While eCommerce customers enjoy the convenience of shopping from anywhere at any time, they don’t have the instant gratification of in-store purchases. To offset this tradeoff, online retailers must provide customers with timely shipping and delivery.
Not only do your shipping and fulfillment processes have to be fast, accurate, and efficient, but there also must be constant communication with the customer from the point of purchase through delivery. While this is no small task, there are various shipping and fulfillment options available to retailers of all sizes.
The Importance of Effective Shipping and Fulfillment
The fulfillment experience that you provide as a retailer is one of the main reasons a customer will or will not shop with you again. The best customer service, the greatest web design, and the most optimized shopping cart flow will all be quickly forgotten by a customer if the product they ordered takes longer than expected to arrive, or even worse, is damaged or incorrect.
Even the biggest eCommerce businesses have to tackle the same delivery and shipping challenges that you do.
Customers have high expectations:
• Most expect to get everything within 2 days and for free. That’s costly to setup and make profitable.
• They believe both delivery and returns should be free.
• They want options for how, when, and where they want their product shipped. Sometimes to their homes. Sometimes to their offices. Sometimes to a post office.
Scaling your fulfillment operations is difficult:
• How do you build a fulfillment operation that is profitable during low sales periods, but can scale to support the demands of peak seasons like holiday?
• As volumes grow, it tends to magnify any operational issues. Inventory discrepancies, damages, and out of stock items are typically the first issues that start popping up.
• The demand for permanent and temporary warehouse workers is at an all time high, meaning that keeping your operation properly staffed is even more challenging.
Strategies for Fulfillment Success
One key differentiator between best-in-class eCommerce players and those who fall behind is their attention to the details of their fulfillment strategy.
A good way to benchmark where your business operations currently stand is to ask yourself the following questions:
• Do you have a role in your organization focused solely on eCommerce fulfillment, or a dedicated partner that handles it on your behalf?
• Do you ship from multiple locations, either fulfillment centers or retail stores?
• Do you know the average time it takes from from order submission to delivery confirmation?
• Do you know your order accuracy rates? (Were the correct items shipped?)
If you answered “no” to one or more of the questions above, you have a lot of opportunity in front of you.
So, where do you start? While it’s common for companies to have two different systems in place to handle order management and control inventory levels, it’s important to have constant visibility into both processes. Integrating your order and inventory management systems can help you form a single source of truth for real-time status updates on purchase orders, stock quantities, sales orders, shipping, and fulfillment.
You need to be able to create, track, cancel, or modify orders quickly and easily. With solutions like Shipwire’s order fulfillment platform you can do just that while providing real-time analytics and alerts for elements like delivery tracking and order status updates.
Inventory needs to be accurate and synced across all the moving parts in your multichannel world. Software solutions, like Stitch Labs, centralize your inventory into a single location, allowing you to control how much stock is available on each sales channel.
THIRD PARTY LOGISTICS (3PLS)
Over the years, 3PLs have played all sorts of roles with retailers, from a seasonal relationship for help with peak volumes, to a fully outsourced logistics operation handling every order that flows through their business. There are many core benefits 3PLs provide that emerging and established retailers can take advantage of. 3PLs:
• Provide additional capacity for peak holiday volume or seasonal product staging.
• Reduce delivery times and costs by locating inventory strategically across the country, getting it closer to your customers.
• Enable international expansion by testing products in new countries and markets.
Besides complementing your existing logistics infrastructure, a good 3PL should also be a competitive differentiator for your business, by offering services like:
• Logistics industry expertise and advice in the way of strategic account management, network optimization, and cost saving analysis.
• A consolidated view of business intelligence across all sales channels for data like shipping costs, tracking information, and fulfillment key performance indicators (KPIs).
• Connections to suppliers and manufacturers that could serve as potential drop ship vendors
Ingram Micro Commerce & Fulfillment Solutions
IMCFS has been a dominant player in global B2B replenishment for years, and after its recent acquisitions of both Shipwire and DocData, it now has a powerful fulfillment technology platform and a strengthened footprint in Europe that make it an attractive option for global B2C fulfillment or direct-to-consumer retail replenishment. Some of the core benefits are:
No commingling of inventory – Some 3PL’s allow sellers to pool their inventory with supposedly identical items supplied by other sellers. The practice leads to mixups between counterfeit and authentic products. This is a risk for the makers of the authentic products who can face customer backlash or fines from sales channels.
