All Things Shipping
Dec 21, 2015

2016 Shipping Forecast: The Need for Optimization

Shipping not only serves as the last operational component for getting products into the hands of your customers, it has become the pivot point for sales and customer experience. With programs like Amazon Prime setting the bar for shipping speed and pricing, consumers’ expectations for free and fast shipping are becoming even more of a decision point during the checkout process. In 2016, we expect free and fast shipping to become the norm when purchasing online. So it’s important to start optimizing for the best shipping solutions that’s both beneficial for your sales and margins. 

  • Identify the types of shipping expectations customers have, and integrate with multiple carriers to take advantage of the services they’re best optimized for.
  • Take advantage of local shipments. Diversify what service levels you are using not only on shipping speed, but also based on where you’re shipping to.
  • Optimize your packaging depending on what and where you’re shipping. Make sure you finding the best fit for your products and customer-base.
  • Fulfill orders as soon as possible to leave more time for shipping. The clock starts ticking for your customers as soon as an order is placed.

1 – Integrate with multiple carriers to take advantage of their best services. 
Every carrier has a different service they excel at. Opening up your platform to multiple carriers will give you the best shipping options for your needs.

For day-to-day regular shipping on the cheap, USPS Priority Mail is your best bet. Continuously, USPS beat out private carriers such as FedEx, UPS, and DHL on pricing for parcels under 4 lbs. Their delivery estimates are also quite accurate, with only 3% of packages being delivered outside of their one to three day estimate in 2015.

For overnight shipping, use a private carrier (FedEx, UPS etc) for much better customer service, and fast processing times for claims in case packages don’t get delivered on time. Many of our customers love FedEx Standard Overnight or Priority Overnight as they have continuously demonstrated their ability to get packages from door-to-door within their promised time-frame with 99.7% accuracy.

For international mail, consider taking a second look at what your needs are as shipping across borders can get tricky with a large variety in processing time at customs.

If your customers are cost-sensitive and patient, you may be want to try out USPS Priority Mail International. Again, for shipping small, light packages, USPS offer the most competitive rates. However, be aware that the USPS will have spotty tracking depending on where the parcel goes to, sometimes it can be hard to tell if your shipment is just stuck at customs or lost. Since it’s a government-run service, the USPS will pass off the shipment to the local postal service provider in the country it’s shipping to. Check out this thread on USPS E-Delcon delivery confirmation for more information.

If you want a more accurate, trackable method, consider integrating with a few private carriers like DHL Express, UPS, and FedEx to check out their rates and options. All of these carriers have international fleets and are much more reliable at getting you accurate tracking information to update your customers.

It can be easy to integrate with multiple carriers with a partner like Shippo. We’ve helped thousands of businesses connect with multiple carriers through one simple integration. They get access to 14+ carriers through one API and the ability manage all their shipments from one location.

2 – Take a look at where you’re shipping from and to.
For many services, price is dependent on the weight of your parcel and the Zone (distance) it’s being shipped to.

Often local shipments will arrive on the faster end of the delivery window simply because it needs to travel less distance. For Priority Mail, packages are often delivered within one day for Zones 0 to 2 (local areas) and are much cheaper to ship to.

2016 PM PME Rate Chart

The cost difference between Priority Mail and Priority Mail Express can be very significant, but the delivery times between the two service levels in local areas will not. So unless you absolutely need a guaranteed overnight shipment, you shouldn’t need to pay for more than Priority Mail for Zones 0-2. 

Zones are dependent on your where you are shipping from. If you don’t know what USPS zones you frequently ship to, enter your postal code in this zone chart to find out.

Simple zone map
This map shows a simplified idea of different zones for shipments from San Francisco and from New York. 

3 – Optimize your package to qualify for better discounted rates. 
Analyze your products, and see how you can change up their packaging to tap into a variety of discounts.

Use First Class Parcels to ship non-urgent, lightweight items under 16 oz – like t-shirts! Since distance doesn’t matter for these parcels, they’re the cheapest option for getting small items to your customers.

Take advantage of USPS Flat Rate and Regional Rate packages for heavier items going farther distances (like Zones 5-8). These boxes and envelopes are available in multiple different sizes on the USPS website for free. They ship at a flat rate no matter how heavy and where they’re going.

If you can, optimize packaging for cubic rates – discounted, bulk pricing based on the dimensions of the parcel instead of weight. They’re best for small packages up to 20 lbs, with all sides under 18 inches.

Although there are no specific requirement, you must sign a NSA with USPS and they will decide case-by-case who can get access to these rates – typically they’re reserved for customers who ship over 50,000 packages a year. But you can easily tap into these rates by working with a partner like Shippo. We consolidate shipments from smaller businesses to help everyone acquire bulk rates.

For more details on these services, check out our guide to alternative shipping methods with the USPS.

4 – Fulfill orders quickly to leave more time for shipping.
For customers, the clock starts ticking as soon as the order is placed. Too often do we see businesses wait a number of days before fulfilling their orders. Then, they pay for an expedited service to get shipments to their customers on time.

By simply ensuring that orders are fulfilled the same day they are placed can save a lot of money on shipping.

If you aren’t doing it yet, make sure that you also are updating customers on the status of their order, at minimum with a tracking number. It’s can be a simple, automated way to increase transparency and decrease support tickets. The fact that customers see how quickly you have fulfilled their orders is a great way to use shipping to improve your customer experience.

Shippo offers a free multi-carrier tracking API that can be integrated directly into your system. Some merchants have this API to build tracking directly into customer accounts, encouraging return visits to the store. Other businesses have used this service to provide improved customer service experiences such as last-mile delivery text notifications.

Long gone are the days for using one shipping carrier and service for all your products and customers. It’s time to take a look at using the an array of carriers, service levels, packaging solutions, and customer support options that best meets the needs of your products and customers.

Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.

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Shan Lian
was a product marketer at Shippo.

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