Little is more satisfying than opening your front door to find what you ordered online waiting for you. For the shopper, it takes just one click. For the ecommerce vendor, however, it is a completely different (and much, much longer) story.
As an ecommerce vendor, you need to face the challenge of delivering fast and on schedule without forfeiting profit. Behind the scenes, this involves a long list of:
b. choosing the “right” shipping method,
c. setting up a shipment fee model,
d. researching duties and taxes, and
e. setting up a business account.
So if you have a great product and are wondering what you need to do to get it to your customers, here is a great place to begin.
For starters, packaging matters.
Imagine the backlash your business will receive when your product arrives at your customer’s doorstep in less-than-perfect condition (yes, customers these days expect nothing short of perfection) or, even worse, when your product arrives at the wrong doorstep. While you may not be able to control what goes on after your product leaves the manufacturer, what you can do is invest in sturdy packaging to minimize the effects of those bumps along the way and to use quality labels that prevent possible wear and tear.
To save you the effort of sifting through endless options on Google, here is a compiled list of the top suppliers that can help you achieve the ecommerce standards of today:
The “right” shipping method is generally a balance between the shipping cost and delivery time.
According to Baymard Institute, approximately 7 out of 10 people abandon their shopping carts online – a phenomenon you (and every other ecommerce vendor) will experience and, in due course, spend countless hours analyzing. And while your analysis may yield many possible factors, once again, only a few will fall within the scope of your control, the most important of which are the shipping cost and delivery time.
The general rule of choosing the “right” shipping partner is, therefore, balancing cost and time. However, depending on the retail value of the product, consider tipping the balance in favor of one or the other – typically, products of lower retail value are more price-sensitive and require lower-cost shipping options, whereas products of higher retail value, being less price-sensitive, may be able to withstand the steep price tag of fast shipping options.
To help you make a more informed decision, here is a list of key things to consider:
1. Postal vs. Courier
With the numerous shipping carriers available out there, it can be a very time-consuming (and daunting) task to find the shipping cost and delivery time for each one to compare. So, to get started, figure out whether you want to go with a governmental or private carrier.
And in case the category names didn’t give it away, government carriers refer to postal services operated by a country’s government, such as USPS, Canada Post, Royal Mail, etc., whereas private carriers refer to courier services that are operated independently, such as UPS, DHL, FedEx, etc.
Of course, private carriers are almost always more expensive, but you do get what you pay for, especially when it comes to shipping and here are the pros and cons of each category to prove it.
In case you ever wondered what it is exactly you are paying for, here is a list of components that are taken into consideration every time you receive a shipping quote:
- Package Size
- Package Weight
- Departing Country
- Destination Country
2. To insure or not to insure?
Most shipping carriers already offer insurance. What differs between carriers though are the type of products they are willing to insure, the maximum dollar amount they are willing to reimburse, and the associated terms and conditions.
Doing your research on insurance policies is, therefore, a task very worthy of your time, especially if you are shipping products that are higher on the retail value spectrum.
3. Is tracking a luxury or necessity?
As the ecommerce industry grows more and more sophisticated, e-shoppers’ expectations have risen to include knowing the whereabouts of their long-awaited packages at any moment in time and even receiving automated notifications with the details. So, needless to say, tracking has become necessity.
Be strategic about what to charge for shipping—it pays in the long run.
Remember, what you charge for shipping not only affects your bottom line, but also your brand image. With that in mind, consider your options:
1. Free Shipping
Obviously, the most exhilarating option for the e-shopper, but not so much when it comes to the vendor. Unless your warehouse and customer are all located in one country, offering free shipping may dig deep into your margins. Yes, in some cases, free shipping may lead to more sales, which may justify the cost, but there are no guarantees, so here are a few alternatives you could consider.
Increasing the price of your product to cover shipping fees has become a common industry practice for those dealing with products of high retail value, such as luxury or hand-made products.
In case your products are more price-sensitive and cannot withstand the price hike,requiring a minimum order value for free shipping may be a better solution. This way, e-shoppers would be more incentivized to purchase more, thereby increasing the average order value and making free shipping more financially reasonable
2. Charge What You Get Charged
Charging customers for shipping may seem to be an unenticing option, but when done correctly, it may improve your credibility and help with sales.
For starters, make sure that you are completely transparent about charging for shipping and state the reason why, especially if your business is socially motivated—many people love supporting small businesses and have no problem paying a bit extra once they know how that can help your business grow. Also, it helps to mention what carrier you are using for delivery, which may justify the price to some customers. If possible, even build a “shipping calculator” on your checkout page, which adds more credibility to your ecommerce business and makes shoppers feel like they are paying a fair price. For your reference, check out Simple Sugars, a store recently featured on Shark Tank – once a customer gets to the checkout, they input their delivery address and the shipping calculator does the rest.
Source: Simple Sugars
3. Flat Rates
At first thought, an “easy-fixer” is to charge a flat shipping rate for every order regardless of size or weight. But you may want to take a little longer to think about this one—while a flat rate may seem like the easiest solution, it actually takes a lot of work and experience to figure out the average cost of shipping for all your products. And even when you actually do come up with a figure that works, there is also an element of risk involved (if you end up only selling the cheap products, your profits would take a serious hit).
Be a master of taxes and duties.
If you are shipping internationally, one of the most intimidating issues you will come across is handling customs duties. And since taxes and duties vary from country to country and product to product, be prepared to spend lots of time doing the research—an important step that will help you make the decision of whether to charge customers for taxes and duties or to foot the bill yourself.
To learn more about customs duties, click here.
Save time and money, set up a business account.
Even if you are very early in the game and have not even begun receiving orders yet, it helps to set up a business account on your shipping carrier’s website. Some perks you may enjoy further down the road are faster service thanks to the account dashboard, cheaper shipping rates thanks to business accounts’ adjusted pricing models, and data storage in case you ever need to look up any previous order details.
Once you’ve gone through all the steps mentioned above, you should be ready to launch your ecommerce business. So give yourself a pat on the back because now comes the even more challenging task of getting orders.
Research for this guide was done by Yusan Wu.