Shipping in the world of ecommerce serves as the initial physical interaction customers have with your brand when receiving a parcel. This interaction significantly shapes your brand reputation.
For instance, 56% of online shoppers aged 18-34 anticipate next-day delivery and are willing to pay extra for it, setting high expectations. Failing to meet these expectations could lead to a negative first experience with your brand.
While prompt delivery matters, many businesses now offer free shipping, fostering a positive customer perception and potentially boosting sales. However, this perk can impact profitability, demanding a thorough understanding of its financial implications.
What Constitutes Ecommerce Shipping?
Ecommerce shipping encompasses your order management process, spanning from product dispatch at your warehouse to its delivery to customers and, potentially, returns.
It intricately involves various components of your overall order management systems and processes, including:
- Ecommerce shipping software
- Warehouse management systems
- Customer relationship management (CRM)
- Marketplace software
- Inventory management software
- Supply chain management
Even as a small business operating on platforms like Amazon or Etsy, your shipping process might currently entail updating a spreadsheet and packaging a product for dispatch.
However, understanding the comprehensive processes involved in professional ecommerce fulfillment, even at this early stage, is crucial.
The Ecommerce Shipping Journey Unpacked
Within your comprehensive order fulfillment process, shipping stands as a pivotal phase. While fulfillment commences at the order placement, shipping kicks in as the product departs the warehouse en route to the customer.
This shipping process unfolds across four key stages, each necessitating its specialized system:
1. Order Receipt
Initiating the ecommerce shipping journey begins with the warehouse receiving the order. An efficient inventory management system often syncs seamlessly with your order management system, ensuring real-time stock updates are available to customers.
Once an order is placed, a notification prompts the warehouse to prepare the package, either through a simple email or an integrated warehouse ticketing system. This phase applies to both third-party and in-house warehouses.
2. Processing, Picking, and Packing
Upon order receipt, the warehouse scrutinizes and verifies the order, gearing up to package the product accurately. This might entail manual retrieval of items from warehouse shelves or involve automated solutions.
Packaging assumes significance here, influencing your brand’s initial impression on the customer. It’s crucial to tailor packaging to the product type, ensuring both aesthetic appeal and secure transit.
3. Shipping Out
Shipping products to customers typically involves collaborating with third-party carriers like DHL Express, FedEx, or Royal Mail. The choice of carrier must align with your shipping commitments to customers—be it next-day delivery or other specific terms.
Understanding the shipping partner’s conditions, including size limits and cut-off times for timely delivery, remains crucial.
4. Handling Returns
Free return policies have proven to boost revenues for many ecommerce brands, enticing customers like Amazon and Asos. Some even go the extra mile by offering prepaid shipping labels for hassle-free returns.
While enhancing customer experience, these practices might come with substantial costs. Managing returns effectively is an inevitable part of running an ecommerce store. Clear communication regarding the return process is pivotal for customers.
Considerations for Successful Ecommerce Shipping Business
Ecommerce shipping isn’t just a part of your strategy—it’s a critical component impacting customer experiences and your financial outcomes. Here are key factors to keep in mind:
- Methods
Understanding customer expectations regarding delivery methods is vital. Investigate competitor offerings and consider options like next-day shipping—whether absorbing or sharing the cost with customers.
Varying shipping times and costs across geographies can be essential, ensuring fairness and customer satisfaction.
- Costs
Profitability is crucial. Offering free shipping should align with your product’s profit margins.
Account for marketplace fees, such as FBA fees, which can impact overall profitability and factor in return rates that affect sellable inventory.
- Weight
Carriers charge shipping based on weight or volume, considering destination distance. Compare carrier rates and methods using tools like Parcel Monkey’s calculator for informed decision-making.
- Supplier/Carriers
Choosing carriers with suitable requirements and cost structures is key. Confirm capabilities, like handling large items or pre-paid return slips, align with your needs and budget.
- Packaging
Packaging speaks volumes about your brand. Balance security with brand representation, avoiding excessive padding to limit added weight and volume.
Branded shipping materials from carriers like UPS or FedEx offer security but may compromise brand aesthetics.
Marketplaces often provide branded packaging; consider customization options for non-fragile items, like polybags or mailers, available through platforms like Printful or Vista Print.
Types of Shipping Methods for Ecommerce
- Same-day Delivery
Initially pioneered by Amazon in cities like New York and London, same-day delivery remains a premium option available from carriers like Royal Mail.
Though costlier, it suits businesses with perishable or urgently needed products, like local shirt companies providing quick solutions for coffee spill emergencies before meetings.
- Two-day, Next-day, or Expedited Shipping
With Amazon Prime setting the pace, two-day shipping has become a standard in the US, while smaller countries lean towards next-day deliveries.
To stay competitive, many ecommerce brands aim to match similar shipping speeds.
- International Shipping
The demand for locally-made products persists, yet brands often seek a broader market. Marketplaces like Etsy, Wayfair, and Amazon Handmade have propelled this trend, with customers willing to pay premiums for unique products.
International shipping involves varied fees among carriers and complexities with customs and taxes.
