E-commerce News and Insights
Aug 15, 2018

The Ultimate E-commerce Shipping Guide: Solutions, Strategies, & More

In today’s $461 billion e-commerce world, consumer expectations of the e-commerce experience converge on one key element: shipping. In fact, 61 percent of online shoppers will abandon their cart due to high added costs, like shipping. And, 79 percent of consumers said free shipping would make them more likely to shop online. As a retailer, it’s mission critical to get your e-commerce shipping solutions and strategies in tip-top shape so that you can be successful.

We’re going through every aspect of e-commerce shipping, including solutions, software, strategies, and more, to help you fulfill orders and exceed customer expectations.

Table of Contents

  1. Establish Your Shipping Processes
    1. Determine Your Shipping Policy
    2. Choose a Shipping Software
    3. Choose Your Packaging and Materials
    4. How to Pass Along Shipping Costs to Customers
    5. How to Offer Free Shipping
    6. How to Save on Shipping Costs
    7. Should You Offer Shipping Insurance?
    8. Don’t Forget to Send Order Confirmation Emails
  2. Choose Your Carriers
    1. Compare Shipping Rates
    2. Negotiate Carrier Rates
    3. Take Advantage of Free Supplies
    4. Schedule a Carrier Pickup

Establish Your E-commerce Shipping Process

If you’re just starting an e-commerce business from scratch, you’ll need to spend some time planning your shipping process, including choosing the carriers, service levels, and packaging to send your items, plus how you’ll want to pass shipping costs on to your customer.

Determine Your E-commerce Shipping Policy

You’ll want to make sure you clearly define your shipping policy, so you have a guide to stick to as customer queries come in. Then, publish your policy in an easy-to-find section of your website, since that is what customers will reference before making their purchase. In fact, 80 percent of online shoppers consider shipping cost and speed to be influential in determining where they shop.

The best policy is one that fits the needs of your company and customers. As you begin drafting your policy, answer these questions with your business in mind:

  • Are you offering shipping for free, a flat rate, or a variable fee? Typically, we see retailers promote free shipping, a free shipping threshold, or flat-rate shipping prominently on their website. If the cost of shipping varies based on the purchase, most sellers won’t share shipping prices until the checkout process.
  • How long will it take for your customers to get their packages? Do you offer same-day, next-day, or other express delivery options? If your company sells perishable goods or timely novelty products, it’s important for customers to know that they’ll get their product when they need it. If you offer customers Ground and Express shipping options, be sure to mention them.
  • What carrier(s) do you ship with? Customers want to know if they should be looking in their mailbox for a small package delivered by the USPS or if they should be looking on their porch for a FedEx or UPS package.
  • Do you ship internationally? Make sure potential international customers know right away whether you will serve them or not. Otherwise, you risk frustrating consumers.
  • Do you have any special shipping circumstances that should be shared with customers in advance?

We’ll be diving deeper into many of these topics below. For now, outline your shipping policy and then come back to it at the end to make sure all aspects of your shipping strategy are covered.

For more information, check out a few examples of shipping policies from successful e-commerce businesses.

Choose an E-commerce Shipping Software

Shipping software will help you compare shipping rates, print shipping labels, and automate your communications with customers. The best types of shipping solutions are the ones that will work seamlessly with your current workflow so you can sync orders with the e-commerce platforms you use and avoid manually copying and pasting information.

Most importantly, you want to make sure that the shipping software or integration you choose will automate much of the shipping process for you, so you can spend less time on shipping and more time growing your business.

Shippo is shipping software that lets you do all that and more. You can try Shippo out for free using its Starter plan or test out its Professional plan on a 30-day free trial.

Choose Your Packaging and Materials

It’s very important to choose the right packaging for your products. Of course, you want to make sure that the item arrives on your customer’s doorstep in one piece. But you also want to ensure sure you’re optimizing your packaging materials to get the best e-commerce shipping rate possible. Consider padded envelopes and poly mailers, since these packaging types are oftentimes more cost effective, because they take up less space in the delivery truck.

