A well-thought-out and effective eCommerce shipping strategy is essential for any eCommerce business to meet customer expectations, reduce costs and operate profitably.
You could have an excellent product but if your shipping strategy is not on point, it could be bad news for your business.
If you are new to the eCommerce space but wish to have an effective eCommerce shipping strategy in place, this blog will guide you through the importance, best practices and recommended shipping strategies.
ECommerce Shipping Strategy - Importance
In today’s digital marketplace, the importance of an eCommerce shipping strategy is critical to the success of any eCommerce business. Its importance can be understood by the following impact it has on business;
1. Customer Satisfaction
When a customer receives their order as per their expectation such as with reasonable shipping costs, on time and in good condition; it enhances their satisfaction. A satisfied consumer is more likely to return for future purchases and recommends the business to others as well.
On the other hand, a poor shipping experience may result in consumer dissatisfaction and they may not return and also leave negative feedback.
2. Cost Management
An effective eCommerce shipping strategy plays an important role in managing and reducing costs. An eCommerce business by optimising its packaging and shipping methods and relationship with carriers, can provide the level of service as expected by customers and remain profitable as well.
Your warehousing costs and other costs related to handling inventory can also be optimised if an efficient eCommerce shipping strategy is in place. You can also minimise the risk of understocking and overstocking products and in turn, reduce costs.
3. Competitive Advantage
A well-executed eCommerce shipping strategy can set you apart from your competitors. Experiences such as fast delivery, free delivery, and hassle-free returns are highly valued by customers. This competitive advantage will also help in getting new customers and retaining the existing ones.
ECommerce Shipping Strategy - Best Practices
It is necessary to keep the best practices in mind as you create an effective eCommerce shipping strategy. It is crucial to adopt these best practices to ensure customer satisfaction, remain competitive and optimise eCommerce business operations.
Know Your Customers Well
As they say, the customer is the king; knowing well those you serve is the foremost and best practice to master. Different customers have different preferences and priorities. Understand your customers and segment them based on various factors such as location, order frequency, order value and purchase behaviour.
You can also conduct surveys at regular intervals and get customer feedback on their shipping preferences. This will provide you with the most accurate insight into what your customers expect.
Build A Great Team
A great and cohesive team is necessary to execute an efficient shipping strategy for eCommerce.
A good marketing team communicates with your customers and makes use of various promotional tools such as free shipping, reduced shipping etc. to attract customers.
An efficient team of web developers and designers ensures that the right shipping options are visible at the right time and the website is easy to navigate.
The team handling the order fulfilment process ensures that the orders are packed, shipped and delivered on time.
All other teams which are involved in making decisions in the shipping strategy need to work closely together.
Accurate Shipping Cost Calculations
Calculation of accurate shipping costs is pertinent for an effective eCommerce shipping strategy. Some of the factors to be kept in mind while determining the shipping costs are the weight and dimensions of your products, packaging materials to be used, and shipping zones which you service.
To calculate shipping costs accurately, you need to consider the weight and dimensions of all your products. For instance, if most of your products are of uniform size, a shipping price which varies with delivery location is more appropriate.
You can divide the regions you cater into different zones and set different rates for each zone based on distance. Optimising your packaging process is also very important to lower your shipping costs.
Packaging Products Well
The first thing customers notice about your product is the packaging. A well-packaged product is a positive affirmation of your brand. You can also custom package and include your logo and a thank you note.
Other than good presentation, there are other aspects of packaging that you should consider. It includes using eco-friendly packaging options and optimising packaging to save on space and cost. It is also important to use appropriate packaging if the product is perishable or temperature-sensitive.
Choosing Trusted Shipping Partners
A trusted shipping partner is a decisive factor in the success of an effective eCommerce shipping strategy. While choosing a shipping partner, it is important to factor in criteria such as the type of products to be shipped, the average weight and size of the packages and the destination to be shipped.
For eCommerce shipping in Australia, you can partner with a trusted 3PL which specialises in warehousing, order fulfilment and shipping operations.
Tracking Shipments
Along with the eCommerce business, the customer also needs to track their order. It is a desirable practice to offer real-time tracking so that customers can accordingly monitor their shipments.
