February 10, 2019  |  MX Data

Top eCommerce Shipping Best Practices For 2019

To create an exceptional eCommerce customer experience, you need to ensure that your business processes are tailored to fit your goals and your audience’s needs.

You must make engaging content, tailor ad campaigns, write emails to nurture leads, and so on.

While these endeavors aren’t always easy, there is another one which is not always as simple as it seems:  Shipping.

Top eCommerce Shipping Best Practices For 2019

After all, you might think that you are first a retailer and not a shipper or a freight carrier and that therefore, you need not worry about implementing an effective eCommerce shipping strategy.  

Well, think again.

If you fail in the process of shipping your goods to your customers, you will very quickly be out of business.

Before you can declare that you have completed your eCommerce business strategy, assuming that the products you sell online are not digital goods but rather hard goods that need to physically be shipped from point A to point B, you need to think and clearly define what shipping options you will use and offer to your clients.

Depending of the types of goods that you will offer online, you will have to:

  • Select the appropriate Shipping rates and methods to offer your customers
  • Understand the corresponding shipping costs that your business will incur
  • Think about possibly insuring your goods during shipping
  • Think about the type of packaging to use for shipping
  • Think about what Customs declarations need to be filled, If you sell to customers outside of your country
  • Think about the necessary labeling processes which may vary by country where you ship goods to
  • Think about your return policies and what shipping methods you will offer or accept from your customers
  • etc...

These variables influence your customers’ experiences and, in turn, your profitability. Hence, you must consider every single one carefully.

Things to consider when defining your eCommerce Shipping Strategy

Before you can even think about how to ship your products, you must choose the most adequate pricing strategy for your shipping services.

There are many options to choose from, but among these, only a few might be well suited to your business strategy.

As an example, if you sell high value goods with high price items, even if the weight and size of your products are small, you might still be able to charge a decent price for shipping (including the insurance in case of damage or loss of a high price item).  

Depending of the context it is less shocking to see a $50 shipping fee for a $2,000 item, than a $50 fee for a $100 item. Even though, in some cases, the $100 item might be much heavier than the $2,000 one and therefore, it might command a higher shipping fee.  

However, from a psychological point of view, customers will hate spending more than 10% to 20% of the total price of the purchased goods, just for shipping.

Remember that even though shipping is not the focus of your business, it is the necessary evil that can contribute to make you look bad.  

In fact, while the shipping options alone offered on your website are not enough to give you high marks in your customers’ appreciations, they can surely contribute to lower the number of stars given by your shoppers online.

Indeed, anyone checking your product offering online takes for granted that you will easily and painlessly be able to ship any of your products anywhere in the country, if not in the world.   Even if you have the best products on the planet, failing to ship your products safely, swiftly and at an affordable price can ruin your business and reputation.

Your shipping strategy  should of course take into account your financial objectives but also be based on the incentives and the customer experience you want to offer your clients when shopping in your web stores.

3 Most Common eCommerce Shipping Best Practices

  1. Free shipping. Research shows that 60% of consumers bail on their carts at checkout when shipping fees are too high, especially when compared to the overall price of the merchandise to be shipped. That’s why businesses offer free shipping or reduced shipping rates. The psychological impact of free shipping is definitely playing in your favor and may play a big role into increasing your sales.  As an analogy, we certainly can remember, way before the internet age, the tactics used by retailers to incentivize their customers. One of them was called Psychological pricing. The concept was pretty basic and almost laughable. You simply would reduce the price of a $20 item to $19.99 or the price of a $100 to $99.99 or $99.90. Surprisingly enough, the psychological impact of seeing the selling price at $19.99 or $99.90 as opposed to respectively $20 and $100 would make the customers register the whole part of the price and not the decimal part.  The net effect of that technique would yield better sales. Nowadays, free shipping has that same power over your customers and if possible, you might as well use that power. However, remember that shipping is never free. Someone has to pay for it. To offset that cost, you might increase slightly your product prices, or you may simply decide to shoulder the shipping costs decreasing your overall margin. There are many way to implement a free or reduced shipping fee strategy. Do not underestimate it, as it can really help boosting your sales.
  2. Real-time carrier rates. Another strategy is to use and offer your customers access to real-time carriers’ rates.  the goal is not necessarily to make a profit on the charged shipping fees but rather to simply put your customer in control of how he wants the merchandise to be shipped and how much he is willing to pay for that.  Offering this type of control to your customer is usually well appreciated and contributes to a better customer experience. A good retail integration platform will allow you to connect real time to various carriers systems’ APIs and allow you to query the current shipping rates for your specific parcels to be shipped from your facility to the customer’s doorstep. Most of the major carriers such as UPS, Fedex, USPS, Airborne, DHL, etc offer APIs to which you can connect and query their shipping rates based on Size, weight, delivery time span, hence allowing you to offer various shipping options to your customers while eliminating the guesswork when quoting a shipping fee. Doing so, empowers shoppers who will pick and pay for the shipping services they want.
  3. Flat rates. Here is a method ideal for eCommerce stores that sell products that have similar sizes and weights. you offer 3 or 4 flat rates depending the overall size of your products and you manage to calculate each rate so that it can safely cover for each parcel type, the shipping costs that you will incur regardless of the distance separating your shipping locations from your customers. The advantage of flat rates is that they are extremely easy to manage and each flat rate can become a non-stocked item that you carry in inventory. Every time a customer selects one of your flat rates, that flat rate simply becomes an additional item that can appear in the body of your customer sales receipt.