Control which country or state your product is in to reduce tax liability – IMCFS allows you to control which state your inventory is actually stored in, allowing you to eliminate the need to register for taxes in over a dozen states, as you do with some 3PL’s.
B2B or B2C fulfillment from one pool of inventory – No need to manage 2 separate inventory levels for your sales channels. The Shipwire platform that powers IMCFS will automatically break inventory cases when necessary for direct to consumer fulfillment.
Route orders to Ingram warehouses or your warehouses – Enjoy the flexibility of routing orders to an Ingram managed fulfillment center, or your own office, warehouse or store at any time. This can be controlled through where you store the inventory, or with customizable business logic.
Fulfill orders from any sales channel – With EDI, API or CSV integrations, you can accept B2B or B2C orders from almost any sales channel, including marketplaces like Jet.com, Ebay & Amazon, or retailer websites like Target, Costco & Walmart.
Fulfillment by Amazon (FBA) is a unique 3PL service allowing businesses to utilize Amazon’s world-class fulfillment centers and operations. Like other 3PLs, Amazon will pick, pack, and ship all your orders. But that’s not all. Retailers should consider the following core benefits of FBA when exploring 3PL partners:
Access to tens of millions of Amazon Prime customers – If you’re trying to scale your business and reach more customers, gaining access to Amazon’s many Prime members is a big opportunity to tap into an active group of online shoppers. (Amazon’s Seller Fulfilled Prime Program also lets marketplace sellers offer product listings that they are fulfilling themselves as eligible for Prime two-day delivery)
Eligible for Amazon Prime Free Two-Day Shipping and FREE Shipping – Consumers love free shipping, especially when it’s paired with a guarantee of speedy delivery. As a FBA customer, you can offer Prime members not only free shipping, but also free two-day shipping.
Amazon handles all customer service issues including returns – A major added benefit you get with FBA is their premium customer service for all the products you ship through them. Since most retailers can sympathize with how messy processing returns can be, this is a key service Amazon can handle for you.
Ability to fulfill orders from other non-Amazon channels – That’s right! Even orders from your branded online store or other marketplaces can be fulfilled with inventory in your FBA center with Amazon’s multi-channel fulfillment offering.
Extra space for more inventory in-house – With Amazon there to handle the bulk of your inventory, you’ll have extra space to house more stock in your current facilities.
SHIPPING SOFTWARE SOLUTIONS
When you get down to the operational logistics of fulfillment—picking items, building boxes, packing orders, and getting them shipped—online selling can feel exhausting, time consuming, and frustrating. Shipping software solutions alleviate some of the stress involved with actually fulfilling orders so you and your team can focus on effectively running your business. If you answer ‘yes’ to any of these questions, it’s time to find a software solution:
Are you handing orders one by one? Working on a single order from start to finish and repeating that process until your orders are complete is working harder, not smarter (it’s working longer, too). Take heed of the assembly line: it’s easier and quicker to take ONE action and complete it en masse for ALL your orders. Pick all your products, pack them, and add the shipping label.
Are you struggling to keep track of orders and shipments? The faster orders start coming in, the harder it is to keep track of what needs to be picked and packed, which sales channel it came from, what needs to priority shipping vs standard shipping, etc. Shipping software helps categorize orders by sales channel, priority, and even by item. These solutions help you figure out the best workflow for fulfilling and shipping. Add to that pick lists and packing slips and organization becomes a breeze.
Are you constantly rate hunting? Retail postage prices are very high. If you use a shipping solution, not only can you quickly find the best rate for your business, but you can also print labels and schedule carrier pick-ups to save time and money.
Whatever your biggest concerns —mentioned above or not—make sure that the shipping software you seek out is a reliable solution with a diverse features list capable of scaling with your business.
What Features Matter in a Shipping Software Solution?
The main purpose behind shipping software, like ShipStation, is to simplify the shipping process by streamlining tasks like order aggregation, file imports, and customer notification. But what do you absolutely need to have in a shipping software?
Integrations. Wherever you sell, whether on your own site, an online marketplace, or a physical brick-and-mortar, organizing orders isn’t easy. A great shipping software, however, will integrate with dozens of sales channels and carriers, covering your current avenues while also giving you options when the time comes to expand.
