The average consumer has become accustomed to free shipping for online purchases, often with one- or two-day turnarounds. This has set some high expectations in terms of shipping prices and speed. While this may be easily attainable for large businesses, it can seem insurmountable for small business owners. Yet, by fulfilling these expectations, smaller businesses can create a phenomenal customer experience that converts shoppers into loyal, lifelong customers.
It requires a lot of behind-the-scenes work by retailers to create these results for consumers. Retailers must constantly refine their shipping strategy and streamline their fulfillment and delivery processes. To make it even more challenging, this must all be accomplished without increasing your prices to unacceptable levels. Fortunately, once you identify the right shipping partners, the process becomes far more manageable.
"When it comes to customer loyalty, shipping speeds and costs are more important than ever," said Tom Caporaso, CEO of Clarus Commerce, a provider of e-commerce and subscription commerce solutions. "Most shoppers still choose 'free' over 'fast,' but with a growing number of retail outlets – Amazon, eBay and others – now combining those options, retailers of all sizes have to find ways to cater to every customer's interests."
"Today's e-commerce sites have a lot of competition, and shipping costs are often factored into consumers' buying decisions," added Christina Crawford, CEO of hair and skin care brand Bubble Pop Beauty. "So it is essential for these stores to create a pricing structure that is competitive with big online retailers."
Whether you have just started your business and aren't sure where to begin with the shipping process, or you're an established company interested in creating a more efficient methodology, here are some tips on tackling the biggest challenges small e-commerce retailers face with ease.
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Choosing the right vendor
Most businesses begin by using the most well-known shipping vendors. Big names like UPS and FedEx feel safe and established, and your volume may be small enough to justify the expense. However, as your business grows, you will need to choose a multi-step and multi-vendor shipping arrangement to ensure faster deliveries at a reasonable price.
"While using just one carrier may seem like a simple solution, it may not be the most cost-effective one," said Amine Khechfe, co-founder of shipping solutions company Endicia. "Small businesses should take the time to identify the right shipping mix for their business needs."
Khechfe recommended that e-commerce businesses consider the U.S. Postal Service as an alternative to private carriers, especially if they regularly ship bulky products. Business owners should also consider surcharges for services such as weekend or rural delivery and use this information to determine the most economical options for meeting customer delivery expectations, he said.
Drop shippers and other third-party logistics (3PL) providers can also reduce shipping costs. Drop shipping – a process in which a retailer sends customer orders to a manufacturer or wholesaler that then ships the product out from its warehouse – is a particularly attractive option for businesses wanting to boost their shipping volume without increasing the space needed to store their inventory. Similarly, 3PLs can leverage the combined inventory volume of a group of smaller merchants to offer better shipping alternatives, said Jose Li, founder and CEO of shipping insights and analytics firm 71lbs.
Building smart, strategic relationships and using technology can help small businesses find the right balance of price and convenience, said Frank Poore, founder and CEO of online merchandising and fulfillment platform CommerceHub.
"The little guys have to act like the big guys," he said. "They have to do things systematically to minimize costs and transit times."
Poore suggests looking for suppliers and drop shippers in the areas closest to your customer base to minimize the distance between the origin and the destination.
And never underestimate the value of negotiation, added Crawford.
"Don't accept standard shipping costs issued by the carrier," she said. "Go through the negotiation process. Compare pricing among other carriers and pick the option that best works for [you]."
FedEx and UPS follow a dimensional pricing model, meaning shipping costs are determined by package weight and size for ground shipments. Kevin Lathrop, CEO of shipping company Unishippers Global Logistics, said many businesses made a lot of adaptations to optimize their packaging for this reason.
"You want to use the minimum amount of space you can," Lathrop said. "Package for safety and density, and put [your items] in an appropriate box for the load."
If you're shipping multiple items on a shrink-wrapped pallet, label each individual box in case the load is broken up before it reaches its destination, Lathrop said. Crawford said that it's also helpful to consider preassembly of products and kitting so orders can be shipped promptly.
Depending on the package weight, Poore noted that your fastest, least-expensive delivery method might be having a private carrier take it part of the way, with USPS making the final delivery.
Shipping technologies and analytics
Technology has made it much easier to manage the shipping process. Businesses of all sizes can monitor shipments at every stage of the journey that allows customers to receive accurate and timely updates. But the increased awareness isn’t only valuable for the customer. It also ensures the business isn’t held liable for delays, errors or damage that occurs once a product has shipped.
Traditionally, if a customer reports an incorrect or damaged product, you had to take their word for it. Now, however, businesses can use video surveillance, real-time scanning and tracking, and other analytics tools across their entire supply chains.
Another crucial ability is providing tracking details for customers, as they want to know exactly where their purchases are, said Jarrett Streebin, CEO of shipping solutions provider EasyPost. He advised focusing on packing and shipping orders within 24 hours whenever possible and sending tracking numbers immediately.
Caporaso said retailers should evaluate their shipping strategy every six months to ensure that it's operating at peak efficiency and delivering the best possible value to customers at the lowest possible cost to your business. An ongoing program of data collection and analysis is an invaluable part of that effort, he said.
Ultimately, it is the customer’s expectations that should be at the center of every shipping decision you make, according to Caporaso. A carrier that saves you money in the short term but alienates your customer with poor service will eventually cost you customers, and money, in the long term.