[Image source: Sticker Mule]

If you’re just starting out and shudder at the thought of calculating shipping dimensions and weights, you can start by using the carriers’ packaging. The main carriers—USPS, UPS, and FedEx—offer free shipping supplies that come branded with their logo on the box. They’re easy to use since you can preselect the packaging type as you’re generating and printing the shipping label to expedite the process.

[Image source: USPS]

If your product is extremely popular or you want to go the extra mile on a perfect, branded unboxing experience, you may want to purchase customized boxes. This adds to your overall customer experience, as well, since 40 percent of online shoppers said they would be somewhat or much more likely to purchase from a retailer that offers premium packaging. The same percentage of shoppers also said that branded or gift-like packaging affects their perception of the online retailer that shipped the item.

[Image source: Lumi]

Determine How You’ll Pass Along Shipping Costs to Your Customers

You typically have three options when it comes to charging your customers for shipping. Each comes with its advantages and disadvantages, so you’ll want to consider what makes the most sense for your business.

  • Fixed Rate: You can choose a fixed rate and charge all customers the same amount no matter what items are in their shopping cart. For example, you can charge a flat rate of $5 for all purchases. You can also do a flat rate that varies based on the number of products. For example, if you’re selling T-shirts, you can charge $5 to ship the first shirt and then every additional shirt is an extra $2. This is a win-win, since you can stick both T-shirts in the same packaging with little impact on your shipping costs and it encourages customers to increase their order value. Fixed rate shipping strategies are easy to implement and require little technical know-how. However, there will often be times where you are stuck paying the difference when the price of shipping is higher than the flat rate.
  • Variable Rate: Another option is to charge your customers the entire cost of shipping the package to its destination. Typically, you’ll need a shipping calculator to provide real-time rates at checkout to provide accurate information to customers. Business owners can hire a developer to integrate a shipping calculator with their checkout process. The benefit of a variable rate is that it ensures the customer is paying for all of the shipping costs, so you aren’t stuck footing the remainder of the bill later on.
  • Free Shipping: You also need to consider offering free shipping, since it plays a major part in the consumer purchasing decision. There are many ways you can offer free shipping. The key here is that you’ll likely need to make up those shipping costs somehow, which is where your creativity comes into play.

How to Offer Free Shipping

Free shipping is unavoidable in the e-commerce shipping industry: nine out of 10 people said free shipping was the No. 1 incentive when asked what would make them shop online more often.

The good news is that there are a few ways you can offer free shipping, so that you can choose an option that won’t break the bank and feels right for your business. Here are two methods for offering free shipping.

The Purchase Value Threshold

A free shipping threshold means that if a customer spends a certain amount at your store, they’ll qualify for free shipping. A good rule of thumb is to choose a threshold slightly above the average purchase value. For example, if customers typically buy a $20 T-shirt from you, price your free shipping threshold at $25 or $30 to encourage larger purchases. The proof is in the purchases: 48 percent of people will add items to a cart to qualify for free shipping.

The Featured Product

You can also offer free shipping for any orders that include a certain product. For example, if a customer adds a perfume to their beauty purchase, they’ll qualify for free shipping. This can help you get rid of old stock to clear out space for new products; get a new product in front of more customers; or encourage the purchase of a higher margin product to help subsidize the cost of e-commerce shipping. You’ll likely want to choose a product that ships for a low cost or will fit easily in packaging with most other products.

For more tips on offering free shipping, check out our blog post on unique ways to offer free shipping.

How to Save on E-commerce Shipping Costs

You’re not the only one trying to manage e-commerce shipping costs. In fact, 68 percent of online retailers consider the cost of shipping to be their biggest operational challenge. There are many ways to save some cents on e-commerce shipping.

