Note: This is a guest post by our Integration Partner, ShipStation — Shipping Software for E-Commerce Fulfillment.
There are many components to crafting a profitable e-commerce shipping strategy. There’s not a one size fits all approach, but there are different models & e-commerce shipping best practices to follow depending on what you sell and where your customers are.
What aspects to consider in E-Commerce Shipping?
Developing a profitable e-commerce shipping plan is dynamic, but it’s not as hard as some may think. From knowing which e-commerce shipping solutions to use and when, to how you charge for shipping & how they integrate with your e-commerce platform, there are a few directions you can take to escalate your business.
We’ve outlined some of the best e-commerce shipping practices below which you can implement right away (if you’ve missed adding any in your current e-commerce shipping strategy). So, let’s get started.
E-Commerce Shipping Best Practices to Consider in 2020
1. Use First Class Mail When Possible
Saving money on shipping is a huge way to protect profit margins. The first step is to make sure that you’re shipping based on the weight of your parcels. And if a package weighs under 16 oz, it’s cheaper to ship with First Class Mail.
In many instances, First Class Mail arrives in the same timeframe or within 24 hours of Priority Mail. While there is no default coverage for First Class Mail, it can be added as an additional add-on.
2. Use Priority Mail Whenever Necessary
USPS First-Class Mail is an affordable mail service for standard-sized, single-piece envelopes weighing up to 0.2lbs and large envelopes and small packages weighing up to 0.8 lbs with delivery in 3 business days or less. All of it costing from $0.55 at a post office.
Using USPS First Class Mail or Priority Mail usually depends on weight. Priority Mail is a great option for shipping parcels between about 1–8 lbs. It comes with $50 of default coverage for all parcels. However, if you ship heavier parcels, USPS Priority Mail may not be the best option for you. Because the USPS delivers such a wider array of letters and parcels, heavier, larger parcels can be more cumbersome for postal workers to deliver.
3. UPS and FedEx Are Good For Heavier Parcels
USPS is frequently the most affordable shipping option for many smaller parcels. However, as a package’s weight increases, UPS and FedEx start offering competitive rates. This can be caused by either shipping heavier packages or by shipping to customers that are further away. Carriers use zones to determine how distance impacts a shipping rate. Zones range from 1 to 9 and are rated from nearest to furthest. One is the cheapest, 9 being the most.
Once parcels hit about Zone 5, UPS and FedEx start becoming more affordable alternatives to USPS. This is also true of parcels weighing over 5–6 pounds. So, if you are shipping something across the US and it weighs more than 5 pounds, it may be time to ship with more than just USPS.
4. How Surcharges Impact your Shipping Strategy
One advantage USPS has, though, is that there are fewer surcharges. Because the USPS doesn’t profit from its services to the same degree that other carriers do, they have a commitment to shipping to every US resident. As a result, its delivery network is more all-encompassing. While this does sometimes make parcels take a little longer to reach their final destination, it also helps keep costs lower.
As a result, FedEx and UPS add substantial rate increases for deliveries headed to residential addresses. More commonly, commercial addresses are easier to deliver to and it’s easier to drop them off. With residential addresses and routes, this can add a lot of fuel costs to make a delivery. This is why FedEx and UPS add about 4.00 extra onto residential shipments — this is known as a residential surcharge. They can also charge fuel or delivery service area surcharges for addresses further away from their shipping centers. However, you can take advantage of some programs that reduce these fees.
5. Priority Flat Rate for Higher Zones and Heavier Parcels
Even though there are situations where UPS and FedEx are more affordable than standard Priority Mail packages, USPS Priority Flat Rate packaging can come in handy too. Flat rate boxes are easy, read here to know more about these.
So, if your parcel weighs less than 70 lbs and fits in the box, you can ship it. However, they can be expensive. If you’re shipping across the US, though, they can actually be more affordable. So, if you’re shipping to zones 8 and higher, flat rate boxes may be your most affordable option.
