Shipping is a critical element of eCommerce fulfillment. The shipping methods and shipping carriers you choose can affect your shopping cart abandonment rate. Plus, fulfillment choices such as warehouse locations and shipping options will impact delivery times and customer satisfaction.
Choosing optimal shipping methods for your products and your customers is crucial to your eCommerce success. Here’s your guide to understanding your shipping options, so you can create an eCommerce delivery strategy that emphasizes speed while keeping costs low.
Breaking down the eCommerce shipping process
ECommerce shipping starts long before an order gets boxed and put onto the truck for delivery. Decisions at every stage of the pick and pack fulfillment process affect your shipping costs and options.
- As soon as your customer places an order, that information is transmitted to your fulfillment warehouse for order fulfillment. The shipping method your customer chose is included with the order information.
- A picker will pull the items for the order from the warehouse shelves. The sooner an order is sent to the warehouse floor for picking, the sooner it can be shipped to your customer. Fulfillment time is an essential element of customer lead time. The longer the wait for picking and packing, the longer the customer must wait for the package, no matter what shipping method they choose.
- Picking instructions may also include the appropriate box or boxes for packing the order. How the order is picked and packed can affect shipping costs.
- The picker delivers the order to the packing station. The packer double-checks all the items and packs the box for safe shipping. The packer also affixes the shipping labels.
- The package is now ready for the shipping station, the last stop in the fulfillment warehouse. Most warehouses sort packages for pickup by different shipping companies.
- The shipping company picks up the parcel and delivers it to your customer. The journey of each package depends on the shipping method chosen and the distance from the warehouse to the delivery address. Some orders will travel a short distance and reach their destinations the next day. Other boxes will be sent by air or transferred from truck to truck at shipping hubs.
Why shipping costs and delivery options are vital to your online business
Shipping is a critical difference between brick-and-mortar and online stores. Choosing shipping methods that facilitate fast and cost-effective delivery is vital to your eCommerce success.
High shipping costs can lead to lost sales or slim profit margins. Fortunately, you can save money on shipping costs with skillful supply chain management through all parts of the fulfillment process.
Another eCommerce challenge is delivery times. When consumers place orders, they usually want to receive them as soon as possible. In some cases, customers need their order within a specific time frame. They might need it in time for a birthday or replenish medical supplies before they run out; if you can’t deliver the order within that time, you can lose the sale. Again, tailoring your fulfillment operations can help speed your deliveries and win loyal customers.
Of course, COVID-19 has complicated eCommerce shipping. Faced with a massive increase in demand, carriers extended peak charges, raising shipping costs. Staff shortages combined with severe weather have, at times, delayed shipments, lengthening delivery times, and disappointing customers. While some of these issues are unavoidable, planning and managing your shipping solutions can reduce their impact on your supply chain and customer reviews.
In this guide, we outline the shipping methods of choice for online shoppers, plus ways that you can improve their shipping experience while controlling costs.
Most popular shipping methods for eCommerce
Keeping customers happy with shipping options is a balancing act. They want free or low-cost delivery, period. Amazon Prime has set the bar high by making free shipping and fast delivery an industry standard.
You could use Amazon FBA to offer Prime shipping, but that service comes with pitfalls that make it a poor choice for many eCommerce businesses. Besides, even without Amazon’s resources, you can keep your customers happy and maintain healthy profit margins. The key is to give your customers choices of eCommerce shipping methods so they can weigh shipping costs against faster delivery. Here are some of the options that online shoppers value.
Free shipping is online shoppers’ favorite shipping method by far. However, shipping isn’t free. To cover the cost of free shipping, you may have to raise your prices, and that could make your products less competitive.
Here are some free shipping options that can make this perk work for you and your customers:
- Offer free shipping with a minimum order of a certain dollar amount. That is an incentive for customers to increase their purchases, so it’s a win-win.
- Provide free shipping during a limited promotional time. Giving customers a time limit to take advantage of the offer is an excellent way to move them from contemplating a purchase to completing it.
- Include a free shipping option with a slower delivery time. That keeps your shipping costs down while giving your customers choices based on how quickly they need the order.
When a customer needs an order right away, overnight shipping or next-day delivery is an excellent shipping option. Consumers understand that there is often an extra fee for overnight service, so you can recoup the cost of this shipping method. Free overnight shipping can also be an appealing perk for shoppers who make high-dollar purchases.
However, slow fulfillment can greatly reduce the value of overnight shipping. If a customer pays for next-day delivery, but the order doesn’t leave the fulfillment center for several days, they won’t get the value they expected. Red Stag Fulfillment offers same-day fulfillment services to keep delivery times as short as possible.
In general, it’s a good idea to offer at least three shipping methods at checkout. In addition to overnight shipping, you can provide other expedited shipping options. For example, you might give customers a choice of overnight shipping for a premium price, two-day delivery for a lower price, or five-day delivery with free shipping.
Flat rate shipping
Flat rate shipping gives customers a set fee for shipping, no matter how large or small their order. Charging a flat rate for shipping allows your online shoppers to increase their orders without increasing the cost to ship the order, making larger orders attractive. You get a minimum fee to help offset picking and packing costs while subsidizing shipping services for customers who place bigger orders.
Amazon has begun to offer same-day delivery in select markets, bringing online shopping another step closer to the immediate gratification of a brick-and-mortar purchase. To make same-day deliveries, you need same-day order fulfillment from a warehouse close to the customer’s location, plus access to shipping services that can pick up packages and deliver them within a few hours.