Check the Weight

Weight is a huge factor in the cost of shipping. While it’s not always a solution, sometimes sending two different packages could be beneficial if that means you can access cost-effective delivery options for lightweight packages. A great service level to consider is USPS First Class Package Service which only accepts packages up to 16 ounces, and is usually priced very competitively.

Don’t Overlook Special Service Levels

There are many other unique service levels that will help keep some money in your pocket.

Should You Offer Shipping Insurance?

If you’re incentivizing consumers with a free shipping threshold, chances are the value of each order will be higher. For these high-value orders, consider purchasing shipping insurance. A single loss or damage of a high-value shipment can set you back significantly. Not only have you lost the original shipment, but typically you would have to send the customer a replacement and pay for the cost of shipping again.

Each domestic FedEx and UPS parcel is covered automatically up to a value of $100 against loss or damage. The U.S. Postal Service provides an automatic $100 of coverage on Priority Mail and Priority Mail Express.

If the value of your package is more than $100 you may need to add insurance for an additional fee. For shipments valued over $100, you can purchase additional insurance provided by the carriers or from a third-party insurer, which can usually be found through your e-commerce shipping software of choice.

Don’t Forget to Send Order Confirmation Emails

Did you know that e-commerce shipping confirmation emails are opened 1.5 times on average? These emails are a critical moment to communicate with your customer and foster loyalty for repeat purchases.

When you do send these emails, include a link to the order tracking page, since emails with links have two times the click rate than confirmation emails without them. And consider including your brand name in the subject line, since that has a 7 percent increase in unique open rates compared to emails without it.

Smart retailers will also include logos and other relevant opportunities when they email the tracking information in order to continue the experience and build brand loyalty. For example, click-to-open rates are 16 percent higher for confirmation emails that include invitations to join loyalty programs.

E-commerce shipping confirmation emails are some of the most popular communications between a business and consumer. Test the above tips for yourself to see if they boost your post-purchase customer engagement.

Choose Your Carriers

Once you’ve got a general sense of the type of e-commerce shipping processes and strategies you’ll want to implement, the next step is to begin comparing rates and services offered by the different carriers to find the best partner for your business. There are hundreds of carriers globally, and you’ll likely want to start by researching the most popular:

  • The U.S. Postal Service (USPS) is great for smaller, lightweight packages traveling to residential addresses.
  • FedEx and UPS are preferred for larger, heavier packages that require a time-definite delivery.
  • DHL has cost-effective options for international delivery. It is also helping retailers experiment with unique delivery offerings that cater to evolving customer demands, like its Parcel Metro same-day delivery program.
  • Regional carriers like OnTrac and Lasership are optimized for local delivery, which can help you save costs for packages traveling shorter distances.

Compare Shipping Rates

If you have specific packaging dimensions and weights, you can input that information on most of the carriers’ websites to get a price estimate. You can also use a shipping software like Shippo to get real-time rate comparisons between carriers. If you don’t have specific packaging dimensions, you can start by looking at some general examples.

USPS Priority Mail, FedEx Home Delivery, and UPS Ground

USPS First-Class Package Service, FedEx Home Delivery, and UPS Ground

Fore more comparisons, check out FedEx vs. UPS vs. USPS rates for U.S. domestic delivery or DHL vs. FedEx vs. UPS vs. USPS for international delivery from U.S. origin addresses.

Negotiate Carrier Rates

High-volume shippers are able to negotiate shipping rates with FedEx and UPS. Even if you’re not a high-volume shipper yet, it’s important to know what to expect, so you’ll be ready to negotiate when the time comes.

Above all else, you need to have a compelling story to tell, and that’s where your data comes in. It’s easy to see your past shipments using Shippo. Visit Shippo’s Shipping Analytics tab to see your e-commerce shipment history and access past data.

Even if you don’t have the threshold you want to negotiate, FedEx and UPS will typically offer you a grace period of a few months to meet your sales goals. That way, if you’ve been scaling quickly, you can reap the benefits of those lower prices by promising higher volume soon. However, if you don’t meet your sales goals, you will lose your discounted rates, so make sure you’re reporting and projecting accurately.