Another advantage is that the USPS incentivizes these packages so much that they offer the boxes for free. However, if you are caught using these flat rate boxes for something other than USPS Priority Flat Rate, they can send you a cost correction that you’d then have to pay.
6. E-Commerce International Shipping
A major barrier that online merchants face when growing their business is finding a good international audience. Apart from finding ways to find these customers, shipping to them can be so taxing (literally and figuratively) that it is not financially worth it to pursue.
International shipping is obviously more expensive, but there are some features that make this more affordable. For instance, USPS First Class Mail International is good for parcels up to 4.4 lbs, while domestic First Class Mail is only good for parcels up to 16 oz.
Furthermore, Priority Mail International offers default coverage for items valued up to $200 instead of the standard $50. As long as you accurately fill out customs forms and follow the laws associated with the recipient’s country, you should be good.
7. Choosing the Right Shipping Software
Shipping best practices become easier to figure out the more time you spend with them. However, even the best understanding of this needs practical applications. That’s why a shipping software like ShipStation comes in handy. They allow you to process all of your day’s e-commerce orders quickly and efficiently.
Whenever you find a new affordable way to ship to a region, simply create an automation rule that makes any future order automatically assign the services you know to be best. Running a small business can take more time than it should. And developing an effective shipping strategy allows you to save a lot of time on fulfillment — which can become otherwise a time suck, even to the most knowledgeable shipper.
Another aspect to make sure if whether the shipping software integrates well with your e-commerce store. Automate.io lets you connect ShipStation to 100+ apps. Automating routine tasks can help you focus on selling more and provide hassle-free shipping to your customers. Here are some of the workflows that can help you:
8. Offer Free Shipping Whenever you Can
Knowing how to charge for shipping can make the difference between making a sale or having abandoned carts. In a study that ShipStation conducted on consumer expectations around shipping, we found that 76% of customers factor both the cost and ease of returns into their final decision.
Here’s an example of how Nijala Tweaked Their Shipping Strategy to Win More Sales by choosing Free Shipping options.
- Free Shipping: Free shipping is a great way to convince customers to buy from you. However, free shipping is rarely “free.” Rather, merchants typically inject carrier fees into the price of the item. This is typically done for items that are small and can be shipped in USPS Priority Mail envelopes or packages.
- Free Shipping with a Threshold: Understanding e-commerce shipping costs makes you take the right decisions. Free shipping with a threshold is where the merchant may eat some of the shipping costs, but it incentivizes customers to purchase more. Typically, this is done for orders over $50, $75, or $100. Many merchants include suggested items during checkout to incentivize the customer to bring their order total to a high enough total to receive free shipping.
9. Offer a Flat-Rate Structure Shipping
Flat rate pricing may be an easier option to offer your customers. Ultimately, the problem many merchants face with shipping is that their customers don’t always know what to expect at checkout. With larger companies like Amazon, everything is structured in such a way that there are no surprises. People know how long something will take to ship and how much it will cost.
Since free shipping is sometimes out of the question, including the price of shipping with the item(s) or even as a banner ad on your website can increase consumer confidence when buying from you. This pricing is usually something like $2.99 or $4.99 per item. Knowing the shipping costs of each item is an important first step. This allows you to charge a competitive price for shipping while also protecting profit margins.
10. Invest in a thermal printer
Sometimes we think of things in too much of the short term. Business equipment needs to be sturdy and reliable. And ultimately, it needs to be cost-effective. A thermal printer is a great way to save both time and money. While they may have an initially higher price point than standard printers, the lack of ink cartridges, quick print time, and ease of sticking a label on a parcel makes a thermal printer a great way to wrap up your fulfillment.
Those were the E-Commerce shipping best practices for businesses as presented by our integration partner ShipStation — a Shipping Software for E-Commerce Fulfillment. So if you’re looking to up your E-Commerce game and deliver utmost customer satisfaction, implement the above practices and let us know if you’ve anymore that work for you :)