- Store Collection
Brands with physical locations offer customers the option to collect purchases in-store. An efficient inventory system helps manage stock across multiple stores, enabling real-time visibility and reducing unnecessary deliveries.
This omnichannel model, used by companies like Argos in the UK, enhances customer convenience.
- Marketplaces
Amazon (FBA) and Walmart (WFS) offer their fulfillment services. While marketplaces boost sales and build customer trust in fulfillment, they entail higher fees and require stocking products in their warehouses.
Many brands utilize these services as part of their shipping strategy without relying entirely on them for order fulfillment.
Choosing the Right Shipping Method
1. Understand Customer Expectations
Before selecting shipping methods, analyze your customer base. For instance, companies like Amazon have mastered the art of providing various shipping options.
They offer free two-day shipping for Prime members, catering to customers who prioritize speed while also providing standard shipping options for cost-conscious shoppers.
Tools/Plugins: Utilize customer relationship management (CRM) tools like Salesforce to analyze customer preferences and incorporate features like estimated delivery dates during the checkout process.
2. Evaluate Product Characteristics
Consider the nature of your products when choosing shipping methods. A company like Harry & David, known for its premium fruit baskets, employs specialized packaging and expedited shipping for perishable goods to maintain product quality during transit.
Tools/Plugins: Shipping management software with product-specific packaging recommendations and handling instructions. Consider tools like ShipBob for comprehensive shipping solutions.
3. Factor in Shipping Costs
Balancing cost-effectiveness with customer expectations is crucial. Zappos, the online shoe and clothing retailer, offers free shipping and returns, absorbing shipping costs to enhance customer loyalty and satisfaction.
Tools/Plugins: Shipping cost calculators integrated into the checkout process to provide transparency to customers. Tools like Shippo automate shipping processes.
4. Consider Geographic Reach
Align shipping methods with your business’s geographic scope. Alibaba, a global wholesale platform, tailors shipping options based on the international locations of buyers and sellers.
Tools/Plugins: International shipping plugins for ecommerce platforms like WooCommerce that facilitate seamless cross-border transactions.
5. Offer Shipping Flexibility
Providing flexible shipping options is key. Instacart, a grocery delivery and pick-up service, allows customers to choose delivery time slots based on their convenience.
Tools/Plugins: Delivery scheduling plugins integrated with ecommerce platforms. The delivery Date Plugin for WooCommerce is an example.
6. Integrate Technology Solutions
Leverage technology to streamline shipping processes. ShipStation, a shipping and order fulfillment platform, integrates with various ecommerce platforms, automating order processing and providing real-time tracking.
Tools/Plugins: Shipping management software, real-time tracking plugins, and ecommerce platform integrations. ShipStation is an example.
7. Align with Business Branding
Consider how shipping aligns with your brand image. Apple, known for its sleek and minimalist brand, ensures a consistent unboxing experience with clean and well-designed packaging.
Tools/Plugins: Custom packaging design tools or services. Packhelp is a platform that offers customizable packaging solutions.
8. Monitor and Adjust Based on Feedback
Gather feedback from customers and adjust shipping methods accordingly. Etsy, a platform for handmade and vintage items, encourages sellers to gather and respond to customer reviews, including feedback on shipping experiences.
Tools/Plugins: Customer feedback plugins or surveys integrated into the post-purchase process. Yotpo is a popular tool for collecting and managing customer reviews.
9. Compliance with Regulations
Ensure compliance with regulations. DHL, a global logistics company, provides comprehensive information and support to ecommerce businesses to ensure adherence to customs and import/export rules.
Tools/Plugins: Customs declaration plugins integrated into the shipping process. Easyship is a platform that helps businesses navigate international shipping regulations.
10. Negotiate with Carriers
Explore opportunities to negotiate shipping rates with carriers. Walmart, a retail giant, negotiates bulk shipping rates to optimize costs and provide competitive pricing to customers.
Tools/Plugins: Freight negotiation tools or services that assist businesses in negotiating with carriers. Freightos is a platform that facilitates freight rate negotiations.
Best Shipping and Inventory Management Software
We have complied the list of 5 best inventory management software below which you can consider as a part of your shipping strategy.
A. inFlow
inFlow is a shipping and inventory management software tailored for small businesses, offering real-time control over inventory.
Primary Features:
- Barcoding: Minimize errors with barcode scanners for label printing and seamless item tracking.
- Sales and Invoicing: Automation streamlines shipping and transactions, improving the sales workflow.
- Inventory Control: Set reorder levels, conduct stock tracking, and organize orders across multiple locations. Receive email alerts for low stock and access real-time order tracking information.
- B2B Portal – Showroom: Access inFlow’s B2B portal, Showroom, to eliminate manual stock updates.
Limitations:
- Integration Options: Lacks multiple integration options.
- Supply Chain Management: Limited supply chain management features.
B. Megaventory
Megaventory, a cloud-based solution, is tailored for retail, wholesale, and manufacturing industries, offering a comprehensive suite for order fulfillment, invoicing, and shipping management.
Primary Features:
- Inventory Management: Comprehensive inventory features, from goods returns to serial number tracking and stock alerts. Streamlines operations for seamless inventory management.
