eCommerce is pivotal for the sales strategy of most businesses — 35% of merchants opened an eCommerce storefront in 2020 alone. eCommerce shipping is the reason behind eCommerce, playing a huge part in how businesses reach customers with their products.
Besides helping you streamline your ordering process, a positive eCommerce shipping experience can drive consumer preference for your brand and boost your reorder rates. 73.8% of shoppers rank shipping as the most important aspect of their online shopping experience.
However, eCommerce shipping dilemmas can quickly derail your sales strategy, from runaway costs to ongoing delivery delays.
In this article, you’ll learn how to implement eCommerce shipping strategies to scale your operations faster, protect your margins from unforeseen capital, and build a tribe of loyal customers.
What Is eCommerce Shipping?
eCommerce shipping is the process of getting products from a virtual order trolley to the buyer’s doorstep.
It encompasses the entire order process from making an online purchase to carrier pickup, packaging, transit, tracking, and delivery. These steps require sourcing supplies, managing inventory, processing orders, and delivering products to customers. In between all of this, businesses need to deploy inventory and order management integrations, and collaborate closely with shipping carriers.
Meeting customers’ demands is crucial to eCommerce success. eCommerce shipping facilitates success by giving businesses greater control over their quality assurance processes and helping elevate their customer experience.
In recent years, technology has significantly enhanced eCommerce shipping. AI and machine learning algorithms help to reduce manual labor in many ways. These include providing real-time traffic reports, identifying customer preferences, accurately forecasting demand and inventory requirements, and helping reduce stockouts without inflating inventory carry costs. Also, blockchain technology enhances transparency and security in supply chains with real-time tracking and quality assurance.
Why Is It Important to Get Your eCommerce Shipping Right?
eCommerce shipping can impact your business’s growth and profitability in many ways. Let’s explore why a meticulous eCommerce delivery strategy is essential in today’s marketplace.
Operational Scalability
Without a solid shipping strategy, scaling can quickly become a logistical nightmare. Optimizing your shipping processes early on lets you easily handle order volume fluctuations. Whether shipping 10 or 10,000 orders, a well-planned strategy helps you provide exceptional service without sacrificing quality or delivery expectations.
Cost-Efficiency
Optimizing your shipping strategy also means taking advantage of cost-saving opportunities, such as bargaining lower rates for higher volume orders and optimizing packaging to reduce the size (‘dimensional weight’) to minimize charges.
Faster Delivery Times
Slow shipping can quickly lead to dissatisfaction and even cart abandonment, with customers looking for 1–2 days or even same-day delivery. A well-executed shipping strategy can help you meet fast delivery expectations and even exceed them. By adopting technology such as route optimization algorithms and demand forecasting, you can offer lightning-fast shipping that meets customers’ expectations.
Seamless Integration with eCommerce Platforms
Integrating eCommerce platforms with shipping solutions can simplify the entire order fulfillment process. Get access to automation features for order processing and labeling. Readily available tracking tools foster transparency and predictability in your ordering and shipping processes. The benefits of integrated shipping solutions in your eCommerce platform include fast-tracked shipping processes, reducing manual errors, and saving more valuable time.
What’s Involved in the eCommerce Shipping Process?
You can navigate the eCommerce delivery process in just a few steps. From strategic decisions and meticulous planning to smooth implementation, you’ll find the key steps you need to follow below.
1. Decide between In-House, Outsourced, or Hybrid
Decide what type of shipping approach works best for you: handling shipping internally, outsourcing it to a third-party logistics provider, or adopting a hybrid approach that combines both. Each option has pros and cons, depending on order volume, budget, and infrastructure.
2. Study Your Customers
Research and analyze your customers’ preferences and expectations regarding shipping. Explore first-party data (personal info users willingly provide for you) using surveys, questionnaires, and polls to gain valuable insights into customer expectations regarding shipping. Ask questions about preferred delivery times, shipping costs, and any specific delivery options they desire.
Also, analyze their past purchasing behavior and shipping preferences. Pay close attention to customer reviews related to shipping.
3. Build a Fulfillment Network
Establish a network of fulfillment centers near your target markets for quick and cost-efficient delivery.
4. Set a Price
Your pricing should balance customer expectations and business costs. Your options here might include incorporating shipping costs into product prices, offering flat shipping rates, weight-based rates, free shipping (with a minimum order threshold), dynamic pricing based on end customer location, and pickup rates.