Customizable Workflow. You work a particular way and your shipping software should, too. Maybe you work through priority orders first from all marketplaces and then sort by date. Your shipping solution ought to let you filter, search, and customize views that won’t disrupt your workflow. Settings that can be saved and applied to multiple orders at once—or that apply on order import—are highly valuable time-savers.
Batches and Bulk. Batching orders and bulk actions are functionality all modern retailers need. Batching enables you to process hundreds of orders and print their accompanying labels with just a couple of clicks. Bulk actions will drastically cut the time you spend applying shipping services and weights, etc., to orders drastically. The more actions available en masse, the better.
Automated Tracking. Look for a software solution that automatically sends tracking information to both you and your customer. A customized, branded shipping notification email is best – especially if the software delays sending until the package actually hits the mailstream.
Opportunity for Growth. Whatever shipping software you choose should be able to grow with your business, and needs features that will help facilitate that growth. The last thing you want to do is spend time getting to know a system, building a workflow around it, and then outgrow it.
Before you commit to a shipping software, make sure it’s compatible with your current workflow. Sign up for free trials, connect your stores, and ship some orders. Getting hands-on experience with different softwares will allow you to make an informed decision. Then, just get ship done.
Another fulfillment option for growing retailers is drop shipping. With this shipping method, drop shipping suppliers deliver your products directly from the wholesaler to the customer and charge you for the item once it’s shipped. You never have to keep the products you’re selling on-hand in your facilities. The main advantages of using drop shipping are:
Low financial investment – Not needing to purchase and hold your business’ inventory greatly reduces your upfront costs. By avoiding having your company’s capital tied up in inventory, you can use those funds for other important functions like marketing and advertising.
No warehouse costs – Since you won’t be storing your inventory, there is no need to own or rent warehousing facilities – or staff workers to run them.
Broader product selection – Because you’re not purchasing your inventory in advance to have it in stock, drop shipping enables you to offer a more diverse selection of products to your customers.
Geographical freedom – Without the need for a physical warehouse location, you’ll have the freedom to operate from anywhere across the globe.
Scalability – Drop shipping takes the heavy burden of owning, operating, and managing a shipping and fulfillment center off your hands. Therefore, it will be your drop shipping supplier’s job, not yours, to manage any influx of orders your growing business receives.
While this all sounds like music to many retailers’ ears, there are a few other factors to consider:
Profit margins are dependent on the products you sell – Since drop shippers typically bill businesses based on the products they ship, the larger, heavier, and more expensive your products are, the more thin your profit margins will be. Conversely, smaller and cheaper items will offer you higher profit margins.
Sourcing products from multiple warehouses complicates inventory tracking– While it’s a plus that drop shipping allows you to easily source a wide-range of products from various suppliers, fulfilling many different products from multiple warehouses can quickly cause inventory tracking issues. To curb these complications, you’ll need to sync your inventory management systems with your drop shipping suppliers.
Potential for drop shipping supplier failures – Any time you outsource a business function, you run the risk of that vendor or supplier’s errors costing your business or harming your other processes and/or reputation. Any mistakes your drop shipper makes can create a bad customer experience that will ultimately reflect poorly on your business.
Choosing a Shipping Strategy
Outside of product pricing, one of the most difficult tasks for retailers is determining how to handle shipping rates. Charging customers too much can make you less competitive in the market, but charging too little can eat into your profits.
A big factor in an online shopper’s buying decision is the shipping options they’re given and the fees they’re going to be charged. Forrester has reported 44% of online customers abandon their shopping carts because of high shipping costs – something every retailer wants to avoid.
With this in mind, the following are top eCommerce shipping options and the pros and cons of each:
Free Shipping – All orders are delivered free of charge to the customer (we’ll dive into more details below)
Flat Rate – All orders have the same shipping rate regardless of the product or order size.
Pro: No unexpected spikes in shipping costs for your customers – what you see is what you’re charged.
Con: You’ll need to calculate out your average shipping cost per order. You can test offering flat rates based on weight or order size
Weight-based Shipping – Shipping fees are dependent on the weight of the products being delivered
Pros: You can set specific price ranges for weight tiers that make sense for your products.
