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How to create a shipping strategy that is profitable and as unique as your online business

Versha Kamwal
September 3, 2021
6
mins read

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Today’s world of ecommerce is all about convenience—convenience of speed and affordability. This being said, online shoppers care deeply about delivery cost and shipping speed.

Shipping is customers’ pet peeve and one of the most significant reasons for cart abandonment. It wouldn’t be quite wrong to state that ecommerce shipping can be the difference between success and failure for ecommerce sellers—it matters a lot to online customers!

Thus, shipping is an essential part of the ecommerce order fulfilment. But the challenge is customers want free and fast shipping, but for an ecommerce business, shipping is costly and time-consuming. Here a shipping strategy can help you to find a balance between cost of shipping and your customer experience.

In this blog, you’ll learn what is ecommerce shipping, what is an ecommerce shipping strategy, and how to create an effective shipping strategy for your ecommerce business.

What is ecommerce shipping?

Ecommerce shipping refers to all the services that are required for transporting customer orders from a storage facility used by the ecommerce seller (warehouse or a fulfilment centre) to the customer's delivery destination.

With the right partner, ecommerce shipping can be efficient, affordable, and fast which can help you to:

  • Meet customer expectations
  • Choose the best courier service
  • Discover cost-effective ways for shipping
  • Achieve lightning-fast shipping
  • Cover the cost of providing free shipping

What is an ecommerce shipping strategy?

A shipping strategy creates a vision and sets the direction for achieving certain shipping goals of ecommerce businesses while enabling them to track progress toward those goals. An ecommerce shipping strategy has a wider scope apart from providing free shipping and fast delivery— though these can be integral parts of the strategy. Thus, you can offer a combination of fast and affordable shipping methods that can help you reduce shopping cart abandonment, increase conversions, and delight your customers.

However, one shipping strategy does not suit all businesses, you need a strategy that works well for your unique business—depending on your audience, budget, margins, product, and a variety of other factors.

Now, let’s see what all you should consider while creating a shipping strategy for your online business.

How to create a shipping strategy for your ecommerce business?

Here are the things you consider while creating a shipping strategy that best suits your online store:

1. Customer expectations

  • 86% of the shoppers abandon their carts due to the cost of shipping
  • 74% of shoppers find free shipping very important while checking out
  • 93% of shoppers are motivated to buy more products if free shipping options are available and 58% of shoppers add more items to their cart to make themselves eligible for free shipping
  • 60% of customers chose a competitor that has more convenient delivery options.

The above statistics briefly reflect the importance of offering fast and free shipping to your customers. This means you must evaluate your customers’ expectations creating a shipping strategy— as it’s important to offer shipping options that appeal to your customers. For meeting your customers' expectations, there are 10 ways to offer free shipping to your customers while covering its cost.

However, if you’re still doubtful, you can always test it through a limited-time free shipping promotion and monitor the response. If you’re able to cover the cost of shipping, you can adopt this short-term strategy as your long-term shipping policy.

Forever New offers free delivery on all orders
Forever New offers free delivery on all orders

2. Customer locations

When you’re selling online, your customers can be located across India. If you have one warehouse, offering fast shipping across India will be very costly. However, if you have multiple warehouses spread across India covering all the zones, i.e. North, East, West and South—you can save on shipping costs while providing express shipping.

Let’s take a few examples based on shipping zones,

  • Your customer location is Pune and your nearest warehouse is also located in Mumbai. This means, you can take advantage of local shipping while reducing shipping cost and transit time—express order delivery.
  • Your customer location is Tamil Nadu and your nearest warehouse is located in Bangalore. This means, you can take advantage of zonal shipping while reducing shipping cost and transit time—fast order delivery.
  • Your customer location is Assam and your nearest warehouse is located in Haryana. This means, you have to assign national shipping that will not only increase your shipping cost but also increase transit time—slow order delivery.

