Shipping and delivery are a vital part of your eCommerce business. Shipping is also one of the highest costs of eCommerce fulfillment. Fortunately, because of the growing popularity of online retail, shipping options for eCommerce have expanded. Here’s your complete guide to the best shipping options for eCommerce.
Basics of eCommerce shipping
ECommerce shipping is the transport process that takes an online order from the fulfillment warehouse to the delivery address. Once the fulfillment center hands the package off to the carrier, it can take anywhere from a few hours to a week or more to reach its final destination.
However, the is a lot to consider before that hand-off happens. You need to choose appropriate packaging, optimal shipping methods, and the best carrier to make the delivery. With the right order fulfillment partner, you can put an eCommerce shipping strategy in place that controls costs and delivers your orders quickly and reliably.
Why excellent fulfillment and delivery are vital to your eCommerce business
Fulfillment and shipping are your closest contact with your eCommerce customers. You want to give them a delightful unboxing experience by packing orders carefully and including fun packaging or extras in the box. But orders that are delayed in shipping or boxes that arrive damaged can sour this customer interaction.
Ultimately, eCommerce is about trust. When a consumer clicks a button and makes a purchase in your online store, they trust you to deliver the promised products. If an order arrives late or poorly packaged, that erodes the trust. Part of your promise at the point of purchase was on-time delivery of the items in perfect condition.
A bad shipping experience may make a customer hesitate to buy from you again, so top-notch shipping and delivery are essential to building a loyal customer base. That’s why it’s vital to choose the best shipping options for eCommerce delivery for your business.
Best shipping options to offer your eCommerce customers
Shipping options are one factor that consumers evaluate when deciding whether to make a purchase online. They want their order to arrive quickly, but they don’t want to pay a lot (or anything) for shipping. Here are some popular shipping options for eCommerce that you should consider for your online store.
Free shipping is the gold standard of online retail. If you can offer free shipping, you’ve removed an important friction point and smoothed the way to your Buy button.
Of course, free shipping isn’t free. It comes out of your profit margins, and you’ll have to factor that into your pricing. One of the challenges to offering free shipping is that shipping costs vary for each order unless you ship via USPS Priority Mail Flat Rate services. Otherwise, your shipping cost depends on the shipping zone of the customer, determined by the distance from the point of origin (fulfillment center) to the delivery address.
Keep reading for strategies for offering flat rate shipping while preserving your bottom line.
Flat rate shipping
Flat rate shipping is appealing for several reasons:
- You don’t have to use software to calculate the actual cost of shipping for each order.
- Customers don’t get surprised by high shipping charges that could change their minds about making a purchase.
- Flat rate shipping rewards and incentivizes larger purchases. The more you buy, the smaller the shipping charge is as a percentage of the purchase price.
Of course, flat rate shipping has some of the same downsides as free shipping. Your actual shipping charges could vary, making it hard for you to set prices that cover your shipping costs. Plus, the software that calculates actual shipping charges is widely available and compatible with many eCommerce sales platforms. And, if you use a 3PL for your order fulfillment, you can work with them to pre-calculate shipping costs for each item and program those charges into your shopping cart.
At-cost shipping rates
Charging the actual cost of shipping is an option that works best for many eCommerce retailers. Consumers are familiar enough with online shopping that shipping charges are no longer an unpleasant surprise. When you pass along the actual cost of shipping to your customers, you get several benefits:
- You can charge less for your products because your prices don’t have to include shipping costs. This can help you win on price against your competitors.
- At-cost shipping charges give you more control over your profit margins because you don’t have to factor in a variable and unpredictable cost.
- You protect your profitability. If there is a surge in shipping costs, that doesn’t come out of your bottom line since you probably don’t want to raise and lower your prices to match volatile shipping rates.
- It’s fairer to your customers because they pay the actual cost of shipping to their address.
Variable shipping charges do have some risks for online retail. They can discourage a customer from adding to an order if that bumps the shipping cost higher than they are comfortable paying. And, in some cases, shipping costs can drive the price tag for an online order high enough to discourage a consumer from making a purchase.
However, if you can keep your fulfillment costs low and pass on shipping discounts to your customers, charging the actual cost of shipping can be an excellent shipping option for eCommerce. See below for tips on reducing shipping costs and talk to your fulfillment company about ways to ship for less.
This shipping option for eCommerce is an offer of time savings for your customers. Sometimes, people need a product quickly, so they have a gift in time for a birthday or trip. It’s okay to add extra charges for expedited eCommerce shipping, either a flat rate or the actual cost of expedited services. Include next-day, two-day, and other expedited services at checkout to win more sales.
