You control your customer's experience for the most part. You write the ads, you approve the images, you tweak your website and you write the emails. However once your product leaves your hands to be shipped to your customer you have now handed over your brand to the hands of a stranger.
Shipping can make or break your business in multiple ways. Choose the wrong shipping partner and your customers may suffer a poor experience. Don’t plan out your shipping strategy and you could end up unprofitable.
Many new ecommerce entrepreneurs either don’t give much thought to shipping their products, or rightfully so, don’t understand the confusing and complex world of shipping and fulfillment.
In this post we will go over some of the basics to shipping your products and help demystify this complicated topic. We will talk about packaging, provide resources and links to popular couriers, look at tracking & insurance, shipping profitably and apps to help make it all easier.
Let’s dive in.
Packaging & Marketing
As the world of ecommerce develops so do the expectations of customers buying online. Years ago packaging and shipping was simply a way to receive a product purchased online, however, more and more, people are looking for shipping, packaging and presentation to all be part of the shopping 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 more than just a product, but also an experience.
Your packaging and presentation can be an effective way to set yourself apart. Consider Trunk Club. Trunk Club is a monthly subscription service that sends men a custom curated selection of men’s clothes and accessories each month. You can see from their packaging below that their customer unboxing experience is very central to their overall brand experience.
Trunk Club does an such exceptional job, that customers even make unboxing videos on YouTube which furthers amplifies Trunk Club's reach through word of mouth marketing.
Everlane is another great example of someone that uses their packaging as a marketing channel. Items from Everlane arrive wrapped in craft paper with an Everlane sticker and a thank you note that encourages people to share a photo of their purchase on social media.
In a world where sealed factory bags and a black and white order receipt are considered standard, it’s the small details like this that go a long way in making an exceptional impression on customers.
Today, some of the most successful and interesting brands are those that are using packaging to delivery an experience on top of the product.
Consider how you can provide a better customer experience through your packaging and how you can use packaging as an extension of your brand.
Before you can ship your products, you will most likely 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 most businesses and products, you’ll likely need to use some size of box to package your products for shipping as well as some form of stuffing or product cushioning.
Uline is a popular choice to purchase packaging materials including over 1,300 sizes of boxes, bubble mailers, and package cushioning.
You may also want to try thinking outside of the box (no pun intended) and look at other packaging material. For example, consider opting to go with unconventional packaging options like coffee bags if your products don't require protective padding.
Coffee bags offer an inexpensive, but high quality option. A huge additional benefit to packaging options like coffee bags is that they keep orders thin, affording you much cheaper shipping rates vs. the bulkier box counterparts.
Some other large packaging suppliers you may want to consider are ValueMailers, Fast-Pack and eSupplyStore.
Keep It Light And Small
Because most shipping couriers and shipping options are charged based on size and weight, you want to do your best to keep your packaging as small as possible. This will help you save not only on shipping costs incurred by you and your customer but to also keep packaging costs from eating away your profit margin.
Depending on your business and your product line, you may want to consider carrying a few strategically selected sizes of packaging materials, like a small, medium and large size boxes.
Most people would consider the packaging for the product above to be excessive. This is exactly what you’re trying to avoid as it inflates shipping costs dramatically.
Customer Shipping Options
Before you can ship products, you’ll first need to decide your strategy for charging your customers. There are several common methods highlighted below, however, I would suggest you read the full Shopify post on choosing a shipping strategy for your online store.
Offer Free Shipping
Offering your customers free shipping is becoming a increasingly popular option and has shown a lot of promise in reducing shopping cart abandonment. However, as you might suspect, shipping is never free. Someone always has to pay. In this case, again, 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)
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, however 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 Shopify can integrate in real-time with various couriers like USPS and Canada Post (amongst others), to fetch shipping options and live pricing from the various carriers. This allows for your customers to choose and pay for the exact service they want.
Charge a Flat Rate
Finally, the last popular option is to offer flat-rate shipping. The best practice for this option usually is to try and make sure that you don't drastically undercharge or overcharge your customers. Flat rate shipping usually works best when you have a fairly standard product line of similar size and weight products. Flat rate shipping tends to become a little complicated and less effective if you sell a wide variety of products with different sizes and weights.
General Shipping Information & Options
There is no easy way to summarize shipping options. There are a wide variety of factors that come into play, including size and weight of package, departing country, destination country as well as personal and customer preference for tracking information and insurance.
All shipping couriers base shipping rates on a variety of factors including:
It can be difficult to compare services exactly as they all offer slightly different options and every business will have their own unique variables.
In general, UPS or FedEx tend to be the best option for shipping heavier packages and in general provides better tracking and delivery guarantees. However it usually comes with higher shipping costs. You should do your own pricing comparisons to determine what would be best for your business.