5. Integrate Your Sales Channels with Your Fulfillment Solution
Consider technologies such as order processing software and tracking systems that can help connect your eCommerce platform with your chosen fulfillment solution. Some providers like Ware2Go offer Application Programming Interfaces (APIs) for real-time communication and data exchange between your sales channels and fulfillment center.
Customer Relations Management (CRM) solutions help lessen customer concerns about the shipping process, so you can focus on figuring out the best shipping options for your business.
What Type of eCommerce Shipping Option Works Best for You?
The diverse eCommerce shipping options available to businesses can leave you stuck in a maze. We’ll help you dissect the pros and cons of the most popular shipping methods with insights to align your shipping strategy to your business goals and customer expectations.
One-Day and Two-Day Deliveries
These expedited eCommerce delivery options appeal to customers seeking fast delivery. They have the potential to increase sales through impulse purchases and to give businesses a competitive edge. However, the relatively higher shipping costs may eat into profit margins, and short-notice deliveries can throw you into logistical challenges.
Buy Online, In-Store Pickup (BOIP)
BOIP allows customers to purchase items online and pick them up at a nearby store. BOIP also supports various shopping options, such as standard, expedited, or same-day delivery, catering to diverse customer needs and preferences.
The benefits include saving on shipping costs, reducing delivery times, and driving foot traffic to your brick-and-mortar locations.
However, limitations may arise in the availability of pickup locations, and customers without nearby stores may find it inconvenient. It also requires customers to travel, denying them the comfort of having their delivery arrive at home.
Scheduled Delivery Date
This option enables customers to select a specific date to receive their orders. Scheduled delivery allows companies to deploy resources more efficiently and reliably to suit the customer and the business. Customers can plan their pickup schedule accordingly and deal with fewer shipping-related anxieties.
However, customers might be locked into a delivery time that’s slower than on-demand delivery. Also, the pressure on shipping companies to meet a very specific window could lead to issues with service quality and reliability.
Pickup Locations
Offering alternative delivery locations such as lockers, parcel shops, or partner stores can provide flexibility for customers. These alternatives can help reduce business delivery costs and provide added convenience for customers who prefer self-service. Customers have the flexibility to collect their orders at their convenience, in addition to enjoying free shipping. Plus, it’s almost guaranteed that customers won’t ever miss their delivery (as often happens with home delivery).
However, limited availability of pickup locations may inconvenience some customers. Customers that prefer home delivery might not find it convenient. Although the shipping is free, customers still pick up tabs on the transportation cost by commuting to the pick up point. On the business side, since the shipping is usually free, they don’t charge to cover the cost of delivering to the pickup point.
Flat-Rate Shipping
Flat-rate shipping charges, regardless of order size or destination, can simplify pricing for customers and merchants. Flat-rate shipping offers a straightforward and easy-to-understand pricing structure for both customers and merchants. Customers know exactly how much they will pay for shipping regardless of the order size or destination, which can reduce confusion and uncertainty during the checkout process.
55% of buyers abandon carts due to unexpected costs like shipping fees. Flat-rate shipping offers more transparency and predictability, potentially reducing cart abandonment rates.
However, if the flat-rate fees are set too low, you may end up subsidizing shipping expenses out of your pocket, leading to reduced profitability. Flat rates may deter customers if the fees are perceived as too high compared.
What to Look for in an eCommerce Delivery Company
If outsourcing your eCommerce shipping, consider various factors aligning with your business needs and objectives.
Shipping Costs
Undoubtedly, shipping costs are a critical factor when choosing a shipping company. However, it’s not just about finding the cheapest option. Consider the value proposition offered by each shipping provider. Some may offer slightly higher rates but provide superior service, reliability, and faster delivery times.
Packing Options
Putting extra thought into your packaging can leave a lasting impression on customers. Consider partnering with a shipping company that offers a robust set of packing options. That includes customizable and branded packaging and sustainable packaging.
Delivery Options
Customers expect expedited delivery options today. Next-day and same-day delivery are no longer considered a luxury. Choose shipping companies that offer a range of fast delivery options to cater to diverse customer needs.
