business.
Want more information? Learn more about ShipperHQ’s response to COVID-19.