Ship with Multiple Carriers Before You Negotiate Shipping Rates

Using other carriers gives you the upper hand when it comes to negotiating rates. The carriers already know you can take your volume elsewhere, and knowing what rates the other carriers will charge will help you determine what rates you should be aiming for.

Watch out For Hidden Fees or Surcharges

You will be signing a contract, so make sure you read it carefully to ensure you’re not agreeing to any hidden clauses, including spending minimums and surcharges. For more information, check out our blog post on negotiating rates.

Take Advantage of Free Supplies

Shipping costs, including the money spent on packaging materials, can have a big impact on your bottom line. To help business owners manage their e-commerce shipping costs, the USPS provides free shipping boxes and envelopes for some of their popular service levels.

[Image source: USPS]

How Can I Get Free USPS Boxes?

You can order free boxes and envelopes online at the USPS store. The Postal Service will even deliver the supplies to your door for free. Most boxes will typically come in packs of 10 or 25, so keep that in mind as you complete your order. When you select your quantity, you’re choosing how many packs (of 10, 25, etc.) you want. You can also pick up free supplies at your local Post Office.

Are There Any Restrictions to Keep in Mind?

The service level on the packaging must match the service level on the label. So, if you’re shipping the package via Priority Mail Express, you need to use a Priority Mail Express box. You cannot use these boxes for service levels like First Class.

Examples of Free USPS Boxes

The USPS provides free shipping boxes and envelopes for Priority Mail and Global Express Guaranteed packages. Here are a few Priority Mail and Global Express Guaranteed box examples.

For more box sizes and information, visit our list of free USPS boxes.

Schedule a Carrier Pickup

You no longer need to load your packages in your car and head to the post office to drop off your items for delivery. Instead, schedule a pickup with a carrier, so that your local mail person or carrier representative comes to your house, office, or warehouse to gather your packages and inputs them into the mailstream.

[Image source: USPS]

Scheduling a Pickup with FedEx

FedEx allows you to schedule pickups for FedEx Ground and Express packages. If you qualify, you can schedule a regular collection time for FedEx Ground packages. FedEx will assess a weekly fee to the account number associated with the regular scheduled pickup.

For on-call FedEx Express and Ground pickups, FedEx will charge you an additional amount. The charge is itemized separately on your invoice. If you pay by cash (which is not accepted at all pickup locations), check, money order, or credit card, the charge will be collected when you tender the package. You can call 1-800-GoFedEx or go online to schedule a pickup.

Scheduling a Pickup with UPS

UPS offers daily and on-call package pickup. You can have your UPS Ground, Air, and International shipments picked up from your home or office by scheduling your pickup online or by calling 1-800-PICK-UPS.

Customers who select UPS Smart Pickup, Day-Specific Pickup, or Daily Pickup receive one free UPS On-Call Pickup of air or international packages per day for shipments tendered after their scheduled pickup time at their usual shipping location. Packages tendered at an alternate location incur UPS On-Call Pickup fees. This option can also be used for customers needing to return a package to any original shipper who does not have scheduled pickup service.

If you simply want infrequent, on-call package pickup, you can schedule them at your convenience and you can expect to incur a charge on your UPS invoices for each pickup.

Scheduling a Pickup with USPS

For USPS packages, you can submit your request online at www.usps.com/pickup and your letter carrier will pick up the packages during their normal delivery time. This service is free of charge, regardless of the number of packages you are sending. You can even plan your pickup schedule up to three months in the future. You can also specify a pickup window, which comes with an added fee.

After this crash course in e-commerce shipping, you’re well on your way to becoming an expert. If you have any questions about setting up your shipping or getting the best rates for your business, the team at Shippo is happy to help. Please reach out to us here.

Cheers to your shipping and selling success!  

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Michelle McNamara
is a Senior Marketing Manager at Shippo

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