How To Calculate Shipping Costs

Shipping couriers consider a number of factors when they’re calculating shipping costs, including package size and weight, origin country, and its destination. They will also take a look at additional shipping options such as insurance, tracking, customs declarations, and discounts.

Here’s a list of shipping calculators from some of the most popular couriers to help you get started:

How to Choose the Right Packaging

The size and weight of your product, as well as its packaging, greatly affect the cost of shipping. For that reason, you should choose your packaging wisely. Sure, the way you present your products can easily set you apart from the competition. However, it shouldn’t just be about aesthetic value. It should be practical as well.

To offer affordable shipping rates, choose your packaging wisely. It must be big enough to hold and protect your products during transport. But it shouldn’t be too big that it inflates your shipping fees.

You might want to try out two to three different packaging sizes so you can select the most appropriate one for your products. Depending on your business, you could also give consumers several packaging options.

When to Purchase Shipping Insurance

Depending on the products you sell, you might want to consider getting shipping insurance and tracking. If you’re shipping valuable items on a regular basis, you ought to get insurance in case the package gets lost or damaged during transport. Almost all carriers such as UPS, Fedex, DHL, USPS, etc. offer complimentary coverage up to a certain declared value. You can always purchase additional insurance to guarantee that everything’s covered and, you may want to take that into account into the final price quoted to your customers. You might also want to seek the services of a third-party insurance provider.

These services are relatively inexpensive. Some carriers already have insurance built into their shipping services. Make sure to look into this when you’re comparing different carriers’ prices.

What You Need to Know About Customs Declarations

Selling across the border is arguably the most daunting challenge of being a retailer. That’s because you’ve got to deal with customs. You need to fill out a bunch of forms to ship outside of your country. Your paperwork informs customs officers about the details of your package such as what’s inside of it, and how much it costs.

In terms of your shipping strategy, you must inform customers that you don’t have control over customs and duties fees. Not to mention, you have to let them know that these costs vary from country to country. You can share this information on your website or through a notification email.

To find out more about the different policies and forms of customs declarations, check out the resources below.

How to Label Your Packages

When you’ve figured out your packaging, carrier, and shipping costs, you need to start thinking about how you want to label your packages. Most startups opt to manually write the shipping address and return address on the package itself. This budget-friendly method might be perfect for startups. However, it’s labor-intensive and time-consuming.

As your business expands, you will have to ship more orders. This means that manually writing your package labels won’t be the most cost-efficient and time-efficient way to handle the labeling operation. Nowadays, good retail integration platforms, directly talk to various carriers’ systems in real time and they can, on the fly easily print shipping labels for every single order that you need to ship out.

Last but not least, you also need to think about return shipping labels.  That is of course, if your business policy does cover returns. Some retailers do accept returns but leave it to the customers to decide how they want to ship the returned goods back to you.  

While it may sound like a fair and good option, you might want to think twice about this option.  Indeed, if the products you ship are valuable and fragile, you might want to not leave it up to your customers to decide how they want to ship your goods back to you.

If you do, you are almost guaranteed that they will use the cheapest shipping method and not necessarily care about the packaging they use when returning the goods to you.  You need to be very specific about your return policies and make sure you state clearly how you expect your customers to ship back products and within what delay.

To avoid random and unorganized returns, many companies implement well structured return processes which force your customers to first contact your customer service department to obtain a RMA# (Return Merchandise Authorization Number).  Doing so, gives you a better control over what is being returned to your facilities and it gives you a chance to reiterate to the customers how you expect them to ship the goods back to you.

Often e-Retailers ship with their goods a return shipping label which is to be used, should the customer decide to return the goods after obtaining a RMA#.  This method ensures that the customers use a shipping method which is compliant with your expectations.

How about a third party Fulfillment Warehouse

If and when you are in a start-up mode, you can implement an in-house fulfillment model, where you and your team are in charge of fulfilling every single order coming through your website. Sure, it’s a lot of work, but it’s cost-efficient and, it has the advantages to have you learn first hand the ropes of what is needed in your particular environment to efficiently fulfill an order successfully.

However, as your business expands, you might want to consider other strategies. You can seek the services of a fulfillment company which sole business is to pick, pack and ship goods on your behalf.  They can definitely off load that responsibility from your shoulders but, it certainly comes at a price that may seriously impact your bottom line.

Again, our preference would be for you to invest in your business rather than in someone else’s and implement an efficient retail integration platform which will automate and speed up your entire fulfillment process.

Takeaway

Given all the variables you have to consider when it comes to creating a shipping strategy, there is no guarantee that you will get it right the first time. You don’t have to beat yourself up about it. Most businesses struggle to nail it the first time as well. You can be proactive about assessing and changing your strategy in order to deliver excellent customer service that will make your business more profitable.

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