Shipping is arguably the most important part of ecommerce logistics. Without shipping, there is no business. Many business owners make the mistake of thinking that shipping product is like shipping a personal parcel.
There are far more complexities, costs, and best practices when it comes to ecommerce shipping.
Inefficient shipping practices can cause significant losses on your end. The best way to prevent this is to understand the basics of shipping products from home.
In this post, you’ll learn:
- The factors that determine your shipping cost (and how to optimize them)
- Major shipping providers (and how to choose the best one)
- Best practices for shipping products from home
Let’s get started.
Ecommerce shipping basics
Each of the following factors will determine which shipping service you should use and how much shipping will impact your bottom line.
Shipping volume is the number of orders you’re shipping out for delivery in a month. If you’re using an ecommerce platform like Shopify, you can quickly run a report on how many orders you’ve received over a given time period.
Many shipping services will offer discounts for high-volume customers, so it’s important to keep an eye on this metric.
You may have been taught that shipping costs are all determined by the weight of the parcel. But did you know that the dimensions of your shipping boxes also play a huge role in determining your shipping costs?
Most major carriers like FedEx, UPS, and USPS base their pricing plan on your parcel’s dimensional weight (DIM) instead of its actual weight. Typically, objects placed in larger boxes will have a greater DIM, while those placed in smaller boxes will have a lower DIM.
Simply put: go for the smallest dimensions you possibly can while still safely shipping the products.
Weight is obviously still a major factor in determining shipping costs. While you may not be able to reduce the weight of your product itself, you can cut costs by optimizing your packaging with lighter materials.
Most shipping carriers offer different shipping priorities. For instance, urgent orders that need to get shipped out instantly will cost more than products sent on a regular schedule.
National or international shipping
The distance between your address and your customer’s address will most certainly affect your shipping costs. Products shipped from coast-to-coast will cost more than shipping to flyover states, and international shipping will obviously cost the most.
Besides their distance from your home, international shipping may have other restrictions. It’s also necessary to consider the following factors:
- Forbidden or controlled items per country
- Customs documentation
- Taxes and tariffs
Packaging materials, in addition to adding weight, may impact shipping costs as well.
While cutting packaging will reduce those weight charges, you run the risk of transit damage — especially if you’re shipping fragile products. No matter how much money you save by cutting down on shipping costs, it will all be for nothing if you’re drowning in returns and agitated customers.
On the other hand, small businesses that ship out small and heavy objects should consider flat-rate boxes. Flat-rate boxes are packages with predetermined rates. They don’t rely on your parcel’s weight and destination.
Customers will more likely associate your small business with good memories if they have a great unboxing experience. You can achieve this by personalizing each package you send out.
Adding a logo on your parcels can establish your name in your respective niche. Placing stickers, freebies, and handwritten or digital messages can also give your business a competitive advantage over other online sellers.
The best part is that most of these items are extremely light and won’t jack up any weight-related shipping costs.
Shipping insurance can provide security and trust to your customers, especially if their orders are expensive and valuable. It’s also a practical strategy to ensure you’re covered when your parcel gets lost or damaged.
Luckily, major carriers like FedEx and UPS have default shipment insurance of $100. Other shipping services may also offer fees per $100 value of your product.
Shipping isn’t the only problem you have to deal with in the ecommerce world. Some customers may return your package for various reasons like:
- There are damages to the product.
- They don’t like its design or features.
- They don’t need it anymore.
- They changed their mind.
Returns — commonly called reverse logistics — are a whole different challenge. You’ll want to make sure you read the fine print of whatever shipping service you choose to best understand how they handle returns (if at all).
Things to consider when shipping a package
Shipping products from home can get complicated very quickly, especially if you don’t follow a rigorous organizational system. Besides the basics we discussed previously, there are other factors you must consider when building your business’ shipping policy.
Let’s take a closer look at these factors and some of your frequently asked questions below.
When does the package need to arrive?
