eCommerce Shipping and Fulfillment: 8 Things You Need to Know
December 12, 2018
The rise of eCommerce has put extra emphasis on convenience and shipping. While the two go hand-in-hand, shipping has become an essential component in successful B2B and B2C businesses.
The ability to order online and receive the product in a timely manner can influence buyers, drive sales, and create return visitors.
With the saturation of online retailers, it is important to make your business stand out among your competitors or at the very least, stay current with the needs of your consumer. In this case, having desirable shipping and returning options can be highly beneficial. The 2018 Pitney Bowes Global eCommerce study notes that 56 percent of consumers were disappointed by the past holiday season due to difficulties with shipping. Of that 56 percent, consumers listed main issues such as late shipment, expensive shipping costs, unfulfilled orders, wrong product shipped, unclear return policies, and poor packaging as direct reasons for their disappointment. Clearly, having a well-executed shipping plan can greatly impact the success of your eCommerce business. As many small businesses know, every sale matters and return consumers are doubly important.
In this article, we are going to share with you some facts and tips that can help you develop and implement a working shipping and fulfillment strategy. Order fulfillment covers a broad range of steps, from the information on your website to how your product is packaged and even the shipping options you give your customers.
1. Be Clear with Your Order Fulfillment and Return Policies
Having a working shipping strategy can mean the difference between having a customer purchase your product or abandoning their shopping cart. Shipping strategies can also be utilized as marketing tools. This strategy begins on your website and it’s the first step of an eCommerce transaction. Your order fulfillment policies and information should be front and center on your website to attract the most attention. If you’re considering offering free shipping, that should be one of the first things the buyer sees when landing on your eCommerce site. This can greatly influence their decision to make the purchase or not.
The essence of an eCommerce business is its convenience. Consumers are forgoing leaving their personal space to find goods online. Capitalize on convenience and create a site that is easy to navigate with an amazing user experience. Make sure the information is easy to find and clearly stated. If the flow of the website is compromised, this will impact sales and the bounce rate of the website.
Let’s get down to the shipping options you can offer. The key to every shipping strategy is flexibility. You might need a few tries to get the right option going for your business. You might also need to adapt shipping strategies as your business grows and evolves. This could mean having more than one shipping option available to your consumer. You can use the strategy of mixed shipping options to best serve your consumers and produce additional revenue. Below are some top eCommerce shipping solutions to consider.
2. Free Shipping
According to the 2018 Pitney Bowes Global eCommerce study, a staggering 91 percent of consumers will leave an online retail site if fast and free shipping is not offered. With these staggering statistics, most businesses realize that free shipping can be utilized not only as a delivery option, but as a marketing one as well. In order to offer free shipping, you must understand how it affects your profit margin. Even if the option of free shipping is bringing in more sales, the cost of covering shipping expenses for each sale may not equal beneficial results.
To strategically utilize free shipping, you can try a variety of options. One option could be to including free shipping if a certain amount is spent on your products. Studies show that 66 percent of consumers often expect to spend at least $25 in purchases to qualify for free shipping. This can help increase the amount the consumer spends per sale. You can also use free shipping as a promotional offer during a certain time of year or apply it to special products. Companies can also offer free shipping for standard delivery times and expedited shipping at an additional cost. There are a myriad of ways to use free shipping, just make sure it doesn’t affect your bottom line.
"We are starting to see shipping transform from a 'loss leader' into a revenue-generator in B2C and B2B commerce. These merchants are early adopters; successful in amalgamating the rising consumer/buyer expectations with best-of-breed shipping and fulfillment technology to create an agile, efficient, and process-automated last-mile experience. The future will see Customer Experience (CX) drive cross-discipline organizational collaboration to orchestrate a seamless customer journey that includes shipping." – Matthew Mullen, Senior Vice President of Temando, a Neopost Shipping company
3. Flat Rate Shipping
The term flat rate shipping is pretty self-explanatory. It is when one cost for shipping is assigned to any product purchase. Using this option means that the weight, size, and value of the product do not factor into the total cost of the shipping. This gives customers an upfront look at what they can expect for the final total. Since you can dictate the cost of flat rate, you can create a shipping total that will help you cover shipping or even help with the packaging costs. Although not as popular as free shipping, a lot of consumers can see the benefits of this option if they plan to spend more or buy bigger items.
4. Table Rate Shipping
Table rate shipping is almost the opposite of flat rate shipping. This type of shipping allows companies to customize their shipping solutions. For table rate shipping, you can dictate different shipping costs based on a variety of factors. Most often, factors such as delivery destination, product size and weight, and number of items ordered are considered when setting the shipping costs.