Pickup instead of delivery
One of the biggest problems for eCommerce delivery is the rise of theft. So-called “porch pirates” take boxes left by your door before you get home. To combat this, eCommerce delivery services have created secure pickup options.
If you have brick-and-mortar stores in addition to online sales, you can include an in-store pick up option for online orders. This will also save you money on shipping since you can include consumer orders with regularly scheduled deliveries to your stores.
Another option is a pickup at a carrier location. FedEx, UPS, and USPS will often hold packages for customer pickup at their retail locations. UPS Access Point makes this more accessible, with drop-offs (and pick-ups for returns) at the stores of several retail chains.
A third eCommerce delivery option that is growing in popularity is secure drop box locations. For example, Amazon Hub lets you retrieve Amazon packages from a secured locker or a staffed counter near your home.
Giving consumers a pick-up option for their eCommerce delivery will give customers the confidence to order online without fear of package theft. It can also save you money on shipping if you’re able to bundle multiple orders together for delivery to the same pick-up location.
The best way to offer the eCommerce shipping options your customers want is to choose the right fulfillment partner. Red Stag Fulfillment’s shipping operations give our clients a full range of shipping options that they can offer to their customers.
Tips for offering free shipping
Free shipping is the thing that online shoppers want the most. But, since shipping is never truly free, how can you offer it to your customers? Here are some strategies to help you get the benefits of free shipping without breaking the bank.
Factor your shipping costs into your pricing
Of course, the most basic tenet of free shipping is that you need to adjust your pricing to include the cost of shipping. To accurately incorporate shipping costs into your pricing model, it’s essential to have as much data as possible.
It’s not enough to know the average shipping cost for each item. You should also factor in the typical price that your business pays for shipping per item. This will be a reflection of the geographic distribution of your customers and your fulfillment warehouses. Rerun this data analysis periodically to ensure that your pricing accurately reflects the actual cost of free shipping.
Set a minimum order to qualify for free shipping
Free shipping can be a great incentive to increase the size of a customer’s order. Many online retailers offer free shipping on orders above a specific dollar amount.
This is not only an excellent way to boost your sales. Larger orders are often more economical to ship, so you may find it easier to absorb shipping costs. For instance, your fulfillment costs will be lower because you will only pay one per-order fee if all the items can fit in a single box.
Offer free or discounted shipping as a customer loyalty reward
If you have a customer loyalty program, free shipping is a terrific perk to offer your loyal shoppers. Or, if you already offer free standard shipping, you could provide two-day or other expedited shipping at no extra charge.
Offering free shipping to loyal customers may not increase an individual order. Still, it will let your most devoted fans know you appreciate their business and keep them coming back for more. And keeping your current customers coming back is the most cost-effective way to grow your online sales, so, in this case, free shipping is a tool for business expansion.
Offer free shipping promotions
Another popular way to use free shipping is as a promotion. Instead of marking down the price of items, you cover the cost of shipping. Time-limited promotions encourage online shoppers to stop putting off buying decisions and commit to a purchase, so they are a great way to convince new customers to try your product or returning shoppers to buy a bit more. In addition, promotions give you a chance to try out free shipping and see if it works to increase your sales.
3 ways to speed up your eCommerce delivery
Next to free shipping, consumers want fast shipping. With careful fulfillment planning, you can take days off your order delivery times without using expensive expedited shipping. Here are some eCommerce shipping options for faster delivery.
Same-day fulfillment means that your 3PL picks, packs, and ships orders the same day the customer places them if the order is made by a certain cutoff. If your fulfillment provider offers same-day fulfillment, that can reduce your delivery time by as much as a week, which keeps your customers happy.
For example, you might promise a customer delivery in three days based on their shipping zone. However, if the fulfillment warehouse doesn’t process the order until three days after the customer places it, they won’t receive their package for six days.
At Red Stag Fulfillment, we provide same-day fulfillment with cutoff times of 3 pm and 5 pm, Eastern Time. That helps you keep your promises to your customers. We think same-day fulfillment is one of the most critical shipping options for eCommerce – even though it isn’t a shipping service.
Choose your warehouse locations
The closer your warehouse is to your customers, the faster your orders will be delivered. FedEx, UPS, and USPS base their delivery times on shipping zones, which are a proxy for distance. While it may seem like the simplest option to use a fulfillment center close to the port where your products enter the U.S., delivery from that port location to a customer across the country can take a week or more.
Red Stag Fulfillment has national fulfillment warehouse locations that can reach customers on both coasts and in the middle of the country quickly. Our strategic warehouse placement lets us ship your orders to more than 97% of U.S. addresses in two days or less.
Offer expedited delivery options
Of course, you should offer your customers expedited delivery options for orders that they need right away.