Usually, domestic shipping can take up to a few days, while international shipping can reach weeks or even months. Nonetheless, indicate the delivery period so your buyers know when to expect their orders (and balance this with your desired profit margin).
Is a guaranteed delivery or delivery commitment required?
Although it’s not required to have guaranteed delivery or delivery commitment, your small business can benefit from having some sort of guarantee in your shipping protocols. It can give the customer peace of mind that their products will be delivered on time and intact (or they’ll be compensated accordingly).
Is tracking required?
It’s not required to send tracking links of your shipment to your customers. However, it can be extremely useful when you value your reputation and relationship with your buyers. In a sense, tracking can build trust and security.
Is the recipient’s address commercial or residential?
Knowing whether your recipient address is commercial or residential can impact your shipping costs. Generally, shipping to residential properties will cost more than commercial establishments. This is likely because it requires more work and time from the shipping service to navigate neighborhoods and deliver to specific homes.
Is signature confirmation or any other service add-on required?
Like tracking and delivery commitments, having a signature confirmation isn’t required when shipping products from your home. However, you’ll ultimately benefit from this feature and other service add-ons because they can tell whether your customer has gotten your package.
Are you shipping alcohol, other specialized products, or any hazardous materials?
Some areas and countries may restrict or control the entry of some items, especially alcohol and hazardous items like knives. Some carriers may consider this factor and provide additional fees or packaging materials for an extra layer of security during shipping.
Four popular shipping services for small businesses are USPS, FedEx, UPS, and DHL. But before choosing which plan to try out, it’s necessary to compare the programs they offer.
Here are the key takeaways from the services and plans of the four primary shippers worldwide.
The USPS or United States Postal Service is among the best shipping solutions for small parcels from small businesses. It offers click-and-pay services, home pick-ups, and flat rates. It can even go as far as volume discounts.
Other than this, you’ll enjoy its priority mail service. You can get tracking information and have a commitment time of up to three working days.
FedEx is one of the shipping services known for its fast delivery time. It can deliver your packages to your customers anywhere between one to four business days.
Besides this, FedEx has an excellent reward system and FAQs section for your shipping questions and needs. You can also schedule pick-ups and use its postcard printing services for a more personalized touch.
On top of this, you’ll also enjoy its temperature control shipments to ensure your food and beverages are in good condition.
The UPS is best used for large shipments. Its defining services for small businesses include business discounts, scheduled pick-ups, signature confirmation, and its unique UPS connect.
You’ll have discounts on marketing and employee background screening with UPS. You can also maximize the UPS Connect service to connect and brainstorm with others regarding your business and shipping needs.
Apart from this, you can also manage your finances and monitor your returns on its website.
DHL is an attractive shipping service option for international deliveries. Besides its scheduled pick-ups, you and your customers can also benefit from its real-time shipment tracker and e-commerce platform integration.
DHL sends updates regarding your package to your customers through email and text. It also has a live online tracker where they can check the route of your parcel in real-time.
How to choose the right shipping vendor?
Small businesses can benefit from reputable shipping carriers like FedEx, UPS, and USPS. However, you may need to expand your options and try multi-vendor shipping to meet your growing orders at affordable rates.
On top of the basics of shipping, let’s enumerate several things you should look for when choosing the right shipping vendor.
Dropshipping is a great alternative to reduce your shipping expenses if you want to increase your orders without worrying about your inventory storage.
If you’re interested in learning more, check out our post on dropshipping mistakes (and how to avoid them).
You can ultimately cut down your shipping costs if you know a shipping service near your customer base. However, this strategy takes time. You’ll also need to build relationships with various shippers to see which of their plans work best for you and your small business.
The packaging materials, dimensions, and weight of your product will affect your shipping costs. In addition, your branding can also incur additional fees. So it’s always a good practice to check and compare the rates of various shipping services based on these factors.