Tracking shipments will help you eliminate any bottlenecks, enhance delivery efficiency and address customer concerns accurately.
Return Strategy in Place
A product return strategy in place is as essential for an eCommerce business as a product delivery strategy. This is due to the fact that no matter how good your product may be, there will always be cases when a customer may not like the product and would wish to return it.
An efficient product return strategy can convert a potentially negative customer experience into a positive one. You can set your return strategy in such a way that it is not a loss to your business and is prompt and frictionless for the customer.
ECommerce Shipping Solutions
Being able to offer the most appropriate shipping solution is the crux of your eCommerce shipping strategy. Let us have a look at the most common strategies for Shipping Solutions which you can offer your customers;
1. Free Shipping
This is the most preferred option from a customer’s perspective as they love free shipping. From the viewpoint of an eCommerce business as well, free shipping works wonders as it encourages customers to purchase more to qualify for free shipping.
Free shipping can also act as a marketing tool for your business as you can use a free shipping banner in your eCommerce store to attract more customers. There are various other ways you can offer online free shipping to your advantage.
However, free shipping may not be the right fit for every business as free shipping is not really free and the cost has to be borne by the business. So before offering free shipping, it is desirable to make sure;
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Your margins are high enough to cover the associated costs
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Your average shipping costs are not too high
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Your customers expect free shipping else you can charge them for shipping
2. Flat Rates
The most consistent and predictable pricing strategy is to offer flat shipping rates to the customer at checkout. It is the easiest system to set up as you charge the same rate irrespective of the size and weight of the package.
This strategy works best with eCommerce businesses where all the products are similar in size and weight or a majority of the customers order similar quantities. A flat rate shipping is also a good marketing strategy and provides uniform messaging.
A word of caution though. Before implementing this strategy, you need to calculate the average rate of shipping a package to avoid overcharging or undercharging.
To make it easier, you can add a table indicating the flat rates where the online customers can check the delivery charges and expected delivery time at checkout.
3. Real-Time or Live Rates
The most transparent of strategies is to offer real-time or live rates as offered by the carrier for various sizes, weights and distances to be delivered. This establishes a factor of trust as you are not charging any shipping costs but are leaving it to the carrier as per actuals.
This strategy also allows a customer to choose from among a variety of shipping options as per their need. If they urgently need a product they can opt for express delivery at a higher price, or if they are ready to wait for a couple of days, they can choose a cheaper option.
You can also use Shopify Shipping to display the carrier-calculated shipping rates to your customers at checkout if you have a fulfilment centre based in Australia.
4. Mixed Strategy
Another effective way is to combine various strategies and come up with a mixed shipping strategy which works best for your eCommerce business.
You can choose to offer free delivery for purchases that meet a minimum threshold, say $50 and charge flat rate shipping, say $5 for orders below the threshold. For expedited shipping, you can also charge real-time rates as offered by the carrier.
Some of the common mixed strategies include;
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Free shipping + Expedited shipping - Free shipping entices customers and drives them towards checkout. For faster delivery, they can choose expedited shipping at a cost.
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Flat rate shipping + Expedited shipping - By using this strategy, you can upsell by showing the estimated transit time for customers that need fast delivery
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Flat rate shipping + In-store pick-up + Same-day delivery - This a great mixed strategy for local customers as they would prefer same-day delivery and in-store pickup. For those who are not locals, you can offer them a good flat rate.
Summary
An effective eCommerce shipping strategy is fundamental to the success of an eCommerce business. Its importance cannot be undermined as it has a bearing on multiple facets of business operations and customer satisfaction.
Assemble a good team, know your customers well, calculate accurate costs, package products well, partner with trusted shipping partners and have a product return strategy in place as these are the best practices of an eCommerce shipping strategy.
Strategise and implement an effective shipping option to your customers which is feasible to continue without eroding the profits of your eCommerce business. You can offer free shipping, flat rate shipping, real-time shipping or a mixed strategy suiting your unique needs.
If you want a hassle-free operation, you can get in touch with a trusted partner who can provide eCommerce logistics solutions while you can invest your time judiciously.