The Importance of Shipping Strategies
The increase in ecommerce shipping volumes, especially during the current outbreak of COVID-19, has highlighted two factors that are key to the online shopping experience: convenience and shipping. Shifting consumer expectations and “the Amazon-effect” have further highlighted the priority on fulfillment. Effective shipping strategies are now essential for any successful ecommerce operation.
For those just starting out or recently transitioning to ecommerce, planning and establishing an effective shipping strategy is a daunting challenge.
An ecommerce shipping strategy involves more than simply offering free shipping although that may be a must-have feature for some operations. There is also no such thing as a “perfect” or “one-size-fits-all” ecommerce shipping strategy. The ideal approach for individual retailers will depend on several factors such as their target audience, budget, profit margins, and/or product.
This blog is the first in a series where we will outline several of the strategies, considerations, and resources that small and medium-size businesses (SMBs) need to develop and implement their own ecommerce shipping strategy. Below, we have outline 5 important considerations for those just starting out in ecommerce:
- Shipping Options
- Rate Shopping
- Label Printing
#1 Offer Multiple Shipping Methods
Generally, the best practice for online retailers is to offer a combination of both expediated and affordable shipping methods. Presenting these options openly to potential customers increases conversions and reduces shopping cart abandonment.
Driven by competition among ecommerce retailers as well as large-scale operations, free shipping has become a selling point for consumers shopping online. The challenge for retailers is how to maintain margins while offering free shipping.
Different methods to offset the costs of offering free shipping include:
- Customer Pays – Increase product prices to cover the cost of shipping.
- Retailer Pays –Shipping costs are paid from a business’s margins.
- Customer/Retailer – Increase product prices slightly and both the customer and retailer partially pay for shipping.
- Threshold Free Shipping – Offer free shipping on a minimum order amount.
- Select Free Shipping – Offer free shipping on select, more profitable items.
- Promotional Free Shipping – Offer free shipping for a limited time as a part of an overall marketing plan.
- Loyalty Free Shipping – Offer free shipping for long-term customers or those that opt to join a loyalty program.
Flat Rate Shipping
Charging a single fixed shipping rate, either across all orders or for products within specific criteria, can be an effective way for retailers to mitigate shipping costs.
Table Rate Shipping
Table rate shipping involves setting a series of rules for shipping products, enabling businesses to have variable rates based on the destination, product weight, and number of items.
Real-time Carrier Rates
Many ecommerce platforms and shipping solutions can integrate with carriers to generate pricing on their orders, allowing customers to pay for the level of service that they want.
#2 Rate Shopping & Carrier Options
Online retailers should already be familiar with the major shipping carriers and services available to them. While these carriers are all reliable and comparable in the levels of service offered, the shipment costs may vary between them. Businesses should examine these differences to maximize margins.
One of the more common mistakes when deciding on carriers and services is relying upon a single carrier. While only having a single carrier can simplify fulfillment as the requirements will be the same from order-to-order, businesses can potentially lose out on significant savings on their shipping costs. Market leaders understand that the best practice is to compare the different carriers to get the best rates on their shipments.
Rate shopping can be a tedious process if performed manually, the best option for retailers is to utilize leading shipping software that enables rate shopping automatically.
#3 Tracking & Insurance
Insurance and tracking are some of the add-on services offered by carriers that will affect a retailer’s total shipping cost. While they do increase the cost of shipments, the value added by these services may be worth the additional expense.
Adding insurance to a shipment provides customers with a sense of security in their online shopping and is often an inexpensive way to give retailers a recourse should a package get lost or damaged.
Shipment tracking is fast becoming a consumer expectation and, despite the increased shipping costs, providing shipment tracking [link to tracking landing page] presents an excellent opportunity for ecommerce operations. Allowing customers to track their orders from confirmation to delivery is a great way to ensure that those customers have a positive experience.
#4 Packaging and Presentation
When determining how to prepare products for shipment, there are several key things to keep in mind:
- Reduce Internal Movement – having a layer of padding in and around the product keeps it secure and reduces the chance of damage during shipment.
- Consider Dimensions – the dimensions of a package directly affect shipping costs. Businesses can reduce costs and protect their products by choosing the correct sized materials for their shipments and keeping those packages as small as possible.
- Do NOT Reuse Boxes – new ecommerce businesses will often reuse the boxes shipped to them from suppliers to reduce costs. Sending these worn-out boxes to customers provides a terrible impression to those customers.
#5 Shipping Labels
As a general rule, new ecommerce retailers should avoid the urge to write the ship-to and return addresses by hand. This is a tedious and poor representation of the retailer’s brand and is impossible to scale as a business grows. A better practice is to batch print multiple shipping labels.
Dedicated ecommerce shipping software allows businesses to accurately automate label printing and purchase shipping or postage online at a (sometimes significant!) discount. Leading solutions enable seamless integration with multiple carriers and automatically print labels for the selected carrier of that shipment.
We’re Here to Help
Shipping and fulfillment is a very necessary aspect of a profitable eCommerce business but it is not without its challenges. The best shipping strategy will have to be custom tailored to your product and customers.
Descartes ecommerce solutions provide an end-to-end-ecommerce fulfillment platform. From sales channel connectivity to order and warehouse management to shipping, we can help your ecommerce operations. If you are looking to have a conversation about how Descartes can help your ecommerce business succeed our experts are standing by.