This is Chapter 8 in our free How to Sell Online Ebook. You will also find other tips, methods, and tools that you can use to grow your own business in the other chapters. Enjoy!
You have identified a highly potential killer product, created a powerful online store, designed it to perfection, reduced the cart abandonment rate and now ready to take orders. That’s about it, you can take a rest now, right? Unfortunately, not.
The process of setting up your eCommerce store goes beyond setting up an online store and promoting a product. It takes an end-to-end process until an ordered product has successfully been shipped to your customers. But, eCommerce shipping is more than just delivering a product.
Shipping and fulfilling orders have become increasingly complex, 3 out of the top 5 reasons why shoppers abandoned their carts were related to shipping issues. This poses order delays, customer dissatisfactions, and inefficient supply chain management. So, how do you ensure that all your customers will receive your products, defect and delay free? How will you diminish shipping returns? Can you make your customers happy by investing in a seamless shipping process?
This guide explores a thorough discussion of all the aspects of eCommerce shipping and fulfillment. It will help you navigate the best options on how to deliver your products by cutting down supply chain wastage, managing customer returns, and automating your order orchestration.
Follow this guide to help you ship products quickly, efficiently and affordably.
This complete 10-chapter guide takes days to finish. How about downloading an ebook version to read on your Kindle for bedtime reading or while you’re on the train?
1 – eCommerce Shipping and Fulfillment Models
What is an eCommerce Order Fulfillment and Why it Matters to Your Online Store
Building a highly orchestrated order fulfillment process is an integral factor to a successful and profitable eCommerce store. It involves the overall strategy in receiving, processing, and shipping orders.
If done right, it can help build loyalty, repeat purchases, and even attract new customers through referrals and positive word of mouth traction. If done poorly, it can potentially destroy your brand reputation, drive dissatisfied customers, increase costs due to returns, and overall harm your business’ longevity.
To suit your business needs, there are three eCommerce Order Fulfillment models:
- Merchant Fulfillment. You keep your products through your own storage. When a customer orders your product, you ship it by yourself.
- Third-party Fulfillment. You outsource your storage and shipping through a third-party vendor. When a customer places an order, you will forward the order to your outsourced service and they will ship the product to your customer.
- Dropshipping. You are a product middleman. The product is created and stored by its manufacturer. You find customers and once an order is placed, you will forward the order to the manufacturer. Then, the manufacturer will ship the order to the customer but you still keep the profits from that sale.
|Advantages of Merchant Fulfillment||Disadvantages of Merchant Fulfillment|
|1. More control and flexibility. You are responsible for your own inventory, so you can configure your shipping process anytime.||1. Consumes more time and effort. As soon as the orders start growing, packing up your products by yourself will eat up much of your time and effort which could potentially affect your efficiency in the future.|
|2. Eases worry and distrust. You know how the products are packed and when they will be delivered because you have full visibility of the process.||2. Requires larger initial capital. You have to buy wholesale inventory upfront and pay for storage and shipping infrastructure.|
|Advantages of Third-Party Fulfillment||Disadvantages of Third-Party Fulfillment|
|1. Saves more time and effort. You will save a good portion of your energy and resources to focus more on selling products and promoting your online store.||1. Higher fees. Outsourced fulfillment services are not cheap due to larger infrastructure and highly skilled professionals included in the package.|
|2. Gives more convenience and less hassle. You have outsourced experts who can manage your packaging and shipping without worrying that you may be out of stock of something.||2. Loss of direct control. You transfer the control of your face-to-face customer interaction to the third-party vendor. Thus, you rely on their competency and assume that they always act in your best interests.|
|3. Highly scalable. Third-party services can provide you more storage space than doing it on your own.|
Popular Third-Party Fulfillment Companies
|Advantages of Dropshipping||Disadvantages of Dropshipping|
|1. Lower initial capital.You will avoid operational expenses like warehousing your products.||1. Lower profit margins. Expect a significant dent on your profits because the dropshippers will shoulder the risk on your behalf.|
|2. More room for any products. You can sell diverse products since product volume is not a problem.||2. Lower control. The dropshippers control every significant aspect of the order fulfillment process. You will have no control to packing and shipping as well as no power to quality assurance.|
|3. Lower risk. You won’t have to worry that you have too much inventory because you only pay for what you sell.||3. Reduced brand power. Since the dropshippers control the products, you have a weaker stance on imposing your brand experience to the eCommerce shipping process.|
2 – Steps to Ship Your Product
Determining a Carrier
Deciding your shipping carrier is selecting a business partner that would best represent your brand. The first physical touchpoint of your customer will be the courier, so ensure that your chosen carrier matches and aligns with your ideals and goals as an eCommerce business.