Shipping technologies and analytics
Choose a shipping service that allows you and your customers to monitor your packages. Consider those that provide accurate and timely updates to prevent delays and errors.
Since shipping is complex and expensive, compare the rates of each shipper. Then, ensure they meet your profit margins and financial goals before going with their service.
Check the shipping schedule of every existing shipping service. It must match the number of orders you need and how frequently you’ll send them out.
Taking more orders than you can handle can cause additional charges. So the best way to go about this is to consider dropshipping.
A delivery guarantee or delivery commitment can bring ease to your customers. Some shipping services offer this feature, so you might want to check them out. You can also consider checking their reviews, insurance policies, and the number of incidents they had.
Questions are inevitable, especially if it’s your first time shipping products from your home. That’s why it’s necessary to look for a shipping service with a reliable customer support team that you can reach through phone, email address, or social media.
Alternative shipping platforms for ecommerce businesses
Finding the best shipping partner for your business is a big commitment. You’ll need to consider their rates and reputation to ensure they can deliver your products to your customers safely and on time.
Here are some of the best shipping alternatives for your small business.
ShipStation supports small parcel shipping lower than 5k for small businesses. In addition, it offers convenience for you and your customers when managing your shipping logistics.
With ShipStation, you can import orders from several e-commerce platforms in unified software using your specific shipping configurations. This way, you can save yourself from the hassle of setting up separate shipping logistics for every e-commerce platform.
You can also easily manage orders across these platforms on the ShipStation website. You’ll even get regular updates for your shipments throughout the day.
Another primary feature of ShipStation is its ability to apply the branding of your business on your shipping labels for a personal touch. All shipments also have a unique tracking sent to your customers and a return portal.
ShipWorks is a friendlier shipping carrier for fast-moving businesses. It focuses more on organizations with larger quantities of more than 5k shipping per month. It’s also suitable for you if your business has more than one warehouse across the country.
ShipWorks also integrates sales from different e-commerce websites and merchants to make it easier for small businesses to track their shipments. They even provide an option where you can automate your tasks and workflow for easier tracking.
GoShippo is one of the fastest and most convenient shipping options that support small businesses. In addition, you can streamline all orders on one platform, making it easier for you to manage your shipments.
With GoShippo, the shipping rates of USPS, FedEx, DHL, and others have discounts for fewer shipping expenses. Additionally, it doesn’t have volume requirements, unlike ShipWorks and ShipStation.
Your business and customers will receive parcel tracking and live notifications. GoShippo also provides automatic return labels to make returns more hassle-free.
Easyship provides a more personal courier experience for your business and customers. Like the other shipping platforms discussed, Easyship uses a single dashboard where you can manage all your shipments from different online stores.
You can also automate your shipping needs for easier management and compare shipping costs from various couriers. In addition, its website allows you to generate personalized labels and manage your income and revenue with its cloud-based shipping software.
Another primary feature of Easyship is its high discount rate of 91% for shipping in partnership with couriers such as DHL, USPS, and UPS. They also send personalized tracking notifications to you and your customers that match your company branding.
How to manage returns?
Customers may return your products for various reasons. Regardless, you can’t prevent them from doing so, especially since online shopping doesn’t allow them to inspect or view the object before it gets shipped to their address.
Nonetheless, having a clear, transparent, and convenient returns policy can save you from the hassle. It can also increase your loyal customer base because your buyers know they’re in good hands.
Remember that domestic and international shipping may have different return policies. Domestic shipments can benefit from an accessible and convenient return portal, while international shipments may get complicated.
Returns for international packages are more expensive and time-consuming. Your customer’s address is farther, and shipping the object back will incur tariffs and taxes. In such cases, offering refunds or replacements can be a better measure.
Read our full guide on this subject to learn how to reduce product returns before they ever become an issue.
How much to charge customers for shipping?
Deciding on how much your customers need to pay for shipping involves a lot of factors. First, you must find the right balance between your prices to ensure profit while maintaining your customer base.
