You put a lot of effort into making sure your customers have a great experience. You approve the images, you tweak your store, and you write the emails, all with the goal of leaving your customers happy.
But when it comes to shipping, it can feel like you're handing your brand over to a stranger.
With some thought and planning, however, it doesn't have to feel that way—which is a good thing, because shipping is a key part of your business. It's the point where a customer finally experiences your product in person, and it can also represent a major expense in your business, depending on your shipping strategy.
That's why it's so important to map out a defined shipping strategy. Since the world of shipping and fulfillment can seem complex when you're not familiar with it, we've got an overview of everything you'll need to know to make the best choice for your business.
We'll go over some of the basics of shipping your products and help demystify this complicated topic. We'll talk about setting your shipping strategy, packaging, provide resources and links to popular carriers, look at tracking and insurance, balancing shipping costs with profitability, how eoem can help you streamline your shipping, and apps to help make it all easier.
There are some basics that set a foundation for the rest of your shipping. While you can come back and change each of these later on, as you learn more, these are the key decisions and steps that make up your high-level shipping strategy.
- Your shipping rates and methods. Are you going to pass the full cost of shipping on to your customers, or will you offer free or flat-rate shipping to absorb some or all of the cost? By the end of the post, you'll have more information on how to make this choice for your business.
- Product weights. To streamline the process, measure and update the weight of each product you sell. Having that information set up will help you get a good sense of your total costs, and pass along accurate prices to your customers.
- Choose your preferred packaging. While there's more to be said about what kind of packaging is right for your products, once you've selected it, you can add that information to eoem so you can calculate accurate shipping prices.
Source your packaging. You can order free packaging from USPS, UPS, or DHL, or invest in branded packaging if that's part of your strategy.
Set your shipping rates and methods
Before you can ship products, you’ll first need to decide your pricing strategy for shipping. There are several common methods, but your choice should always be informed by the underlying financials of your business.
Offer Free Shipping
Offering your customers free shipping is one of the best ways to reduce shopping cart abandonment. However, as you might suspect, shipping is never free. Someone always has to pay. To make free shipping work, you have a few options.
Increase product prices to cover costs for shipping (customer pays).
You pay the full price of shipping out of your margins (you pay).
Increase prices of products slightly to cover partial costs of shipping (you and your customer pays).
Offer a discount code to certain customers for free shipping.
Additionally, you can also try offering free shipping on a minimum order amount. This strategy can help offset the costs of shipping by helping to increase your average order size, but you're still the one paying for it out of your margins.
Charge Real-Time Carrier Rates
Another effective shipping strategy is to charge real-time carrier rates for shipping. Ecommerce platforms like us integrate in real-time with various carriers like USPS and Canada Post (among others) to generate shipping options and live pricing from various carriers. This allows your customers to choose and pay for the exact service they want.
Charge a Flat Rate
The last popular option is to offer flat rate shipping. The best practice for this option is to try and make sure that you don't drastically undercharge or overcharge your customers. Flat rate shipping works best when you have a fairly standard product line of items that have similar sizes and weights. Flat rate shipping tends to become complicated and less effective if you sell a wide variety of products with different sizes and weights.
Calculating shipping costs
All shipping couriers base shipping rates on a variety of factors including:
- Package size
- Package weight
- Origin country
Plus additional shipping options like tracking and insurance. It can be difficult to compare services exactly as they all offer slightly different options, and every business will have their own unique variables.
Below we have compiled a list of shipping calculators to some of the largest and most popular shipping couriers so that you can begin comparing pricing and options. If you’re based in the US or Canada, you can pay for USPS, UPS, DHL Express and Canada Post shipping through us and receive pre-negotiated rates.
Consider your margins
To be successful at ecommerce, you always need to keep an eye on your profit margins. Because shipping represents a significant expense for ecommerce merchants, if you don’t do your research, you could end up losing money on shipping.
Before you finalize your pricing and strategy for your ecommerce store, you should use a chart like the one below to map out all costs associated with getting your products into your customers’ hands. Many ecommerce entrepreneurs are shocked by how quickly the little charges add up. Don’t get caught in the same trap.
Here's a quick example of how you could calculate your total price to include the cost of shipping.
|Cost of product||$10|
|Customs/Duties (if you cover them)||$0.00|
|Credit card fee||$2.50|
Packaging and marketing
As the world of ecommerce develops so do the expectations of customers who buy online. Years ago, packaging and shipping was simply a way to receive a product purchased online, but more and more people are looking for shipping, packaging and presentation as part of the ecommerce experience.
This expectation means that for many businesses, outside of selling commodities, competing effectively means going above and beyond to impress customers and exceed their expectations by delivering an experience, not just a product.
Before you can ship your products, you’ll need to package them for safe transport. So what options do you have? There are a few common options for packaging including boxes or envelopes (padded or unpadded). For many businesses and products, you’ll a box as well as some other packaging materials to safely ship your products.
Keep it light and small
Because the cost of most shipping options is based on size and/or weight, do your best to keep your packaging as small as possible. This will not only help you save on your shipping costs and what your customer paid for shipping, but will also keep packaging costs from eating away your profit margin.
Depending on your business and product line, you may want to consider carrying a variety of package sizes and packaging materials.
Customs declaration and forms
If you're shipping outside of your own country, you’ll need to include the proper customs documentation. These are available at your local post office or shipping retail location. These forms tell the customs officers at the country of import what is in the package, how much it costs, and whether it is a gift or merchandise.
Check with your country’s postal service to find out exactly which forms you’ll need to attach to your package. These forms should be completed honestly and clearly to prevent your package from getting held up in Customs.
Customs declaration information
For more information on customs declaration and the required forms and policies, please see the resources below:
Once you have decided on the carriers you want to use, consider setting up business accounts. Business accounts offer a variety of services including discounts, better expense tracking, and a whole host of online tools to more efficiently manage the shipping aspects of your business.
Labelling your packages
Once you have figured out your presentation, packaging, carrier, and costs, you’ll need to determine how you want to label your packages. Many new ecommerce entrepreneurs start off by writing the ship-to and return addresses on the package by hand. Although this can be a great way to start, it tends to be time consuming, tedious, and not scalable as your business grows.
From your orders list, select all the orders you’re ready to ship.
Preview each shipment, including the carrier, shipping service, and package. Adjust or fill in any missing information as needed.
Buy all of your shipping labels in one click, then print them as a single PDF.
Using a fulfillment warehouse
A fulfillment warehouse can help automate and handle the shipping for you. When you choose to work with a fulfillment warehouse, you will store your inventory at one of their warehouses. Depending on their level of integration with your shopping cart, when an order comes in your fulfillment partner will automatically be forwarded the order to pick, pack, and ship the purchase order on your behalf.
Shipping is definitely a challenging aspect for any ecommerce business. Every business will have their own unique challenges they need to work through and overcome to develop the best and most efficient shipping strategy. Like many aspects of building your new ecommerce site, it will take time and tweaking to determine what works best.
Understanding all the variables and evolving your shipping strategy with your growing business is vital to its long term health and success. So once you think you have it figured out, don’t let it go stale. Reevaluate every six months to make sure you're delivering the absolute best possible service and experience for the best possible price to your customers.