Return Options
Look for partners that offer hassle-free return processes, including pre-paid shipping labels or free return shipping for customers. While absorbing the cost of returns may seem daunting, it can lead to higher customer retention and lifetime value in the long run.
Target Audience
Consider the geographic locations of your customer base when selecting a shipping company. Look for companies with established networks and expertise in navigating your targeted markets to ensure timely and reliable delivery.
Technology Integration
Choose a shipping company that seamlessly integrates with your existing technology stack. Look for partners with robust API support for smooth information flow and automation between your eCommerce platform and the shipping provider.
User-friendly dashboards and real-time tracking are essential for operational efficiency and transparency in the shipping process. They provide real-time visibility into different processes, such as inventory and order management, in-transit tracking, and customer communications, allowing for greater transparency and predictability.
eCommerce Shipping Best Practices
Now, let’s dive into some expert insights and strategies for optimizing your eCommerce shipping operations.
1–2 Day or Same-Day Delivery
When Amazon first introduced the idea of free 2–day shipping, it felt like a luxury, and it quickly drew subscribers to Amazon Prime. Fast forward to today, and 1–2 day eCommerce delivery is now a consumer expectation. In fact, a recent survey shows that 60% of customers regard fast delivery as the most important component of a good customer experience
37% of consumers expect small to mid-sized businesses to ship faster than their big box competitors.
Forge local partnerships with carriers and warehousing centers in your target locations to forward stock inventory for quicker delivery. Innovative transportation solutions like electric bicycles, drones, and autonomous vehicles can bridge gaps for faster last-mile transit, facilitating faster delivery.
Sustainable eCommerce Shipping
A recent consumer survey by Ware2Go revealed that 88% of consumers (especially millennials) consider sustainability important to their purchasing decisions, and 66% of consumers said that sustainability has become more important to them due to the COVID-19 pandemic.
Carbon emissions from eCommerce vehicles were expected to reach an alarming 30% by 2030, even before the 2020 eCommerce boom.
There are 2 steps merchants can take toward more eco-friendly eCommerce shipping solutions:
A Distributed Fulfillment Network
By distributing inventory to fulfillment centers closest to their customers, merchants can lower their Time in Transit (TNT) to 1 to 2 days. This lowers the amount of carbon emitted during the delivery and LSO minimizes the overall number of next-day air shipments.
Carbon Offset Shipping
Ware2Go’s recent consumer survey revealed that 66% consumers are more likely to purchase a product that offers carbon-offset shipping if the product and price point are the same.
Carbon offset programs range from planting trees to protecting old-growth forests and forest management.
Advertising eCommerce Shipping Guarantees
To realize all of the advantages of a fully optimized eCommerce shipping network, it’s important to advertise shipping promises at the top of the sales funnel.
Google Shopping’s Free and Fast annotations are an excellent way to advertise free 1 to 2-day shipping at the beginning of the buyer’s journey. Google’s data shows that these annotations increase conversion rates by up to 9%.
You should also advertise your shipping guarantees on your homepage, banner ads, and paid social campaigns. If you haven’t yet established a nationwide 2-day footprint, begin growing top-line revenue in the markets where you offer free 2-day shipping with geo-targeted ads.
Accurate Last-Mile Carrier Tracking
Last-mile tracking is the final step in the delivery process, where packages are transported from the shipping hub to the customer’s doorstep. This stage is essential, as about 75% of customers have reported problems with their deliveries at this point.
Implementing a reliable last-mile tracking system ensures that businesses and customers can track the package’s progress and know exactly when it will arrive. By integrating advanced tracking systems with your eCommerce platform, you can send customers timely updates via email or text messages, including the tracking number and a link to view the package’s real-time journey.
For businesses, having strong last-mile tracking allows for proactive communication with customers, helps address delivery issues quickly, and enhances the overall customer experience by providing transparency and building trust.
Custom Packaging
Custom packaging reflects attention to detail and quality, and this positive impression can increase customer loyalty.
Incorporate branded elements such as logos, colors, and messaging into the packaging design. Also, consider practical aspects such as durability and eco-friendliness while ensuring that the packaging adequately protects the contents during transit.
Room of Choice or Full-Service White Glove Delivery for Heavy or High-Value Products
This delivery method requires delivering heavy or high-value products directly to the customer’s preferred spot within their home. This is particularly suitable for large furniture or electronics purchases.