An example of table rate shipping is if your business charges a cost for deliveries within a certain radius of their location and a different cost for shipping to locations outside of that radius. Companies can also choose to charge one shipping cost for the order of one item and a different cost if two or more items are purchased. There are a variety of different shipping cost options eCommerce sites can set when using table rate shipping.
5. Live Shipping Rates from a Carrier
This option gives exact shipping rates to your consumer directly from shipping carriers such as UPS, DHL, or FEDEX. Although not traditionally used as a promotional item, live shipping rates do show the consumer exactly what they are paying for when choosing their shipping options. Live shipping rates are a great strategy for B2B shipments where rates are calculated by precise factors such as quantity, size, weight, or shipping distance.
For the live shipping rate strategy, you can still cover your costs in packaging or order fulfillment with added surcharges to the shipping rate that the consumer ultimately chooses. By having live rates, you can pick and choose the best carrier for your product by current shipping rate.
6. Utilize Shipping Tools
Once you have a basic plan for order fulfillment and returns completed, you can then look into all the tools available. With B2C and B2B transactions, we are no longer looking at the one package at a time being taken to your local post office process. In a working eCommerce business, every process has to be streamlined to be as effective as possible.
Starting with the basics, postal services such as FedEx or UPS offer business accounts that help companies keep track of shipments, easily order packaging supplies, and schedule pick ups. This allows consumers to easily track their orders. Along with attractive options such as free and fast shipping, consumers want accurate shipping. They also want to know when they can expect their goods and they want to be able see where it is each step of the way. Having a business account with postal services can have the added advantage of discount shipping or free shipping supplies. It is a good idea to look into what benefits you like and what works best with your shipping fulfillment objectives.
Some more in-depth tools are also available to help with your shipping needs. These options provide shipping software that integrates with your eCommerce site to offer the best solutions for your shipping needs. These systems may also offer consultations to glean additional expert advice.
You can also take advantage of the shipping solutions that are offered with your eCommerce site. For example, Magento, a user-friendly eCommerce platform offers shipping strategies for both small businesses and larger mid-market online stores. The flexibility of the platform will allow for customization as your business grows and changes. eCommerce platforms of this type offer similar benefits as having business accounts with postal services, but it takes it one step further by seamlessly integrating with your site. There’s also a vast Magento community of support when you need it.
Now that you have a good understanding of shipping options, you can then move on to prepping your goods before sending it out. Before placing your product in the mail, think through how this item will be introduced to your consumer. As the world of commerce evolves, packaging has become much more than just a functional object. In many B2C transactions, consumers are looking for an ‘experience’ when they receive their products. The packaging and branding all plays a role in the reception of the product. To stand out among your competitors, you’ll want to take some care when packaging your product. Some time should be spent creating the right design for your packaging. Consumers really respond to personal touches when they receive their goods. You are basically using a well-crafted package to replace the in-person customer service. For business to business (B2B) transactions, designed packaging might be less important, and the ultimate functionality is more desirable.
When thinking about packaging, also keep in mind that the weight and size will all factor into the cost of shipping. So a good compromise must be made between design and functionality. Make use of this aspect of order fulfillment to leave a lasting impression with your consumer. This can help a customer decide to shop with you again.
8. International Shipping
Once you have a basic grasp of the type of shipping strategy that might work best for you, you can then consider widening your radius. International shipping may seem like a huge next step, but it’s also a potentially profitable one. With the increased growth of international sales, it might be a good idea to see if that is a possible avenue for your business. Depending on the country you are planning to expand to, you will have to carefully research the import and export restrictions for that country. Then there are the considerations of the customs taxes or additional documentation that your goods will need. You will also have to then choose an international carrier to work with.
When considering international sales, it’s best to do your research diligently. Make sure there is a demand for your product in the country or countries that you plan to sell to.
Shipping and fulfillment is a very necessary aspect of a profitable eCommerce business but it is not without its challenges. The best shipping strategy will have to be custom tailored to your product and ideal consumer. It may take a few tries and adjustments before you find a solution that works best for you.
“In the (near) future we will see more flexible last-mile solutions, like smart and enhanced delivery platforms (On Demand Delivery), more lockers, in-home deliveries, or deliveries in the trunk of your car. And these flexible delivery solutions will be supported by technologies like A.I. and autonomous vehicles…” – Leendert van Delft, Vice President Sales Programs Global and Europe, DHL