As your e-commerce business expands, you must scale up every aspect of your supply chain, from manufacturing to pick and pack fulfillment to shipping orders to your customers. Order delivery is a critical element of your business, not only because it’s one of the biggest costs of fulfillment but also because it can make or break your relationship with your customers.Â
Shipping orders fast and accurately to customers across the U.S. and worldwide gets more complex the bigger your business grows.
Here are tips and what to bear in mind as you scale up your shipping game.
Set up accounts with multiple carriers
To get the cheapest shipping rates, set up business accounts with FedEx, UPS, and USPS. Small retailers may stick with a single carrier because consolidating their shipments qualifies them for a higher volume discount.
But, if you can, work with all three major U.S. carriers to provide your customers with optimal shipping options. Flexible carrier selection (choosing the best carrier for each package) can deliver your orders faster and save you money.
Pro tip: If you outsource your order fulfillment to a 3PL, ask if your fulfillment company offers shipping discounts. Fulfillment providers are high-volume shippers and may be able to negotiate more favorable rates than individual merchants. If you ship on the 3PL’s account, they may be able to offer cheaper shipping than you could get on your own.
Offer customers at least three shipping options
Part of upping your shipping game is offering your customers the shipping options they need. That could mean free shipping (more on that later), but you should also include pricier shipping options. In addition to standard shipping, give consumers a choice of at least two more expedited shipping options, such as two-day delivery or overnight shipping.
Pro tip: Fulfillment speed also affects delivery times because shoppers don’t care whether their order is in a warehouse or on a truck — they only know they haven’t gotten it yet. Your expedited options, especially overnight shipping, need to be accompanied by same-day fulfillment.
Make sure the packaging suits the products
You probably put a lot of thought into getting your product packaging ready for retail. The box you use to ship an order isn’t as exciting, but it’s just as crucial to delivering a delightful unboxing experience for your customers.
The first rule of packaging is that less is more. Use the smallest sized box that will fit each order, to reduce shipping and packaging costs. Excessive packaging can also be a turn-off to customers who are aware of the environmental impacts of packaging and also don’t want a big mess to dispose of.
However, a box that’s too flimsy can cost you in the long run. Use a thicker grade of corrugated cardboard to ship heavy or fragile products.
Pro tip: For delicate or high-value items, upgrade your infill to include molded cardboard or other sturdy materials to hold the product in place during shipping.
Use LTL freight for bulk or oversized item shipping
A big order could be a large item, such as a mattress or kayak, or a bulk B2B or wholesale order. Either way, the surcharges when you ship heavy and oversized products by FedEx or UPS can make shipping too expensive.
Less than truckload (LTL) freight shipping solves that problem. Freight shipping is no longer limited to businesses with a loading dock; many trucking companies can also deliver products to residential addresses.
Pro tip: If you do a lot of freight shipping, you might want to work with a freight forwarder to help you get the best rates and routes.
Reduce shipping costs and delivery times with strategic warehouse locations
One warehouse location may be all you can manage when your business is small. In fact, many e-commerce founders start by storing products in an office or garage and filling orders themselves. As you scale up your shipping, you must develop a fulfillment strategy to deliver orders quickly while keeping shipping costs low. Warehouse siting is part of that strategy.
To find the best strategic warehouse locations, use tools from UPS and FedEx to map out the shipping zones. Simply enter the zip code for each warehouse location to generate a map showing how many days it will take for packages to reach different parts of the U.S. When you add a second, third, or more warehouses in strategic locations, your combined warehouse presence can allow you to ship to all or most of your customers in two days or less.
The shipping zone maps reflect delivery times, not costs, but shipping zones are an approximation for shipping costs. The higher the zone, the more it will cost you to ship an order, so this warehouse strategy will also save on shipping.
Pro tip: An ideal fulfillment strategy uses the minimum number of warehouse locations to achieve maximum consumer coverage. The fewer warehouses you use, the easier it is to manage your inventory; shipping stock from many locations can significantly increase your inventory carrying costs. Look for a 3PL with warehouses that have broad reach rather than ones close to either coast so that you can optimize with fewer locations.
Pros and cons of free shipping
Free shipping is a terrific way to overcome resistance and encourage a shopper to make a purchase. And, if you’ve developed a fulfillment strategy that reduces your shipping costs, free shipping might be a cheaper enticement than a coupon code (depending on your product price points and weight).
However, free shipping can complicate your product pricing and eat into your profits. Before you offer it across the board, do a thorough analysis, including average or typical shipping costs, to ensure that you don’t damage your business.
Pro tip: Don’t be all or nothing with free shipping. Offering free shipping for orders over a certain amount is an excellent way to encourage shoppers to buy more. Or you can provide free shipping as a limited-time promotion periodically.
Leverage a 3PL to scale up your shipping game
A fulfillment company or 3PL is your best ally when you need to scale up your shipping game. You don’t have to be a big enterprise to work with a fulfillment company — 3PLs come in all types and sizes, and there is probably at least one that works with companies of your size and in your business niche.
As noted above, a 3PL can help you reduce shipping costs and shorten delivery times. Professional fulfillment from a top-notch company will also give you a better result, with fewer mis-packs and fewer returns. Plus, you outsource not just your logistics operations but many of the headaches, which frees your time to grow your business even more.
Pro tip: All 3PLs are not alike. Choose a fulfillment provider with experience shipping products similar to yours in size, weight, and special handling needs. For example, some warehouses specialize in shipping clothing items, and they’re prepared with equipment to package and protect garments, as well as process returns. A warehouse set up to handle stock like yours will have less inventory shrinkage due to damage and will know the best ways to ship your products.
This is a guest post from Jake Rheude, Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce
