What Is eCommerce Shipping? A Detailed Guide On Strategies & Processes

Transportation of a product procured from an online retailer by a customer to their door is known as eCommerce shipping.

The above is a simple definition. However, today’s eCommerce shipping involves highly complex processes – ordering, picking and packing, labeling, shipping, tracking, communication, and returns – that work seamlessly to deliver the product at the right place, time, and price.

What is eCommerce Shipping?

eCommerce is a critical function of online retail as it is a crucial differentiator in satisfying and retaining a customer. Any business strategy of an eCommerce set-up must consider the capability to ensure the timely delivery of a purchased product safely at a reasonable cost. Developing and implementing the right shipping process with the right partners ensures a controlled and inexpensive delivery operation.

The goal of an eCommerce shipping plan is to have an inexpensive and efficient process that delivers the product safely and on time, every time.

The advent of eCommerce has given rise to fast deliveries of products that one shops for from the comfort of their home. Thus, eCommerce shipping has become a vital aspect of a successful eCommerce business, as it offers both convenience and quick deliveries to customers. 

Hence, an eCommerce business that delivers a product purchased online quickly, safely, and on time can sway buyers, increasing sales and retaining loyal customers.

Poorly-planned shipping for the eCommerce process may significantly impact the success of an eCommerce business. A weak shipping process implementation could lead to late deliveries, high shipping costs, unfulfilled or misplaced orders, wrong items shipped, ambiguous return policies, and poor or damaged packaging, thus, impacting the business

What are the Processes Involved in eCommerce Shipping?

The shipping process in eCommerce involves receiving an order and handling and packing the product for final delivery to the door. The eCommerce shipping process has three preliminary stages:

  • Order receiving

Ensures the ordered items are in stock.

  • Order processing

Ascertains order information for accuracy  (e.g., checks if the delivery address is correct).

  • Order fulfillment

Determines ordered items are picked, packed, and kept ready for the shipping company to pick them up for delivery.

What are the Various Costs Associated with eCommerce Shipping?

eCommerce shipping and logistics costs are complex, and hence an overview of the various expenses associated with eCommerce shipping is given below:

Shipping costs

Shipping costs are calculated by considering the following –

  • Dimensions (lxbxh) – volumetric and gross weight

All shipping carriers assess both volumetric and gross weight for calculating shipping costs. The higher weight of the two is considered, and the rates are calculated accordingly. The gross weight is the package’s actual weight, and the volumetric weight considers the size (l x b x h) of the box to determine the shipping cost.

  • The distance to the door

The distance between a package’s origin and destination is considered when calculating shipping costs. Thus, the distance between two different points of origin, and shipping to the same destination, may significantly differ. And so, the longer the shipping distance, the higher the shipping cost.

  • Shipping rates structures

Generally, most eCommerce businesses use the following two shipping rate options:

  • Flat rate shipping 

As the name suggests, the rate charged is uniform for all orders within a particular range, like weight range (volumetric or gross), order value, delivery distance, or some other categorization.

The disadvantage of this rate structure is that a few orders will be overpriced and others underpriced.

  • Real-time rates

With this option, the website displays the actual shipping rates offered by the carrier per the weight of the package, type of service, and the shopper’s location. 

This rate structure charges the correct amount to ship the package to the shopper’s location. 

Free shipping

Most eCommerce businesses increase their sales conversions by offering free shipping. For most consumers shopping online, free shipping is one of the main reasons for completing a purchase on a particular site, thus building customer loyalty.

eCommerce businesses can offer free shipping without losing money, as follows:

Incorporating shipping costs into product costing.

Offering free shipping for a minimum purchase value.

Providing a loyalty program and charging a fee in place of free shipping on all orders.

Handling costs

Handling fees cover everything other than shipping costs. It includes staffing costs for picking and packing items, labeling, loading/unloading the vehicle, and other fulfillment services.

Packaging

Packaging affects shipping costs and customer experience, affecting the brand image. The delivery person and the packaging represent a brand that the customer personally interacts with first-hand.

A well-executed packaging is a vital feature that fosters brand loyalty and customer retention. Conversely, poor or easily damaged packaging leads to a disappointed customer.  

  • The right packaging

There are plenty of packaging options from which one may choose. For example, consider the following to help determine the right packaging option:

  1. The type of product.
  2. The shape of the product.
  3. Weight (volumetric or gross) of the product.
  4. Is the product over-dimensional?
  5. Fragility or durability of the product.
  6. Does the manufacturer supply the product with packaging?
  7. Whether to go for plain packaging or brand the packaging.
  • Custom packaging

Though custom packaging will be expensive, top-quality packaging can help one’s brand stand out in a competitive environment. Good packaging can create a memorable experience, go viral, and build brand loyalty.

  • Sustainable packaging

With rising eCommerce sales, the waste generated increases. Further, the widespread awareness of the current global environment scenario means that choosing sustainable eCommerce shipping and packaging solutions will help improve one’s brand image, leading to increased sales.

Shipping carrier used

Outsourcing shipping services to a 3PL can help the eCommerce businesses expand operationally and negotiate better shipping discounts – lowering overall costs and increasing profits.

A sizeable 3PL network of fulfillment centers can also help eCommerce stores with lower shipping costs and transit times.

Surcharges

Extra costs added to a base rate are surcharges. Any charge exclusive of the regular shipping and handling rates affects the shipping price.

Here are a few surcharges:

  • Fuel surcharge: it covers the fluctuating price of oil. It’s a percentage of the shipping cost and changes once a week.
  • Over dimension surcharge: means an oversized or bulky non-standard package, which is non-stackable or fragile. Such packages get charged more.
  • Surcharge for remote territories: are additional fees carriers charge for delivering packages to remote areas, like beyond city limits or the service area covered by the carrier.
  • Dangerous/Hazardous goods: pose a possible risk to other packages carried with it and a delivery person or people near it. Hence such packages incur surcharges. 

Returns

eCommerce returns have now grown into a massive issue. The Paypers’ 2021-2022 Report says shoppers return anywhere from 10% to 40% of their eCommerce purchases. 

For businesses, returns create challenges in terms of higher logistical costs, increased handling costs, and risk frauds. Also, if the customer returns the product in a damaged condition, the business bears the costs involved in either product refurbishing or disposal.

The returns process can be daunting, inconvenient, and frustratingly slow for shoppers.

What are the Best Practices in eCommerce Shipping?

Adopting the best practices for eCommerce shipping is vital for achieving success as this is the differentiator that helps one stand out amongst a host of competitors. 

It is also proven that nearly 50 to 60% of online shoppers don’t buy from eCommerce stores offering high shipping costs. 

Hence, the practices listed down below should be followed.

Form a team

“You are only as strong as your team.” — Dominique Wilkins.

So go ahead and form a team. It is vital that the business generates leads, attracts shoppers to your site, increases conversions, and handles customers’ concerns on shipping efficiently, effectively, and courteously. Accordingly, the following teams will be required sooner or later to grow a successful business:

The marketing team: designs flyers and promotions to attract visitors to the site. The marketing team also carries out communications of such promotions to customers. Communication could be by emails, sms’, blogs, vlogs, social media, and online advertisements. 

The web designers and developers team: ensure the site is attractive and easy to navigate for potential customers. Like the product listings and offers, the content is explicit and without ambiguity. Customers must also be able to notice the various shipping options and policies available, preferably before checking out. 

The fulfillment team: ensures that the orders received are processed quickly. The correct items per the order are picked, packed, shipped accurately, and on time. 

The customer service team: is one of the most critical. A missed or delayed delivery is most aggravating for a customer. They must know how each phase in the product lifecycle affects the customer and how to respond to customer concerns satisfactorily. Concerns could be about a particular ongoing promotion, shipping options or policies, and myriad other issues.

Set the right goals

It is essential to set a goal for yourself. You must know where you wish to go and how to get there. One must review one’s path from time to time and then make a course correction if required considering where one wishes to be. Then decide on a strategy that would best help one achieve the desired goal.

Set SMART (Specific, Measurable, Achievable, Relevant, and Time-based) business goals for yourself. Then decide on a strategy. The goals must be clear and concise, which will ensure a profitable shipping strategy with an efficient shipping process and operations. 

Here are a few questions that one needs to answer to set goals and strategy.

  • What is your target market? 
  • Do you wish to acquire international customers or stay domestic? 
  • Do you want to brand yourself, or is it simply a side-hustle? 
  • Do you want to generate more business and earn profits? How would you do it?
  • How can one increase conversions? By offering free shipping or various shipping options or offering competitive price rates, one can increase conversions.
  • How can you increase the average order value? Maybe by offering free shipping for minimum order quantity/value or a flat shipping rate to high-value or multiple products bundled together.
  • How can you expand the market or increase the target audience? You may do that by partnering with a large 3PL having an extensive network of fulfillment centres. Thus, being able to ship to new geographies or by introducing newer, fast-moving products.
  • How to decrease costs – by exploring possibilities of tying up with major carriers or 3PL, try cheaper packaging options or alternate suppliers offering to ship the product to the customer directly. Furthermore, by showing more affordable products than existing suppliers, increasing efficiency by streamlining the operations through process reviews, and thorough education of fulfillment teams, one can decrease costs.

Right return policy

The reverse logistics process in eCommerce entails collecting a purchased product from a customer and putting the returned item in stock if undamaged. This process is a cost concern for an eCommerce business and, if mismanaged, will affect its profitability.

Generally, a customer happy with a business’s return policy will shop with the same retailer again. The reverse is also true: shoppers unhappy with the returns process will, in all likelihood, never shop with that business again.

Hence, have a customer-friendly return policy and process returns quickly. 

Right shipping strategy

Here are the following shipping strategies that one may use per one requirement.

Several eCommerce businesses have successfully used many of the below-mentioned shipping aggregation methods as a strategy:

Real-time rates

Display rates in real-time directly from major carriers. Though this strategy will get you the best rates, it cannot be used as a promotional tool because there could be marked variation in rates. 

Benefits:

  • Cheapest shipping option.
  • You can offer to ship to new geographies at lower costs for expanding your business since you can take advantage of scale.

Same-day delivery

Same-day delivery requires a highly efficient fulfillment with equally efficient logistics operations. The disadvantage involves deploying plenty of resources, making the entire process costly. 

Benefits:

  • The fastest delivery time will be the USP (unique selling point) to increase conversions. With increased conversions, one’s reputation and brand image increase, leading to higher revenues.
  • On the flip side, one should not adopt same-day delivery as the first go-to strategy. Instead, a two-day or overnight shipping would be a more uncomplicated strategy to implement initially.
  • Once a robust team is in place handling the fulfillment efficiently and a capable, trustworthy shipping partner is signed up, you could then think of offering same-day delivery service to your customers.

Free shipping

Most customers shopping online expect to be offered free shipping. 

Benefits:

  • It fulfills the customer’s expectations.
  • It directly improves conversion rates, which builds customer loyalty and retention, thus leading to higher profits. 
  • Though free shipping is free for the customer, ensure that higher product margins cover this cost, else you will lose money on every sale.

Flat rate or table rate shipping

One way to avoid offering free shipping is to provide flat or table rate shipping to the customer. 

A flat rate charged for shipping any product ignores the type or size of the product or order value. 

Table rate shipping offers a low flat rate for shipping a product close to the fulfillment center, which progressively increases with the distance from the fulfillment center to the destination.

Depending on the minimum order value or order quantity, one could also charge a flat rate. Beyond a specific order value, one could offer free shipping if the costs are covered in the sale price of the product sold.

Alternative shipping strategies

You could try any of the above strategies that you are sure will not affect your bottom line.

You could also think of alternative strategies like combining various shipping strategies to improve customer satisfaction and profits. 

This kind of alternative strategy could lend itself to designing new promotions. 

Here are a few:

  1. Offer standard and express shipping with assured delivery time at checkout so that customers requiring fast delivery can opt for it. 
  2. OfferfFree shipping is it drives customers to your site. At the time of checkout, ensure to offer express shipping at a higher rate for faster delivery.
  3. Offer Tracking services for shipments.
  4. Offer branded shipping.

Ensure the customer can track product shipments by providing a tracking service. Today, most eCommerce shipping solutions and 3PL offer tracking services that you could leverage.

What are the Benefits of eCommerce Shipping?

Automated shipping process

One can control the eCommerce shipping process with automated shipping. The system updates the inventory, the order tracking numbers, the courier reports, and the order delivery reports. 

An automated eCommerce shipping system replaces all manual processes, thus reducing human error and streamlining the fulfillment operations. 

An eCommerce shipping solution helps you import and export files, confirm/cancel orders, update inventory status, and choose the courier service.

Sales channels integration

Any eCommerce shipping solution will automatically sync the purchase orders with your sales to start further fulfillment operations. You can thus process the orders and provide the tracking details and status updates to your customers in real-time. 

Save time and money

With an automated solution, you gain access to multiple channels and can offer faster deliveries at discounted eCommerce shipping rates enabling you to reach more customers.

Non-delivery reports

Orders not delivered and returned are a massive loss for any eCommerce business. Automated eCommerce shipping solutions can reduce this loss to a large extent. Reports detailing the delivered and undelivered orders are easily generated using automated solutions. You can even determine which courier/carrier partner was responsible for the delivered and undelivered packages and take action accordingly. At the end of each month, you may analyze which partner is diligent and saves money for you and which doesn’t.

Returns management

For an eCommerce seller, handling order returns is the most challenging. An automated eCommerce shipping solution will help manage your returns.

The system will effectively manage returns and make your customers’ shopping journey a wonderful experience.

Thus, an automated eCommerce shipping solution will help you with the following benefits.

  • Quicker deliveries.
  • Customer satisfaction, repeat purchase, and retention.
  • Improved reputation and brand value.
  • Higher sales and increased profits
  • Save time and money

How to Choose an eCommerce Shipping Service for Your Business?

Small eCommerce business owners must partner with a suitable eCommerce shipping carrier to offer cost-effective shipping solutions to customers.

