If you run an online business, then you have likely put a lot of effort into creating a quality product. You will have conducted all your market research, identified your target audience and finetuned your marketing materials.
Once you make a sale and it's time to ship those products, however, a lot of that sense of control can be lost as you hand your product over to a third-party delivery provider. Comparing different carriers, figuring out pricing arrangements and even dealing with customs can complicate your order fulfilment, and, in worst-case scenarios, negatively impact your customers' experience.
Therefore, it's essential to know how to ship products efficiently and properly. To help, we've compiled a brief guide on the shipping process, so that you can mitigate the risk of complaints and refund requests, and ensure that every aspect of your service is top quality.
Establishing a Shipping Strategy
Before you start trusting your packages to an external shipping company, several decisions first need to be made. The four key points that you need to consider are:
- Shipping Rates – Will you take on the shipping costs, or pass them along to customers?
- Packaging – What is the most efficient way to package your products and where will you get your packaging from?
- Carriers – Different carriers have different advantages and disadvantages. Will a worldwide carrier offer your company the best value, or will a local postal service work better?
- Shipping Methods – Is it more efficient for your business to handle shipping internally, or is an outside fulfilment service a better solution?
Let's take a look at each of these considerations in greater detail so you can understand how they will affect your shipping operations.
Establishing a good shipping process starts with knowing how much your company will have to spend on fulfilment, and how it will accommodate for these expenses. The rise of services such as Amazon Prime that offer free, two-day shipping means that customers have high expectations about how quickly products arrive and what delivery will cost.
Generally, there are three approaches that companies adopt to justify shipping costs. The most popular, of course, is free shipping. If you are prepared to offer this service, it does not mean that your online business has to assume all of the expenses incurred when you send products. You can either incorporate the difference into the price of the item itself, or share the burden with the customer if it does not impact your bottom line.
The next step up is to have a flat rate shipping price. This is an excellent choice if all of the items you ship are the same size and are travelling through the same geographical area.
Finally, you can set up real-time carrier rates on your website and let the customer decide how much they are willing to pay. Choosing this method is preferable if it would be otherwise too expensive to cover shipping costs for your services, and helps to manage customer expectations on deliveries since they are involved in choosing how to ship their purchase.
Determining how you will package your products is another crucial step in shipping your goods. Many carriers use a dimensional pricing model, which takes into account both the physical size of the product along with its weight. Essentially, this means that the smaller the packaging, the less you and your customers will spend on shipping.
For this reason, poly mailers have become increasingly popular for items that are unlikely to receive damage during shipping, such as clothing. These lightweight mailers cost little and offer enough protection from the elements to ensure that customers receive their products unscathed.
At the same time, though, it's worth considering that presentation is important to modern consumers. If you are shipping a high-priced or luxury item, the unboxing experience is often a vital element of the customer's purchasing experience. As a result, you need to strike a balance between packing efficiency and keeping the product presentable.
You will also need to consider from whom you are receiving your shipping materials. You can order custom packaging materials from suppliers such as Value Mailers or Fast Pack, but these services come at a cost. Alternatively, it's often possible to receive packaging materials for free from some of the larger shipping services, such as DHL and UPS. These packages are also carefully designed to align with international standards, which helps control costs when you ship products to customers.
Once you've decided how you will recoup shipping costs and know how you will package and send your products, it is time to start considering which carrier to work with. This decision will likely be influenced by the volume of products you are shipping, the size of those products and where you are sending them.
If you ship products to customers overseas, then you will want to start with an international shipping service, such as UPS or DHL. Many of these companies offer shipping calculators to find out what sort of costs you can expect so that you can determine if they are within your budget. You can also find out if it is possible to schedule regular pickups for deliveries. It's also a good idea to investigate which (if any) customs declaration forms you will need, and whether there are any tariffs, taxes or duties that will impact your goods.
Don't overlook local carriers, however. National postal services such as the Australia Post, USPS, Canada Post and the UK's Royal Mail offer competitive rates for packages sent within their own borders. If you find that you are doing a lot of business in a specific country, then it is often advantageous to utilise these services.
Remember, though, that when you are considering these options, you also need to pay attention to the additional costs involved in commercial shipping, such as accurate tracking and insurance. As a rule, larger carriers tend to use more sophisticated tracking technologies and some, including UPS, offer complimentary guarantees on items up to a certain amount.
Finally, you also need to consider the logistics of how your business is storing and sending your inventory out, as there may be a more efficient solution that you should consider.
For instance, if you are handling the shipping yourself and sending less than, say, ten packages per week, then you might be able to get away with handwriting deliveries. However, as your business begins to grow, this method will become impractical and extremely time-consuming. At this point, it would perhaps be worth investing in a thermal label printer to quickly print off shipping addresses directly from order forms. It could also be worth investing in emerging technologies, such as artificial intelligence or the Internet of Things that can optimise and improve your processes.
If you don't have the time or resources to manage your shipping methods in-house, there are external options available, too. For example, fulfilment services are specialist firms that store your products, and then package and ship orders as they are received. While this approach means that you forego personal control over the minutia of the shipping process, working with a trusted logistics expert can free up you and your staff to focus on other pertinent business matters.
Another option is dropshipping, whereby you send orders to a supplier or manufacturer who then fulfils the order. However, this option entails the implementation and operation of a significantly different business model, as the product's manufacturer usually takes a much higher proportion of the sales.
By following these basic steps, though, you can easily improve your shipping process and profit margins. The key is to ensure that you research potential providers thoroughly, and don't commit to anything until you (or your accounting team) have carefully run the numbers on your costs.
What about you? What is the most effective shipping process for your business? Let us know your experiences and thoughts in the comment section below.