One of the best secrets to being successful at ecommerce is to figure out how to ship profitably. 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 your costs associated with getting your products into your customers hands. Many ecommerce entrepreneurs are shocked but how quickly the little charges add up. Don’t get caught in the same trap.
Insurance & Tracking
Depending on what you’re selling and its value, shipping insurance and tracking can offer a great deal of security. With most couriers, insurance and tracking is relatively inexpensive and provides you recourse should one of your packages get lost or damaged. Some payment service like PayPal require either proof of delivery or a tracking number to be eligible for Seller Protection insurance.
Consider purchasing insurance on big-ticket items so that in the rare cases when a package does get lost, you'll be covered. Keep in mind that some shipping services have insurance already built into the price, so consider this when you are comparing various courier prices.
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 online or at your local post/shipping office. These forms tell the customs officers at the country of import what is in the package, how much it costs and whether it was a gift or a purchase.
Check with your countries postal service to find out exactly what forms you’ll need to attach to your package. These form should be completed honestly and clearly to prevent your package from getting held up in Customs.
Getting Stuck In Customs
In general, international shipments aren’t a problem for the most part, however packages can get stuck in customs sometimes for days, and sometimes longer. Make sure your customers are aware that you don’t have control over customs delays.
Tariffs, Taxes and Duties
Your customer will be responsible for any additional fees that are charged by customs. They usually will have to pay any additional fees at the time of delivery. It’s always a good idea to make sure to include this information in your policy page so customers aren’t hit with unexpected fees. To get an idea of what fees your customers might incur, check out this customs duty calculator.
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.
USPS Business Gateway - Set up an account with USPS and get access to the full suite of business tools they offer that can help with label and postage printing, shipment tracking and more.
Canada Post Venture One - The Venture One account with Canada Post can help you save 5% on shipping and packaging products as well as upgraded services on parcel shipping.
UK Royal Mail Online Business Account - An online business account with Royal Mail will help you save time by managing all your shipping expense and invoices all in one place.
Australia Post Business Credit Account - A Business Credit Account with Australia Post will allow you to charge many of the common services directly to your account for better management of your expenses.
UPS Business Solutions - Manage all your shipments, package tracking, billing schedules and package pick up schedules.
FedEx Business Center - Sign up with FedEx and manage all your shipment information online.
Labelling Your Packages
Once you have figured out your presentation, packaging, courier and costs, you’ll need to determine how you want to label your packages. Many new ecommerce entrepreneurs start off by writing the shipping and return address 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.
Most ecommerce platforms will allow you to print shipping addresses from your orders page that you can stick onto your packages using tape. If you want to take things one step further, consider sticker mailing labels you can buy for your home printer.
As you grow there are variety of shipping apps and tools that can further help you streamline your shipping processes. This includes simple apps like the Shopify Order Printer which will help you print invoices, labels, receipts and packing slips and more full-featured shipping apps like Shipstation or Shippo. Shipstation and Shippo will integrate with many of the most popular courier companies so that you can print more than just shipping labels but the postage as well, which will be directly charged to your account.
Furthermore, as you grow, you can look at dedicated hardware to print shipping and postage labels for your orders like this label printer from Uline.
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.
There are a number of advantages to using a fulfillment warehouse including:
Cheaper Shipping Rates - Because fulfillment warehouses ship such large quantities for multiple vendors, they receive cheaper shipping rates. They're also integrated (usually) with all of the major shipping logistics companies, giving you easier access to the widest range of shipping options.
Shorter Shipping Times - Strategically choosing your fulfillment partner and the warehouse to store your inventory means you can store you inventory closer to the bulk of your customers.
Fulfillment warehouses aren’t for everyone though. There are several disadvantages as well that you need to consider:
Branding Experience - Generally, if you use your packaging presentation as part of your branding experience, like Trunk Club noted at the beginning of this post, you’ll be hard pressed to find a fulfillment warehouse that will work with that level of dedication and customization for your brand.
Additional Costs - Although you will likely receive better shipping rates working with a fulfillment partner, there are other rates that need to be paid including what are commonly referred to as pick and pack fees as well as warehouse storage fees. If you feel like you’re ready to work with a order fulfillment warehouse, there are several that have fantastic integrations with Shopify including Shipwire, Fulfillrite and a host of others. For a better idea of pricing and costs, you can use Shipwire’s pricing calculator.
Shipping is definitely a challenging aspect to any ecommerce business. Every business will have their own unique challenges they will need to work through and overcome to develop the best and most efficient shipping strategy. Like many aspect of building your new business though, 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.