  • When choosing an eCommerce shipping service that is right for your business, one must consider cost, shipping schedules, and type of packaging.
  • Customers must be able to track their orders.
  • Have a return service that is friendly and efficient

A 2018 research by Deloitte recorded that 72% of the shoppers said that free shipping was the number one reason to shop online. Today, many customers expect free eCommerce shipping for their online purchases with a one or two-day delivery time. 

Established companies could easily attain this goal, but this would be an enormous undertaking for small business owners. 

Though small eCommerce businesses may find it impossible to offer this strategy, by accepting the challenge of providing free eCommerce shipping, they could gain a loyal and grateful customer who will come back to shop repeatedly.

eCommerce businesses must strive continuously to review their shipping and fulfilment strategy and processes to be successful. However, the overall process becomes easier to manage once you partner with the right shipping partners. 

Conclusion

eCommerce is growing at a rapid pace. eCommerce Shipping is a challenging activity for any business, let alone an eCommerce business. Every business must find the most appropriate shipping strategy to adopt. It’s not a one size fits all solution. Different companies have their challenges, and it will take time and continuous fine-tuning to arrive at the most optimum solution and strategy.

Evaluate your strategy periodically to ensure that you continue to deliver the best service, with the best customer experience, as an outcome at the lowest price possible. WareIQ can help fulfil all your eCommerce shipping requirements in addition to a host of other services.

Established in 2019, WareIQ, a Y-combinator backed startup, has rapidly grown to be the leading provider of full-stack eCommerce fulfillment services for some of the most reputed brands in India. WareIQ offers a full-stack platform for eCommerce companies to enable same-day delivery and next day delivery to customers – an Amazon Prime-like experience but accessible to everyone.

WareIQ has empowered brands to sell more, sell faster & sell everywhere due to:

  • Access to WareIQ’s strong nationwide network of fulfilment centresmicro-fulfillment centers & urban dark stores near their customers
  • Access to all major national & hyperlocal last-mile couriers at discounted rates for making same/next day deliveries possible
  • Easy integration across multiple online platforms & marketplaces enhancing multi-channel selling
    • Horizontal marketplaces: Flipkart, Amazon etc.
    • Vertical marketplaces: Nykaa, Myntra etc.
    • D2C platforms: Shopify, Magento, WooCommerce etc.
    • Social commerce platforms: Bikayi
  • Access to a superior centralised tech platform for eCommerce operations
    • ML-based prediction engine for efficient warehouse network design & smart inventory placement
    • Centralised platform for core fulfilment & shipping operations
    • Post-shipping apps for delightful experience & zero to minimum supply chain leakages (Branded tracking page with smart marketing placements; Trigger-based updates & smart communication platform)

WareIQ has customised offerings for merchants experiencing different order volumes as well as having different delivery speed expectations. WareIQ is probably one of the very few fulfilment tech companies in the world that have same-day delivery service for their customers under their product “WareIQ RUSH”.

With world-class WMS functionalities, WareIQ handles the entire range of intricate operations in the eCommerce fulfillment process, ranging from Inbound Operations such as scanning and quality check, through 100% accurate Pick and Pack, to Inventory Management across all channels. WareIQ’s next day delivery and same-day delivery services are helping eCommerce businesses set new standards with respect to setting customer expectations and fulfilling them with high efficacy. At the same time, WareIQ customers realise significant cost savings and wider reach due to better negotiations with shipping partners, strategically placed warehouses, economies of scale and scope in warehousing and data-driven decision making.

eCommerce shipping_wareIQ logo

WareIQ’s WMS, a centralised tech platform helps to better manage undelivered orders by reducing NDR processing time by 12 hours – a multifunctional NDR dashboard helps to track and take immediate action for undelivered orders in real-time, thereby reducing RTO by up to 10%. Automatic replenishment recommendations and easy purchase order creation capabilities on the WareIQ platform further empower eCommerce companies to leverage all possible ways of increasing their ROI.

300+ brands, such as The Man CompanyFuture GroupKama Ayurveda and Wingreens Farms, have trusted WareIQ as a reliable partner in their growth journeys. No minimum order quantity requirements make it suitable even for small businesses, having low order quantities, to take advantage of the latest trends such as next day delivery and same-day delivery. The onboarding process is simple, convenient and less time consuming, while the pricing policy is clear and transparent. WareIQ also undertakes strict safety precautions at its warehouses and complete ownership of the operations, thereby minimising the risk exposure of WareIQ customers.

Thus WareIQ will definitely prove to be a more reliable and trusted long-term fulfillment partner compared to dropshipping and conventional 3PL companies.

Sign Up Now with WareIQ to avail our superior fulfillment tech platform & enhance your online business growth.