Launching an online business is so much more than building a pretty website. You need systems and processes in the background to get products into customers' hands. One key area is ecommerce shipping. Below, we take a look at what it is and what you need to know to kickstart your strategy.
What is ecommerce shipping?
Ecommerce shipping is the process of sending online product orders to the purchaser’s intended destination. This often involves an in-house and third-party collaboration. Ecommerce shipping has evolved over the years, especially recently due to technological advancements and the COVID-19 pandemic.
Steps in ecommerce shipping
Ecommerce shipping entails the following steps:
- Receiving: This is the first step when the order is placed. The retailer must ensure they have the product(s) to fulfill the order(s).
- Processing: The second step is when the retailer double checks the order — is it the correct product, billing information, shipping destination, etc.
- Fulfillment: Finally, the retailer picks and packs each order and preps it for shipping.
Types of shipping methods
There are many types of shipping methods — and you can do this yourself or with the help of a third party.
- DIY ecommerce shipping:when you deliver orders to customers yourself
- Outsourced ecommerce shipping:when you use third-party companies and services to help ship orders to customers
Many brands use a hybrid of the two, offering local delivery options with a mix of outsourced shipping, for instance.
Ecommerce delivery options
You don’t have to choose one delivery option and stick with that for every order. In fact, it’s advisable to offer customers an option to choose the delivery method they prefer. This can lower costs, speed up delivery times for shoppers, and give them a more positive purchase experience.
Some ecommerce delivery options you may want to offer include:
We have Amazon to thank for the two-day delivery expectation that many consumers now have. Amazon Prime made two-day delivery the “standard,” and brands everywhere are being challenged to deliver the same. In fact, most online shoppers expect deliveries in three days or less, according to one survey dating back to 2019.
Now that two-day shipping is more common, next-day delivery ups the ante a bit. And consumer demand is driving it. One survey found that 68% of consumers are more likely to make a purchase if there’s fast shipping.
Next-day delivery isn’t enough for some shoppers. According to a February 2021 survey, as many as 36% have ordered same-day delivery from an online-only merchant in the last six months — a significant increase from 24% six months prior. Same-day delivery is an option for merchants with a strong fulfillment network or who have the means to deliver orders locally, which brings us to the next ecommerce delivery option.
Many consumers look for free shipping, and it’s a great way to lower cart abandonment rates. A survey found that about half of online shoppers have abandoned a cart because they thought shipping was too expensive. And free shipping is the second biggest factor in their purchase decision.
The concept of free shipping also extends to returns. Three-quarters of consumers look for free shipping for returns, although about half of retailers charge for it. This is a good place to differentiate yourself — remember to highlight the advantage to consumers.
If you want to offer free shipping but can’t afford to at your current price point, look for ways to get shipping discounts or increase your product prices to offset the expense.
Local delivery is when an online merchant offers efficient order dropoff to customers who are within a certain geographic parameter. Local delivery is a great way to boost sales. One Shopify analysis found that customers spend 23% more with a 25% higher cart size when local pickup and local delivery are available. They also have a 13%–19% higher conversion rate than shoppers who choose more traditional ecommerce shipping options.
TIP: Connect local delivery options with AfterShip through the following integrations:
Selling globally opens your brand to a huge potential customer base, and selling online makes it easier to break into international markets. However, this also brings new challenges and requirements when it comes to ecommerce shipping.
International shipping is often more expensive, and you’ll also need to pay tariffs and duties to customs authorities. It’s a good idea to cover these costs as the merchant rather than springing them on your customers. You’ll also need to research which carriers you can use. But the payoff is often well worth it.
TIP: Track FAR international shipments with AfterShip.
Carbon-free or carbon-neutral ecommerce shipping is when the sender takes active steps to combat the negative impact shipping has on the environment. Carbon-free shipping is becoming increasingly popular, especially as consumers grow more aware of environmental issues and how companies can make an impact. As many as 70% of them think about the recyclability of product packaging, for example.
Packages weighing more than 150 pounds are sent via freight shipping. Freight shipping is meant for large packages and large volumes of packages. You typically see freight shipping for large manufacturers sending orders overseas, but freight shipping can also apply to direct-to-consumer commerce, especially for big items and orders.
Dropshipping is a method of ecommerce shipping where everything is completely outsourced to a third party. In a dropshipping model, the retailer doesn’t physically hold any of the inventory. Instead, the dropshipper handles everything from processing through fulfillment. This is a low-hassle way to handle ecommerce shipping, though its associated costs cut into your business profit.
Ecommerce shipping companies
There are tons of ecommerce shipping companies out there. AfterShip alone has partnered with 845 carriers around the globe. To get the best shipping rates and delivery times, most ecommerce brands use more than one carrier. Mano Mano, for example, leverages AfterShip’s open API to connect with their carriers of choice.
Some of the more commonly known and used carriers include the following:
United States Postal Service (USPS)
The USPS is the official government-run postal service that handles shipping within the US and its territories, along with global shipping options. You can do everything in person or use the agency’s online tools. The USPS offers a suite of business shipping services, as well as a web tools portal API. With it, you can check shipping rates, track packages, and schedule pickups.
When you ship via USPS, you can use their free shipping supplies to help save costs and their returns tracking tools to improve the customer experience.