Eshopbox's network of fulfilment centres spread across India
Eshopbox's network of fulfilment centres spread across India

3. Shipment weight and measurements

All major shipping carriers use a pricing technique to calculate shipping costs, i.e. volumetric weight. It takes into account the size of a package to determine the shipping cost. Thus, you need to weigh and measure your products in order to get a brief idea of the shipping cost. Most of the shipping carriers (like Delhivery, Bluedart, Ecomexpress) calculate shipping charges based on the dead weight of the package or its volumetric weight, whichever is greater.

This means, the faster the delivery and the larger the item, the more you have to pay for shipping.

Packages of different sizes
Packages of different sizes

4. Courier rates

Courier companies require the following to give you a correct estimate for shipping rates:

  • Shipment weight
  • Package dimensions
  • Origin and destination details
  • Shipping preference (e.g. standard mode or express mode)

Now that you have analysed where your products are headed, their size and weight, and the desired delivery speed. This is all you need to get shipping quotes from multiple courier companies. You can visit or get online quotes from multiple courier companies and compare their quotes–the goal is to choose the best service at a reasonable price.

This means, you pay more or less for a shipment depending on where it’s going, how much it weighs, and how fast you want to deliver your orders. The only exception to this is flat rate services. Courier companies charge a standard fee for any package—whether small or big.

5. Returns shipping

Just like shipping, the cost of your return shipping depends on the package weight, dimensions, and distance of return delivery. If your products are low-weight and your customers are located nearby, you can most likely afford to absorb the cost of free returns. However, if your products are heavier and your customers are located far away, reverse shipping will cost you more.

So, you need to consider the costs of returns per item in your inventory to create a shipping and returns policy that doesn’t leave a hole in your pocket—however, you can still manage your returns in the right way that ensures profitability!

6. Shipping and handling costs

Shipping costs refer to the cost of getting an order to the customer’s location. Whereas, handling fees cover everything else, including picking, packing, generating a shipping label, loading the orders onto a truck, and any other operations, and the cost of manpower associated with these operations.

The cost of shipping and handling will increase or decrease based on various factors, such as:

  • If you’re using branded packaging, your cost would increase unlike standard packaging
  • If you have fragile products that need to be processed by using secure packaging like bubble wrap, you costs will again shoot up
  • If you’re using eco-friendly packaging materials, cost of acquiring sustainable packaging will increase
  • If you're offering products kits and combos, handling costs will increase

Pahadi Local's branded packaging
Pahadi Local's branded packaging

7. Automation in the shipping process

Powerful technology and intelligent automation can speed up order processing and the entire shipping process—enabling you to provide fast shipping speed. A streamlined pick and pack process that follows SOPs (Standard Operations Procedures), ensures that your orders are ready to be shipped on time—when you’re selling on multiple marketplaces (Amazon, Flipkart, and more) while meeting their stringent fulfilment guidelines.

Additionally, if you have scalable storage and manpower, you can also effectively manage variability in sales—whether low order volume or high order volume due to seasonality or flash sales. This means, if you have access to such infrastructure, you can easily promise your customers lightning-fast shipping speed while ensuring incredible order accuracy.

Plus, you can also provide them with real-time order tracking and order updates via email and SMS. This will help you to enhance the customer experience by giving your customers complete visibility of their orders.

Real-time order tracking
Real-time order tracking

8. Shipping insurance

There are certain shipping exceptions (such as lost shipment or damaged shipment) that tend to occur and you can minimise their impact with shipping insurance. It is the coverage for customer orders shipped via a courier company to recover any losses if the order is lost or damaged in transit.

Customer orders can get damaged in transit due to inappropriate handling that can be the fault of the courier company. In such scenarios, the courier company bears responsibility for any losses. Additionally, if you regularly ship high-value items or fragile products, you may want to consider using a third-party insurance provider that will cover the loss.This means, you must consider the cost of insurance while creating a shipping strategy for your ecommerce business.

Bottom line

Sending customer orders from point A to point B shouldn’t be that difficult. However, when it comes to ecommerce shipping, transportation is not the only factor. With the number of variables involved in shipping, you need to defy shipping exceptions and deliver the best possible experience to customers while maintaining profitability and efficiency for your business. For this, you need to start from scratch and create a shipping strategy that optimises your capabilities, keeps a check on your costs, and leaves an unforgettable impression on your customers.

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