White glove delivery involves trained handlers unpacking and assembling the items at the designated spot inside the customers’ home. This provides added convenience and peace of mind to customers, minimizing the risk of damages to the item or the home.
Calculating eCommerce Shipping Costs
eCommerce shipping rates are calculated based on a few major factors:
Dimensional Weight (DIM)
This refers to volume calculation based on the package’s weight and size. Find the smallest packaging that can safely fit your product to reduce DIM weight without risking damage. Depending on your product, that could be an envelope or poly mailer.
Shipping Zones
Based on the package’s origin and destination zip codes, shipping zones let the carriers determine how long a product will have to travel in its final mile.
The longer the package travels, the higher the shipping zone number and the higher the shipping cost. Storing your product as close to your end customers will reduce costly long-zone shipments.
Not sure where to store your inventory to reduce time in transit? Get a free custom analysis with NetworkVu.
Delivery Speed
Faster eCommerce delivery options typically incur higher shipping costs. Deploy integrations for calculating the cost of different delivery speeds on your website.
Negotiate favorable shipping rates with carriers, particularly for bulk or regular shipments to find some cost advantages. Streamline your inventory management processes to reduce the expenses on expedited shipping options.
Packaging Materials
Products with special handling requirements, such as fragile or perishable items, may incur higher shipping costs due to the need for additional packaging materials and careful handling processes. For instance, transporting sensitive electronic components might require special packaging, climate-controlled storage, and handlers with specialized electronics knowledge.
To reduce shipping costs, use packaging materials that provide adequate protection while minimizing weight and volume. You can also combine multiple items into one shipment whenever possible to reduce handling costs and streamline the shipping process.
Additional Shipping Costs
Watch out for various additional shipping costs, such as fuel surcharges, residential delivery fees, and surcharges for oversized or overweight packages. Consolidate multiple orders into single shipments to minimize handling and transportation costs. Set minimum order thresholds for free shipping to encourage larger purchases and offset shipping costs. Consider using shipping software to compare rates and identify cost-saving opportunities.
Pricing Strategies for eCommerce Shipping
The challenge for eCommerce sellers is to meet consumers’ delivery expectations without degrading their unit economics or inflating the cost of their product beyond profitable levels. Ahead are five common pricing strategies for eCommerce shipping, their advantages, and disadvantages.
Charge a Flat Rate Anywhere in the US at Checkout
Many eCommerce sellers will average their shipping costs across their previous orders to set an average cost per item. This risk-based pricing exercise is designed not to alienate large existing or potential markets. However, you may also risk degrading your unit economics if demand spikes in more remote markets and causes you to over-index on long-zone shipments or overnight air.
Even worse, when customers see a flat rate shipping charge at checkout, they’ll typically hunt for alternative options that offer free 2-day shipping.
Pass Shipping Costs on to Customers in the Form of Higher Prices
Obviously, free shipping is never free for the merchant. Many merchants will choose to offset their margins by increasing the cost of their products. This tactic is really only feasible for retailers with strong brand affinity and little to no competition.
Offer Free Shipping after a Spending Threshold
This strategy can prompt some consumers to spend more and increase the average order value (AOV). But it can also cause abandonment from new or returning customers who want to buy your product but are not interested in a large purchase at that time. It may be more prudent to focus first on converting those new customers who are just dipping their toes in the water of your brand and introduce spend thresholds later.
Absorb the Cost of Free Shipping
Using this strategy, you won’t raise the price of your product; you’ll fully absorb the cost of shipping yourself. This is a great eCommerce delivery option for most emerging brands and those in a highly competitive space — if they can reduce their shipping costs enough to protect their margins.
To find options for the cheapest shipping for eCommerce with this strategy, try positioning your products closer to your end customers with a nationwide warehouse network, targeting the areas of highest demand concentration. This enables nationwide 2-day ground coverage, eliminating the need for next-day air and costly long-zone shipments.
The Right Packaging: An Important Detail in eCommerce Shipping
Here are some creative packaging strategies for safeguarding products in transit and adding value for customers.
Customized Packaging
Consumers have come to expect a level of personalization and “wow” factor from direct-to-consumer (D2C0) brands in their unboxing experience.
For emerging brands, the cost of losing a potential loyal customer may far outweigh the cost of investing in custom or high-end packaging — which can help differentiate your customer experience.