Some of the factors to consider to determine the best carrier are the following:
- Domestic and international shipping capabilities
- Cost of the shipment
- Delivery schedules
- Size of manpower
- Recency of equipment and other resources
- Delivery efficiency reports, if any
- Number of current supported businesses
- Tracking process and coordination
It could lower your shipping costs if you stick with one carrier instead of spreading your orders to several vendors. However, keep in mind that your chosen carrier might not be able to deliver to every international or domestic destination.
Correctly Label Your Shipments
Labeling is an important aspect of the shipping process as it ensures the products will get where they need to go. Aside from that, specific marking is used to meet shipping regulations, identify the origins of the package, ensure proper handling, comply with environmental and safety standards, secure the privacy of the contents, and help receivers identify shipments.
Label or Postage Printing Apps and Services
To conveniently print shipping labels and easily purchase postage, you can visit the following service providers:
- ShippingEasy – Comes with a free plan if you ship with less than 50 orders per month
- Shopify Order Printer – A free service for Shopify Shipping platform users.
- Shippo – No other fees just the cost of shipment plus 5 cents per label.
- ShipRobot – A multi-carrier shipping label with free up to $50 per month price options.
- OrderCup – Pricing starts at $20 up to $90 per month
- Stamps.com – Print postage and labels are priced for just $15.99 per month.
Calculate Shipping Rates
There could be several factors that could affect your shipping rates. Most of them will be based on one or more of the following: item value, dimensions, weight, and your profit margin.
To help you further, you can use the following table below to assist you in modifying your overall shipping rates:
|Shipping Cost Factor||Value|
|a. Product Cost|
|b. Packaging Cost|
|c. Carrier Cost|
|d. Customs and Duties|
|e. Payment Facility (i.e.: Credit card)|
|f. Profit Margin|
|Total Shipping Rate||$ ———|
FYI: DIM (dimensional) weight is a big issues that impacts anyone shipping low density, but larger products. For example, a lightweight titanium bike frame might only weight a few ounces, but because of it’s size and “bulkiness”, carriers will bill you much more to ship such a product. Red Stag Fulfillment’s Dimensional Weight Calculator provides a clear, in-depth explanation of DIM Weight, while also comparing the cost differences between FedEx, UPS, and USPS.
Shipment Tracking and Insurance
Major shipping carriers provide tracking services so you can easily monitor your packages in transit. When determining your carrier, identify which of them are offering tracking service and what potential cost it may incur.
Rough handling by carriers, damaging weather conditions, and other potential hazards to cargo are factors making insurance an important protection for online merchants. Whether you’re selling expensive items, bulk merchandise or fragile products, you have to insure your products and subsequently, offer insurance as an option for your shoppers.
Shipping carriers provide insurance with their service as a guarantee. However, the carrier’s liability is often restricted by international or domestic agreements, so make sure to do your research on the insurer and to inform the customer about the policy.
Shipping Internationally: Customs and Duties
If your online store is planning to ship internationally, you have to consider that tariffs, taxes or other duties are paid before your items may enter or leave a country. To find accurate estimates and understand trade regulations on international customs and duties, visit Customs Info.
You can use this New Import Duty & Taxes Calculator, to provide you an idea of fees your foreign customers may incur.
Overall, the customer who purchases a product will be ordered to pay for such fees upon delivery. It is advisable to give your customers the notice of the fees, and include necessary shipment forms and documents to ensure that the shipment will be cleared by Customs in the destination country.