Federal Express Corporation, or FedEx, is a private courier that ships domestically and internationally. Like USPS, they also have ecommerce-specific business tools, including streamlined returns, reusable packaging, and deliveries seven days a week. You can also integrate it with several ecommerce platforms, as well as use their basic analytics reporting tools to get insights into your business.
The United Parcel Service, UPS, is another private courier servicing domestic and international shipments. They can deliver packages to customers’ homes or to their delivery access points available at select locations. UPS My Choice shows all your outgoing and incoming packages, and you can customize tracking updates to feature your branding. Other tools include a returns manager, UPS® eFulfillment, and on-demand warehousing and fulfillment network Ware2Go.
DHL is an international carrier that’s part of Germany-based Deutsche Post — they ship packages up to 44 pounds to locations worldwide. DHL can handle B2C, B2B, freight, and ePacket shipping. There are several ways to connect DHL to your online store, either through their own portals, an open API, or third-party extensions and integrations.
Related: AfterShip adds 6 new couriers >
Canada Post is the official courier service for Canada, and they also have business shipping services. The carrier has strong integrations with Shopify and PayPal to help you manage sales, payments, and shipping online. You can also play around with their open API to set up your tech stack. Canada Post is a particularly excellent option for Canada-based merchants shipping domestically.
UK Royal Mail
UK Royal Mail is the United Kingdom’s government-funded courier service, and Click & Drop is their core ecommerce shipping offering. After registering, businesses can create shipping labels and print them from any workstation, record tracking numbers, and receive a detailed daily report. Royal Mail has strong integrations with Amazon and eBay in particular, making it especially valuable for merchants who sell on third-party marketplaces.
Government-run Australia Post is arguably one of the most innovative on this list. The courier service has strong integrations with an extensive list of ecommerce platforms, including a Shopify app of its own. Business shipping tools include returns management and tracking, customer delivery choices at checkout, and collection points where customers can go to pick up their packages instead of receiving them at home.
Ecommerce shipping costs in 2021
Ecommerce shipping costs vary greatly — it mostly depends on what you’re shipping, how fast you’re shipping it, and where your package is traveling to and from.
Many carriers do zone-based fees. This essentially maps locations into different zones. When assessing shipping rates, the courier will consider the zone for the package’s origin and final destinations. The farther an item travels, the higher the shipping fees will be.
Likewise, larger, heavier packages also typically cost more. You may look at using a mixture of flat rate and weight-based shipping fee structures to optimize your costs.
Couriers set their own rates, so it’s best to check with them directly for the most up-to-date information:
- USPS - Retail Postage Price Calculator
- UPS - Calculate Time and Cost
- FedEx - Get Rates & Transit Times
- Canada Post - Find a rate
- UK Royal Mail - Get a price
- Australia Post - Calculate postage & delivery times
How to calculate shipping costs for online business
When calculating shipping costs for your online business, add up the following:
- Insurance:It’s a good idea to insure your packages, especially if you sell high-priced goods.
- Import duties:Import duties and tariffs apply to international shipments — make sure you account for these, so you don’t pass them on to your customer.
- Shipping labels:You’ll need to pay for anything related to creating and printing shipping labels — the printer, ink, labels, etc.
- Packaging:While some couriers offer free shipping materials, you may want to opt for your own branded boxes to make a stronger impact.
- Discounts:Some shipping companies offer volume-based discounts for businesses, and you can also find discounted rates through many shipping software platforms.
Once you know how much shipping will cost, you can decide whether you want to pass that along to your customers. If you do, you’ll also need to choose whether to list shipping as an additional fee and risk cart abandonment or bake it into your product price.
Set up your ecommerce shipping strategy
Your ecommerce shipping strategy is more than simply how you’re shipping and who’s doing it for you. You’ll also want to consider things like order tracking and returns management and build your tech stack around that.
Order tracking is so important for both the merchant and the customer. Around 41% of customers blame the retailer for late shipments. And it costs about $17.20 per failed delivery attempt. It’s important to not only track the orders yourself but empower customers to track them as well. Providing visibility into the shipping process can show them where you’re not at fault.
Harry’s uses AfterShip to communicate tracking updates with customers. This not only eases customers’ minds but can also reduce the number of support queries from shoppers looking for their orders. It also fights package theft — something that affects more than half of US-based shoppers.
LEARN MORE: Flyt Express tracking API & integration
It’s also a good idea to customize your order tracking emails when possible. This strengthens your brand identity and also creates instant recognition for your customer. You can customize these emails in AfterShip with the email editor.
AfterShip also has branded tracking pages customers can refer to at any time. This puts more control in the hands of the customer, so they feel assured and informed about their order.
Although every retailer wants to avoid them, returns are an unfortunate reality of ecommerce. And they can be a hassle for both the customer and the merchant, so it’s important to make this experience as seamless as possible. In fact, 95% of shoppers who have a good returns experience will make a future purchase from the same retailer. But if it’s negative, they’re three times as likely to never shop with that retailer again.
One tactic to incorporate into your shipping strategy is to automate the returns process as much as possible. When a customer initiates a return, leverage technology automation to guide them through the process and also manage it on your end. You can also create a returns page with AfterShip and use the AfterShip returns center.
Get the right tech stack
Your tech stack is the control panel for your business — it allows everything to connect and share data which then informs and guides your business. AfterShip is a tracking platform with strong integrations for the top ecommerce platforms, including Shopify, BigCommerce, WooCommerce, eBay, and Magento. With tons of apps and integrations to choose from, you can get a complete picture of orders and your business.