To help you decide, you can explore the following common strategies.
Free shipping can drive in several customers to a small business. In fact, it’s a proven way to encourage them to buy your products. However, this strategy is a bit tricky.
Small businesses must decide on a plan to offset possible losses for free shipping to work. You can try out the following practices and see which one works best for your needs:
- Make your prices a bit higher;
- Offer discount codes; or
- Set a minimum order amount
An essential rule of thumb when deciding how much to charge your customers is not to make your prices extremely low or high. Instead, keep your rates reasonable to prevent losing customers and profit.
For this to work, you can set a standard or predetermined pricing for the shipment of your products. This strategy is best done if your products have similar sizes and weights.
If you’re selling candles of the same size and weight, you can ultimately benefit from flat rates rather than varied shipping prices. It’s also a positive way for customers to estimate how much they’d be spending on your products.
Some shipping services like UPS offer real-time carrier rates. With this feature, customers can choose and pay for their preferred shipping option. They’ll also see the live pricing of your packages from your home to their address. Consider this strategy if you’re a B2B business selling oversized objects.
How can small businesses save money on shipping costs?
While it’s tempting to follow the strategies of well-established companies like Amazon or eBay, shipping can get a bit tricky. There’s no one-size-fits-all framework for the needs of different businesses. But there are several tips you can consider to save money.
Below are the best tips you can try out to save money on your shipping costs.
Research which carrier works best for you
It’s always good practice to research before deciding which carrier will work for your small business. Different factors can affect the rates of various reputable shipping platforms.
Besides this, you can also try strengthening your relationship with your carriers. You may even gain perks like packaging or delivery discounts. You can also negotiate agreements and rates to tailor your shipping services to your business needs.
Automate what you can
We’ve come far from the traditional shipping strategies. Now, you can use shipping software and programs to automate your operations and processes — from the moment you receive an order until it gets delivered to your customer’s address.
Using shipping software for your small business will allow you to save both time and resources. You’ll reduce labor costs and be able to set more reasonable prices for your products.
Offer free shipping with minimum order amounts
Small businesses can’t heavily rely on increasing the prices of their products for free shipping to work. You still need to set reasonable rates to retain your loyal customers and attract more potential targets.
One good strategy to work around this problem is to offer free shipping with minimum order amounts. It increases your order volume while letting you pay for it without losing much profit.
Rely on flat rate shipping if you can
You’ll lose customers if you overcharge them. However, you’ll lose profit if you undercharge them too much.
To offset this dilemma, you can rely on flat rate shipping if you sell products of similar sizes and weights. Otherwise, you may pay a lot more if your product line has varying features.
Reuse shipping materials
As long as the boxes and packaging materials you get from your personal orders are in good shape and quality, you can consider reusing them. This strategy doesn’t only cut down pollution, but it also reduces your shipping costs.
Use fewer boxes
Some carriers base their shipping rates on the dimensions of your boxes. That’s why it’s important to use as few boxes as possible. You should also use packaging materials with suitable sizes and dimensions for your products.
For instance, you can place various orders from the same customer in a single box. You can also ship a small glass cup in a small packaging rather than a large parcel.
While shipping can be expensive and complicated, understanding its key concepts can benefit small businesses. It also allows you to compare and narrow down your options for the best shipping services for your business needs. Learn how to tape a box for shipping to ensure your packages arrive undamaged every time.
As you start to get more orders and ship more products, it’s essential to have an inventory management system that acts as your single source of truth.
SkuVault Core is built to help ecommerce businesses track inventory across all channels, monitor stock levels (to keep customers happy), and consolidate all your in-transit orders — all in one convenient platform.
And the best part? We integrate with all of the aforementioned shipping services. With SkuVault Core, you truly have everything you need in one place.
For more information on how SkuVault Core can help you grow your bottom line without losing your mind, check out our features page here. If you want to see it in action, click the button on this page to get a live demo.