Recyclable and Eco-friendly Packaging
Our consumer survey revealed that recycled packaging is the top sustainability concern for 41% of eco-conscious consumers. Meanwhile, 30% of mid-sized businesses are concerned about the sustainability of their fulfillment model. Opting for recycled packaging (and letting customers know that it’s recycled with messaging printed on the package) allows your customers to know that you share their values.
Internal or Filling Materials
Internal or filling materials provide extra protection for your items, especially if they’re fragile. The filling can be just a few inches thick if the packaging fits the item snugly. For irregularly shaped items, consider custom packaging solutions like molded pulp inserts or corrugated cardboard dividers to further secure the product.
For a greener shipping process and improved brand reputation, opt for eco-friendly filling materials such as biodegradable packing or recycled paper crinkle.
Ware2Go’s eCommerce Shipping Services
Ware2Go simplifies eCommerce warehousing, fulfillment, and eCommerce shipping with a fully integrated platform that connects every sales channel in your fulfillment network. The platform automates processes like order management and delivery tracking, allowing full visibility into inventory levels across platforms and warehouse locations.
A distributed warehouse network supports the technology to enable nationwide 2-day ground shipments, and all warehouses offer the same rigorous SLAs, including same-day fulfillment and 99% on-time fulfillment rates.
Case Study: The Benefits of An eCommerce Shipping Partner
When YBell Fitness launched its BigCommerce store, it knew it needed eCommerce shipping solutions that would fully integrate with its current internal processes. Ware2Go created a custom integration that gives them a low-touch fulfillment solution. That way its team can focus on driving sales, knowing that its customers’ expectations for delivery are met.
FAQs
What Are Some Ways to Offer Expedited Shipping Options for Customers Who Need Their Orders Quickly?
To offer expedited shipping without denting your profit margin, consider placing a minimum purchase amount for orders. It’s cheaper to ship a larger consignment at once compared to shipping smaller items multiple times.
Also, consider partnering with distribution fulfillment centers around your target locations. An experienced 3PL can help you access more cost-effective eCommerce delivery for faster shipping. Additionally, optimize internal processes with automation for quick order fulfillment and leverage technology for easy real-time tracking.
Are There Any Ways to Offer Free Shipping without Hurting Your Profit Margins?
Set minimum order thresholds for free shipping eligibility, absorb shipping costs into product prices, or negotiate discounted shipping rates with carriers based on order volume.
You can also offset shipping expenses by upselling complementary products.
What Should You Do If a Customer’s Package Is Lost or Damaged during Shipping?
Promptly communicate with the customer to acknowledge the issue and provide reassurance. Alert your shipping carrier to locate the package and assess the extent of damage. Depending on the situation, you may need to issue a refund, reship a replacement item, or file an insurance claim with the carrier to cover any financial losses incurred by the customer.
How Do You Handle Returns, Exchanges, Lost, or Damaged Packages with eCommerce Shipping?
Have clear and customer-friendly return policies in your eCommerce delivery strategy, providing easy-to-follow return instructions and pre-paid return labels. Upon receipt of returned items, assess the returned item’s condition, check restock for eligible items, and promptly process returns or exchanges.
Are There Any Regulations or Restrictions You Need to Be Aware of When Shipping Certain Items?
Restrictions may be required for hazardous materials, perishable goods, alcohol, firearms, or items subject to international trade regulations. Familiarize yourself with applicable regulations and consult with legal experts or industry associations for further guidance.
eCommerce Shipping Companies Can Improve Your Bottom Line
Understanding the intricacies of eCommerce shipping is essential for businesses in today’s competitive landscape. From the strategic decisions on shipping partners to expedited shipping options, optimal packaging, and pricing strategies, we’ve explored best practices that can help you overcome shipping dilemmas like runaway cost, delays, and poor customer satisfaction.
Optimizing your eCommerce shipping network for free 1 to 2-day delivery can simultaneously grow top line and bottom line revenue. Studies show that acquiring new customers costs up to 25 times more than retaining existing customers, so by reducing your customer acquisition costs with 2-day delivery, you further improve your margins and ultimately your bottom line.
Want to turn your eCommerce delivery strategy into a retention engine that keeps customers coming back? Learn more from this penetrating eBook from Ware2Go.
