Businesses that operate online need to understand shipping methods and fulfillment inside out to be successful. Partly, it is a practical matter - it helps if you can construct a viable operating model in advance. And partly, it is a customer service issue - the experience must be good for your clients.
While shipping and fulfillment might seem complicated, they become much more tractable once you break them down into manageable conceptual nuggets.
Shipping Methods: What Choices Do You Have?
When it comes to shipping methods, you have a range of choices. All the following options come with various costs and benefits that your enterprise will need to weigh up before it commits to any particular scheme.
- Free shipping. It is not true that you pay for “free shipping.” Instead, you roll the cost of shipping into the price of the goods they sell. You can cut the cost of shipping by cutting your margins.
- Flat fees. Some ecommerce retailers charge flat fees for shipping costs, no matter what customers buy. This option is great for simplicity, but you can’t calibrate the prices customers pay. Prices are the same, regardless of underlying shipping costs.
- Variable rates. Variable shipping prices depend on various factors that affect the cost of transporting the goods, including weight, size, volume, quantity, location, and delivery speed.
- Carrier rates. Carrier rates are similar to variable rates. But instead of fixing prices yourself, you peg them to the rates of whatever company ships your products.
Fulfillment Methods: What Are Your Options?
Fulfillment is a catch-all term that refers to how you process your products before shipping them to customers. You can very loosely think of it as the “warehouse” or “inventory” stage of your business. It’s how you arrange goods between their arrival at your facility and leaving on the back of a truck.
- Fulfillment at your premises. If you’re new to the world of ecommerce, you are likely to use your home for fulfillment. It’s convenient and doesn’t require any additional expense. If you’re a little more established, you might be using a separate warehouse you rent. Fulfilling at your premises (either domestic or commercial), sometimes called “self-fulfillment,” means that you do all the fulfillment yourself. You’re responsible for receiving goods, labeling them with customer addresses, and shipping them out the door at the other end.
- Dropshipping services. These services are relatively new in the fulfillment game. Dropshipping is pay-as-you-go fulfillment. Customers place their orders via your store, and then your site forwards the details onto the drop shipper to fulfill. It has the advantage of being plug-and-play, but also more expensive.
- Third-party logistics services. Finally, you can work with a third-party logistics company (3PL) to do all of the legwork for you. These services provide the warehousing and take care of your inventory for you. Often, all you have to do is manage your online shop front.
Prioritize Your Packaging
Your customers will judge your brand based on the quality of the packaging. If your products look great when they arrive in the mail, you’ll receive glowing reviews. If they don’t, then it could hurt you.
Here’s what you need to consider:
- Robustness: Packaging should be able to protect the goods inside as it transits through the postal system. The more robust it is, the more likely goods will arrive with the consumer in one piece. However, the stronger and thicker the materials, the more it will eat into your margins.
- Branding: While many companies choose plain cardboard boxes to ship goods, branding is still remarkably important. Ideally, you want your product to encourage the customer to choose you again. Unboxing should be a memorable experience.
- Efficiency: If your carrier charges by volume, you want to avoid inefficient packaging with voids. Choose solutions that allow you to pack goods tightly. Also, choose packaging options compatible with current mail infrastructure (such as being the right size for mailboxes).
- Labeling: Packaging should feature quality labeling that shipping vendors can easily direct your goods to the correct address. If you use dropshipping or 3PL services, you usually don’t have to worry about this part.
- Inserts: Packaging inserts are important for keeping goods segregated. Sometimes, you’ll need to include special inserts, such as ice packs, to keep perishables cool. Other times, you’ll need to use foam to prevent product damage.
Options For Packaging
You can choose a plain cardboard box for all your shipping, but there might be more efficient methods for your particular business model.
Here are some of your options:
- Poly mailers: These are great for products that don’t require much protection or padding. You can often put clothes in a poly mailer and arrive at the other end perfectly intact.
- Padded bags: Padded bags look like regular envelopes on the outside. But on the inside, you’ll find a bubble wrap lining to absorb impacts. Vendors typically use this type of packaging for small, moderately delicate products.
- Tubes: These are best for posters, large photographs, and other forms of sizable print media.
- Tough bags: These are the best for non-fragile items.
Providing Tracking For Your Customers
After customers place orders with you, they can become a little jittery if they don’t know their package. For this reason, you need to provide tracking facilities to keep them in the loop.
The ideal tracking system should:
- Provide information on the current order status (whether it is being processed, dispatched, out for delivery, or delivered).
- Be easy to access
- Show regular updates
- Provide accurate timings and locations, indicating where a parcel is right now
- Sync with your store, allowing real-time inventory updates.
As an ecommerce enterprise, shipping and fulfillment is largely something you outsource.
In general, you’ll have to sacrifice one of the following parameters when choosing shipping and fulfillment services:
You can't have all four at the same time. Rapid and trackable services are not the most affordable. And flexible aren't usually speedy or cost-effective. Always bear this tradeoff in mind when choosing a provider.