Above is an example form of US Customs declarations of shipments
4 – Charge Your Customers for Shipping Costs
Your shipping fee significantly affects your customer’s buying decision as 55% of shoppers abandon carts due to shipping costs. To ensure that you are preventing this from happening you have to decide which shipping strategy you need to employ.
Shipping fees typically fall into three categories:
- Real-time Shipping – Seller calculates shipping charges at the time of purchase based on the product’s weight and dimensions.
- Flat Rate Shipping – Seller charges a fixed rate per item purchased or set rate per order.
- Free Shipping – Seller either provides no additional shipping cost for all its products or set a specific condition to qualify for free shipping.
You can charge the exact shipping costs with real-time shipping quotations by connecting your shipping partner (USPS, FedEx etc.) to your customer’s shopping cart. The charge will be more or less similar to what you will incur when you process the shipping.
Simple Sugars has integrated a real-time shipping rate with USPS
Flat Rate Shipping
You can offer a fixed rate depending on the package type, product type or the total number of orders. Flat rate shipping requires determining your average shipping cost per package. You can refer to the “Calculating Shipping Rates” that we’ve discussed earlier to help you figure out your average shipping cost. This will ensure that you don’t over or under charge your shoppers.
Nordstrom has a flat rate shipping charges based on how fast the order will be delivered. There is no minimum order value or a minimum number of orders required.
Many studies have supported that offering a free shipping increases conversion rates and customers want to see free shipping options on the checkout. Although, the capacity of offering a free shipping option should always depend on your profit margins.
Topshop is offering free shipping options for all orders over $20
5 – Manage Refunds and Returns
With many potential issues like wrong products shipped out or damaged items, product returns are inevitable. But, the good news is, they are also manageable. With 66% of shoppers reported to review an online store’s return policy before making a purchase, crafting a flexible returns policy is a crucial point in your conversion.
Strict vs Lenient Refunds and Returns Policy
You have two options when managing your refunds and returns policy: be strict or lenient.
A strict policy where customers were required to pay for returns has shown to decrease repeat purchase by 75-100%.
A lenient policy, on the other hand, seems a better alternative as 81% of shoppers will proceed to browse products when you offer free returns. Customer spending will also go up to 457% if free returns are offered to shoppers.
Best Practices on Refunds and Returns Policy
- Have a clear and concise policy. State an accurate policy of your refunds and returns. It should properly describe what is an acceptable return, your processing and refund time, and other necessary instructions so that your shoppers won’t create misunderstanding or set expectations that you cannot meet.
- Make your policy brief and simple. Your policy need not be lengthy.Cut to the chase and be direct with setting your measures and standards.
- Backed it up by reliable metrics. You always want to be as profitable as possible. Devise a standard process as to what constitute a damaged product, which are re-sellable, and what should be discarded.
Topshop’s Return Policy just provides two simple cost-free options to customers: either return via UPS or via a store. See? Nothing complicated about that.
6 – Automating Your Shipping and Fulfillment
The problems in order distribution and fulfillment process usually happen as an outcome of ineffectual and manual shipping operations. With almost 6 out of 10 online retailers reported to having problems meeting order commitment deadlines and processing orders efficiently, investing an automated shipping software can help you optimize inventory utilization and minimize fulfillment inefficiencies.
Three key characteristics of a highly-optimized Shipping Software are centralized inventory system, easy carrier selection and comparison, and especially a control on a flexible configuration.
Popular eCommerce Shipping Softwares
- Shipworks – has a plug-and-play feature to support most online marketplaces and shopping carts.
- Shipping Easy – provides an automated tracking service, label printing, and discounted shipping rates.
- Odoro – a popular one-stop app for small and medium business’ shipping and order management needs.
Delight and Deliver to every Doorstep
An eCommerce shipping and fulfillment process are often one of the most overlooked, dreaded, and challenging aspects of an online store. Yet, the importance of a seamless and highly orchestrated shipping and fulfillment process impacts the overall customer experience.
It is crucial that you understand and monitor your shipping and fulfillment process fully so that your shoppers are delighted with the cost, time, and quality of your shipped products.
What’s next in Chapter 9: Learn the most important eCommerce analytics metrics that can help you improve the performance of your store’s Traffic, Conversion, and Retention.