A Guide to Ecommerce Shipping
By Megan Wenzl – Linnworks
On paper, ecommerce shipping sounds simple. After all, getting a product your customer ordered into their hands — or at least to their doorstep — is what you do.
If you’re in ecommerce, you’ve done it countless times and will definitely do it again . . . so what’s the big deal?
It’s the main thing your customer expects of you. With that expectation comes great pressure, and a flaw in your shipping process can derail an entire customer relationship.
The statistics speak for themselves.
According to research from Linnworks, 76% of customers say convenience is the top priority when it comes to selecting a retailer.
And when it comes to convenience, the third most important criteria is whether their shipping details are remembered for future purchases. This is just a small part of the shipping process, but it is especially relevant in the US, where customers are 17% more likely to cite this as a major part of a fast, personalized shopping experience.
Anyone in ecommerce will tell you that the shipping process is not as simple as it seems, especially if you’re not doing it right. Here’s how to master the fundamentals of shipping, so everything else can fall into place.
What is Ecommerce Shipping?
While the answer seems obvious, shipping is actually a small part of a larger process called order fulfillment. However, that name is misleading because it’s about much more than just fulfilling an order. It’s about doing it quickly and efficiently.
The Faster, The Better
Time isn’t everything, but when it comes to shipping, it may as well be. However, the solution isn’t always to get a product to your customer at lightning speed . . . although that would be nice. Of course faster is usually better, but sometimes ramping up the speed of delivery can come with excessive costs or sacrifices to other parts of the process, like packaging. You don’t want to decrease quality in other areas just for shipping speed.
Most importantly, time should never come at the expense of transparency, considering that 72% of customers have abandoned a purchase over shipping transparency, according to research from Linnworks. That’s proof you can’t have a one track mind when it comes to shipping, but there’s no denying that customers don’t want to wait too long for their order.
Ecommerce Shipping Methods
Of course, there are different shipping strategies for minimizing cost, shipping times, and customer aggravation, and the right one will depend on your company.
You might naturally gravitate towards free shipping, two words that will always bring a smile to a customer’s face. The benefits are self-explanatory, but free shipping will always come with caveats. Either you have to pay for the shipping yourself or you account for it in the price of your products, placing the burden on your customers and potentially driving them away.
A nice compromise is threshold-based free shipping, which is only offered to customers who meet certain metrics. For example, you can advertise free shipping as a perk for customers who spend a certain amount of money on an order, or order at a certain frequency. That way you can make sure that you are only fielding costs of free shipping for the most valuable customer relationships.
Some companies prefer real-time shipping, where you charge customers exactly what it will cost you to ship the product. While this is hardly as attractive to customers as free shipping, it can show transparency, especially if you supplement it with a shipping calculator on your order page that lets customers know they aren’t getting ripped off.
Then there’s flat rate shipping: offering the same shipping price to all customers. This price can vary by order and will likely be larger for heavier products. This strategy ensures consistency and, if fairly calculated based on your average shipping costs, can be a good way to avoid undercharging or overcharging customers.
Ecommerce Shipping Costs . . . and How to Reduce Them
To put your shipping strategy in action, you will need to pick a courier service. Some services have different prices for different dimensions, putting a slight emphasis on weight, length, and/or depth. Think about the type of products you sell and assess them against potentials couriers’ price formulas. Doing research before settling on an appropriate delivery service is a great way to save costs in the long-haul.
Most of the time, the formula goes something like this: the bigger and heavier your product, the more expensive shipping will be. Another factor that also comes into consideration with shipping costs is the space your deliveries take up. Therefore, it makes sense to be smart about packaging.
Inefficient packaging will hurt you. For example, if you are using a big box for small items or needlessly using heavier packaging materials, you are essentially throwing money away. However, if a type of packaging costs more to ship, it can be worth it if it reduces the risk of product damage, which will always be more costly to your company and its customer relationships than a few extra cents on shipping. Some other fees to be aware of are:
- Parcel insurance for lost or damaged packages
- The cost of replacing lost or damaged items (if you don’t have parcel insurance)
- Re-bill fees for late shipping bill payments
- Re-weight fees if the weight of a package is different from what you reported to your courier
- Customs delay fees for international shipping
When it comes to shipping, it’s crucial to set reasonable expectations. These should be easy to fulfill, but shouldn’t be broad or ridiculous enough to deter any customers.
It’s important to accept that some parts of the process are out of your control, especially when it comes to international orders. However, if you anticipate unforeseen and unavoidable barriers, it’s important to communicate this to your customer so they don’t place the blame on you. Transparency is always your friend, even if it involves telling your customer something they don’t want to hear.
Before you can set accurate expectations for your customers, it’s important to set your own. Of course, you’re not going to have an accurate read on your order fulfillment time before you ship any orders. It’s essential to closely monitor your performance, keeping an eye out for certain key metrics, including:
- Source time: the time between a customer placing an order and your business recognizing it has the resources in place to start fulfilling it
- Production time: the duration of the production process, including manufacturing, finishing, and packaging
- Delivery time: the time between a product leaving your warehouse and arriving at your customer’s door
- Supply chain cycle time: the time it takes to order and receive the raw materials necessary to fulfill an order when the raw materials aren’t in stock
The most important thing to track is the average sum of all four. This is actual customer order cycle time, which is the typical time it takes for a customer to receive a product after placing an online order. This is what you’ll be trying to reduce, in part because it allows you to set more alluring promised customer order cycle times, which is how long you tell your customers order fulfillment will take.
How to Speed it Up
Once you figure out your order fulfillment timeline, then you can start to expedite the process. There are plenty of ways to do this. In most cases, they require an investment but, when appropriate, can do wonders for your customers’ satisfaction.
The key to timely order fulfillment is anticipating obstacles in advance. For example, one of the most common and aggravating ways to slow down the shipping process is a stock out — simply not having enough product in stock to meet the demand.
The proactive solution is simple: always have enough stock. One way to do this is setting a minimum number of products to have in stock at all times. When determining how much safety stock to keep, use data from past spikes or implement a mechanism that dynamically adapts stock levels to demand. An effective inventory management system can help you avoid stock outs.
Inventory classification can be another useful tool for avoiding stock outs and delays. Using your sales data, group products based on the speed at which they sell. This can ensure that high demand items are always in stock and more conveniently placed.
You Don’t Have to Do it Alone. Use a Fulfillment Partner
If you get to a certain point, it might be time to start removing your biggest obstacle towards fast fulfillment — the limitations of the human body and mind. Dealing with order fulfillment manually can be costly, time consuming, and prone to error. There are plenty of places to turn to if you feel overwhelmed by the shipping process.
The time it takes for humans to make decisions and manually input data will always clog up the flow of delivery. Choosing to work with a full-service fulfillment partner will alleviate this and help you boost customer satisfaction. And your customers’ satisfaction with your brand is what truly matters in the end; it makes their lives better, and keeps them coming back again and again.