If you’re not Amazon, same-day delivery can work if you serve customers within a local region. You’ll need your own delivery driver or a shipping service that can make same-day deliveries to your customers. Some retail stores offer same-day delivery from their brick-and-mortar locations.
Freight isn’t just for transporting containers as part of a multi-modal supply chain that includes ocean and rail shipping. Palletized freight shipping is a cost-effective way to ship bulk orders or products that are too large or heavy to ship with FedEx, UPS, or USPS.
Trucking companies can make freight deliveries to residential addresses, though it’s crucial to send a truck with a mechanized lift if there’s no loading dock at the customer’s location. Freight shipping can work well for shipping furniture, bicycles, and even cars.
Red Stag Fulfillment is the bulky and oversized fulfillment expert. Our shipping services include freight shipping, which is sometimes the most cost-effective way to ship a product or an order.
To make these eCommerce shipping options work for your business, you’ll need excellent fulfillment and shipping services.
5 tips for reducing shipping costs
Shipping is often the most significant fulfillment expense. While you might share this cost with your customers, controlling shipping costs will help you grow and scale your eCommerce business. Here are five strategies to consider.
Use package consolidation to minimize shipping charges
Shipping multiple products in a single box is the most basic way to reduce shipping costs. Shipping all the items from one order in the same box is the obvious choice for small products. However, package consolidation can be tricky if your order includes items of different sizes.
For example, suppose you’re shipping an exercise machine, and the customer also ordered workout clothes with your company logo. The device will probably ship in the factory packaging with no overbox. Because of the dimensions of the equipment, you could incur dimensional weight charges. If you can include the workout clothes in the same box, you can send box items without adding to the shipping cost. Red Stag Fulfillment has worked with several clients to develop package consolidation shipping solutions.
Take advantage of discounted rates for volume shipping
If your company ships a high volume of orders, you may be able to negotiate discounts with shipping carriers. However, even if your eCommerce business isn’t large enough to qualify for discounted shipping, you may be able to save on shipping through a third-party logistics company.
For example, Red Stag Fulfillment is a high-volume shipper because we ship parcels for many clients. Because of that, we negotiate lower shipping rates and favorable DIM factors for oversized packages, and we can pass on those reduced shipping rates to our clients. That’s one of the ways that working with a 3PL can save you money on shipping.
Choose fulfillment center locations to maximize reach
The more shipping zones packages cross to reach their shipping destinations, the higher the shipping cost and the longer the delivery time. Rather than shipping from warehouses located near ports of entry, choose locations that can reach more customers’ locations with fewer shipping zones.
You might want to use several warehouses near major population centers. Or, to keep your inventory management simple, you could pick a small number of centrally located fulfillment centers. For instance, Red Stag Fulfillment provides national fulfillment from warehouses in Utah and Tennessee. We can deliver to 96% of U.S. addresses in two days or less from those locations.
Design packaging to avoid DIM weight charges
All three major U.S. shipping carriers charge for whichever is higher between dimensional weight and actual weight. Dimensional weight pricing depends on the size of the box. In some instances, careful packaging can save the shipment from DIM weight pricing, a substantial surcharge on light but oversized items.
Red Stag Fulfillment works with our clients to optimize their packaging and save on shipping. And we document our shipping process and advocate for you if a shipping carrier adds a charge we feel isn’t justified.
Develop a proactive shipping strategy
The tips above are all part of something that every eCommerce business should have: a shipping strategy. While boxing and shipping orders may seem simple enough, planning is the key to controlling the cost of shipping. When we onboard a new client at Red Stag Fulfillment, we game out different packaging and shipping scenarios to find the most efficient way to ship that client’s products. That proactive planning saves money on shipping and ensures that products stay safe during shipping.
Reduce shipping costs without sacrificing quality or delivery times
Make sure your third-party logistics provider offers the services you need to support the shipping methods your customers demand. Here are three ways that Red Stag Fulfillment helps eCommerce companies optimize shipping.
Fulfillment and delivery are separate segments of your supply chain, but your customers don’t make that distinction. Same-day fulfillment gets an order picked, packed, and into the hands of a shipping company the same day the customer places it.
Red Stag Fulfillment offers two levels of same-day fulfillment services, with cutoffs at 3:00 pm and 5:00 pm Eastern Time. We guarantee that we’ll turn around orders received before the cutoff the same day, and that can shave days off your delivery time without the cost of expedited shipping.
Flexible shipping carrier selection
If you pack orders in your own warehouse, you may be locked into a shipping contract with a single shipping carrier. However, one shipping company may not provide the best services for every order, and one company might be faster to certain shipping destinations or offer better pricing for some packages.
That’s why Red Stag Fulfillment provides flexible carrier selection. We find the optimal shipping service for each parcel, which saves you money and delivers your orders faster.
Order fulfillment accuracy guarantees
One major eCommerce shipping expense is the cost of returns. The best way to reduce this cost is to have fewer returned items. While it’s impossible to eliminate eCommerce returns completely, accurate fulfillment that puts the right products in the right boxes is the best way to lower your return rate.
Red Stag Fulfillment guarantees accurate picking, packing, and shipping. If we make a mistake on an order, we solve the problem and pay you $50. With those fulfillment guarantees, it’s not surprising that we have one of the industry’s lowest error rates. And that’s money in the bank for our clients.
We provide a fulfillment solution that helps you improve your shipping methods, increase customer satisfaction, and expand your business. Give us a call to find out how we can help you optimize eCommerce shipping.
More about shipping methods:
- How to Calculate Shipping Costs
- Setting Shipping Expectations for Your Holiday Shoppers
- 3 Ways to Communicate Shipping Delays to Your Customers