How to reduce your eCommerce shipping costs
Shipping is the biggest element of your fulfillment costs. With fuel surcharges and additional handling fees, eCommerce shipping can get pricey, particularly if your products require special handling. Here are more methods for keeping your shipping charges under control.
Reduce dimensional weight charges
The major U.S. carriers use a formula to calculate a “dimensional weight” for every package, in addition to the actual weight. When you ship products that are bulky but relatively lightweight, the dimensional weight may exceed the actual weight. For example, a 30-pound bike frame incurs a shipping charge of as much as three times its actual weight.
However, as we outlined in a recent post about how to ship a bike, the box you choose to ship in can have a significant impact on your dimensional weight charges. Using Red Stag Fulfillment’s dimensional weight eCommerce shipping calculator, we found a difference of almost 50 pounds of DIM weight between two possible bike shipping boxes.
At Red Stag Fulfillment, we are experts at shipping bulky items. We work with our clients to find the best packaging to minimize or eliminate DIM weight charges.
Find creative solutions for hard-to-ship items
As the category of oversized eCommerce has expanded, creative shipping options help companies find ways to ship a broader range of products economically. For example, LTL (less than truckload) freight may be cheaper than using a carrier to ship items that would incur additional handling charges because of size or weight. Many freight companies will now deliver directly to residential addresses so that retailers can sell furniture, mattresses, and even cars online.
Red Stag Fulfillment uses LTL freight for many of our clients who sell oversized products. We are always looking for creative solutions to our clients’ eCommerce shipping challenges.
Work with your 3PL to get volume shipping discounts
Carriers offer discounted rates and discounted dimensional weight factors to high-volume clients. If you don’t ship enough volume to qualify for a discount, your 3PL probably does, and it may be able to pass on that discount to you.
Red Stag Fulfillment moves a very high volume of parcels every day. We leverage that volume to negotiate better pricing with carriers so that we can offer discounted shipping to our fulfillment clients.
Flexible carrier selection
If your company has a volume shipping discount with a major carrier, you probably feel locked into using that carrier for all your order delivery. However, another carrier might be able to deliver an order more quickly or cheaply.
Because Red Stag Fulfillment has relationships with all the major carriers, we can offer our clients flexible carrier selection. We can choose the best eCommerce shipping option for each order, which provides the best deal for you and your customers.
Best practices for return shipping
No discussion of shipping options for eCommerce is complete without a consideration of returns. While excellent fulfillment services can lower your return rate, it’s impossible to get it down to zero. Here are some ways to improve the returns experience for your customers — based on the returns policies of top eCommerce companies — and to keep your reverse logistics costs down.
Let customers print return labels online
Making your returns process easy will help consumers feel comfortable buying. A clear return policy is conducive to new customer acquisition. And a key element of a simple return policy is to give consumers a portal where they can view their orders, indicate which items they want to return, and print a return shipping label. It’s easier for the customer, and it also gives you advance notice of items returning to the warehouse. That can help you with inventory planning and speed up your returns processing.
Offer free return shipping
Free shipping on orders is nice to have; free shipping for returns is essential. If you make a customer pay for shipping back a return, you significantly reduce the chance they will buy from you again, even if they like your products.
Expedite your reverse logistics to process returned items quickly
Work with your 3PL to process returns quickly. Returns need to be inspected to determine if they are in a condition to be resold. Items in good condition should be returned to stock quickly, so they are available for sale. This will reduce the amount of stock you have tied up in your reverse logistics process. In addition, you’ll be able to process refunds faster, which will also increase customer satisfaction.
Just because someone returned an item, it doesn’t mean that they won’t shop with you again. In fact, a positive experience with returns is an excellent way to build trust and gain a repeat customer.
What is the best shipping company for your eCommerce business?
You have a multitude of options for your eCommerce shipping. It’s essential to run numbers on different shipping choices. That will help you develop a plan that controls costs and provides a high level of service for your customers.
A vital part of your eCommerce shipping plan is choosing the best company to handle your order fulfillment and shipping. Red Stag Fulfillment has created a fulfillment company questionnaire to help you ask the right questions when you’re looking for a 3PL. The best 3PL companies will provide eCommerce shipping options that fit the need of your business.
At Red Stag Fulfillment, we take pride in helping our clients improve their eCommerce shipping.
We have been named the best fulfillment service for high-value, large, and specialty products almost every year since we were founded. We might just be the right 3PL for you. Call us to find out how we can work together.
More eCommerce shipping resources:
- DO YOU REALLY NEED TO OWN YOUR WAREHOUSE?
- THE COMPLETE GUIDE TO ONBOARDING WITH A NEW LOGISTICS COMPANY
- PACKAGE CONSOLIDATION: WHAT IT IS AND HOW IT SAVES YOU MONEY