Cons: If you sell heavier items, you’ll also be passing along hefty shipping fees to customers that could cause a spike in shopping cart abandonment rates. Therefore, this strategy is better suited to companies selling lighter weight goods.
Calculated Shipping Rates – Most shipping carriers (like USPS, UPS, and FedEX) offer real-time rate calculators that determine shipping costs based on multiple factors like order size, weight, delivery location, and speed of delivery.
Pros: You can curb your costs, particularly on heavy and/or international shipments which are typically more expensive. Also, customers know they are paying for exactly what they got, no more or less.
Cons: Although the costs are customized per customer, you’re still passing fees along to customers who’d rather incur them.
Ultimately, this is something every business must decide for itself. Is it more important for you to reduce shopping cart abandonment rates by incurring the shipping rates yourself? Do you have low average shipping costs or low-weight products that won’t pass on significant additional costs to your customers? These are questions to consider.
Free Shipping Strategies
Everyone loves free. Whether it’s a free trial, free snacks, free movie tickets, or, considering the subject matter, free shipping. Offering—and advertising—free shipping can increase your average order, build up brand loyalty, and help differentiate you from competitors that are still charging for shipping. Plus, offering free shipping has been proven to reduce shopping cart abandonment rates and increase revenue by potentially 10%.
But there’s no such thing as a free shipping label, so how can you make free shipping work for your business?
Free Shipping Promo – If you’re apprehensive about free shipping, or want to see whether or not it brings people in, offer it as a promo. Maybe it’s for a holiday or a weekend, or your business is celebrating an anniversary. Run it for a limited time and analyze how well the promo period does compared to a non-promo periods.
Free Shipping with Minimum Spend – If running a promotion or offering free shipping full time is too much of a strain, set a threshold. Don’t make the mistake of setting the threshold too high, though. A good rule of thumb is to figure out your average order size and make the minimum threshold 10 or 15 percent higher. That way, you encourage your customers to increase their order only by a little bit more than they normally would. Who hasn’t thought to themselves, “Oh, if I buy another $10, I get free shipping!” and then promptly spent another $20?
Free Shipping for Everyone – This is expert-level. Free shipping for every (domestic) order is the sort of move that gets attention from your customers and will keep them coming back. Especially if you advertise it (which you must do!). Keep in mind, though, that free shipping doesn’t have to mean fastest shipping. You should still offer an expedited service, which can help absorb some of the cost of the free option. Product prices can also get a small bump to make offering free shipping worthwhile.
Free Shipping for Specific Products – You can run this in a few different ways: you have too much stock of a particular item, are replacing current inventory, or want to get your best selling product in more hands. This strategy can be used a bit like a flash sale or a daily deal: “Free shipping on Product ABC for a limited time!” No one wants to miss out on something that’s limited, especially if it saves them money.
Free Shipping If You Like Our Page/Follow Us/Join Our Email List – If you’re trying to build a great email list or a social media presence, incentivize free shipping. The challenge is verifying that the hundreds or thousands of people that order from you also interact with your brand in the way you intended. Still, this is an easy way to build a following while letting your customers feel included. The key to this is keeping them as fans of your pages and emails, but that’s a whole new can of worms!
Free shipping, as with everything related to running a successful retail business, boils down to preference. What works for your business? What’s affordable and feasible for you? Frankly, we recommend trying a few of the above strategies before settling on one. Start with a promo over a holiday. If that does well but the cost to ship hurts your business, add a threshold. If you can afford it, offer free shipping full time and make sure your customer base knows about the change.
Honesty in free shipping is important, too. If you’re using the cheapest and slowest shipping service, make sure your customers are aware of that timeframe. If you’re using something a bit speedier, again, make sure they know the timeframe. And always offer alternative services. Shipping—free or paid—will never be one-size-fits-all so make sure you still provide options.
The bottom line is, as your business grows and your operations expand into new sales channels and multiple warehouses, your shipping and fulfillment methods must be able to scale along with them.
Things To Do Today
✔ Determine a shipping rate strategy, experimenting with different free shipping offers and promotions to help boost sales and evaluate what your customers respond to most.
✔ Choose a scalable shipping and fulfillment method that works best with your products, strategy, and company goals.
✔ Utilize shipping software platforms to automate, track, and streamline fulfillment