- Data Administration: Grant user permissions based on login activity. Import, export, backup, and restore data to facilitate planning and forecasting.
- Order Fulfillment: Automates fulfillment capability checks. Supports shipping providers for consignment or drop shipping in sales and purchasing.
- Manufacturing: Access multi-level manufacturing processes. Generate bills of materials and receive updates on labor costs per work order.
Cons:
- Lacks Accounting Modules: Megaventory lacks integrated accounting modules.
- Absence of FIFO and LIFO: The system does not support First-In-First-Out (FIFO) and Last-In-First-Out (LIFO) inventory costing methods.
C. Unleashed
Unleashed, a versatile cloud-based system, caters to industries of all sizes, providing a comprehensive solution for inventory management, manufacturing, and supply chain control.
Primary Features:
- Purchasing: Generate purchase orders, manage supplier returns, and maintain end-to-end shipment visibility. Add purchase costs for accurate financial tracking.
- Inventory: Maintain complete control over inventory with a flexible product management system. Supports batch numbers, barcode scanning, and serial number tracking.
- Production: Create bills of materials and utilize manufacturing process management for automated planning. Accurately record production costs with margin reporting.
- Sales: Access multiple features like sales margin visibility, order management, backordering, pick and pack, and dropshipping.
Cons:
- No Demand Forecasting: Unleashed lacks a demand forecasting feature, potentially impacting strategic planning.
- Complex for Small Businesses: The system might be complex for small businesses, potentially requiring additional training.
D. Finale
Finale Inventory stands out as a cloud-based shipping software, primarily tailored for the manufacturing, retail, and distribution industries. Offering a suite of modules, it covers purchasing, sales, inventory management, and accounting operations.
Primary Features:
- Stock Auditing: Cross-check financial records and conduct inventory and stock audits to avoid discrepancies.
- Restock Forecasts: Predict restocking using sales history and automate reorder calculations based on supplier lead times and inventory deadlines.
- Integration Capabilities: Seamless integration with over 40+ platforms, covering accounting, shipping, POS, and channel management software.
- Inventory Purchasing: Access a centralized purchasing and replenishment unit within one database, accommodating multiple product tiers. You can also manage multiple orders and suppliers, including the ability to receive partial shipments.
Cons:
- Lacks iOS and Android Support: Finale Inventory does not offer support for iOS and Android platforms.
- No Tax Rate Integration with Sales Quotes: The software lacks integration for tax rates with sales quotes, potentially requiring manual adjustments.
E. Zoho Inventory
Zoho Inventory offers a really impressive inventory management software solution suitable to start-ups and growing businesses. A whole set of order management, inventory tracking, and shipping features are included in it.
Bundling products and kitting, or “composite items,” really give value to the free version, providing great value for shipping-based businesses, especially where multiple products are added or sold to make up a whole, like subscription or custom-made products.
Primary Features:
- End-to-end order management: From inventory status tracking to shipping and everything in between.
- Product bundling and kitting: Allows “composite items” for businesses selling custom or bundled products.
- Autofill PO: Saves time on purchase orders.
- One-click dropship management: Complete streamlined dropshipping process
- Multiwarehouse management: Allows companies to manage inventory across multiple locations.
- Large-scale plans for the top-tier seller: Ideal for a business that grows and scales.
- 24/7 Customer Support: It offers live online support through chat, e-mail, and a detailed knowledge base.
Cons:
- E-commerce integrations: It only handled the integration for Shopify, Zoho Commerce, and of course the marketplaces like Amazon, Etsy, eBay, etc.
- Not so ideal for businesses on other platforms: When you don’t use the integrations-supported e-commerce platforms, Zoho may not be the best option.
Summarizing the Key Components of a Successful Ecommerce Shipping Strategy
The ecommerce shipping strategy largely decides a successful ecommerce shipping and positive customer experience with a profitable business model.
Whether the order is ready to be shipped, picked up by the carrier, returned, or dealt with at any other stage of shipping, every step becomes a significant contributor to how customers perceive your brand.
This simple guide covers the key areas of ecommerce shipping, including order management, packaging, and carrier selection. It also discusses the advantages of different shipping methods, cost considerations, and tools that simplify the process for all businesses.
If properly implemented, your shipping strategy will boost customer satisfaction and strengthen your brand’s reputation.
Suggested read: Mastering Website Speed Optimization: Boosting Your Online Success
Common FAQs on The Key Components of a Successful Ecommerce Shipping Strategy
What are the major steps in the ecommerce shipping process?
Generally, the ecommerce shipping process is divided into four stages. The order receipt, processing/picking/packing and shipping out, and the returns handling system comprise the typical stages.
This requires close attention to every minute detail to ensure optimal service and customer satisfaction.
What can offering free shipping diminish profitability in?
For example, while free shipping brings a higher number of customers and sales, it impacts the profit margin that the firm can make.
Before opening up shipping to customers, shipping and product profitability have to be considered on the customers.
What types of shipping options are available That an e-commerce firm can provide?
Some common shipping options include same-day delivery, two-day/next-day delivery, international shipping, pick-up from the store, and third-party fulfillment services such as Amazon FBA or Walmart WFS.
