Shipping and Fulfillment Strategies for Ecommerce Businesses: A Complete Guide 2022

Shipping can make a lot of difference to your brand’s e-commerce approach. The rise of e-commerce aided by the stringent lockdown during the pandemic has placed a greater focus on customer convenience and shipping. The ability to order online and receive the products on time has a significant impact on the shopping experience of buyers.

A desirable shipping option drives sales and creates return visitors to your e-commerce store. Who wouldn’t want customers to keep coming back to their store?

But e-commerce is more than just about free shipping and faster delivery of products to customers. It encompasses an entire order processing system known as the order fulfillment process. Let’s see what an order fulfillment process is and some affordable, fast, and manageable shipping strategies for e-commerce businesses.

What is e-commerce order fulfillment?

An e-commerce order fulfillment is the entire journey of the product from the retailer to the buyer. It also involves the returns and exchange process. In short, it is a comprehensive process of product delivery and the order gets fulfilled when the interaction between the business and the customer from the ordered product gets closed.

What are the steps in the order fulfillment process?

The order fulfillment process starts from the time a retailer gathers the product from the manufacturers or suppliers.

1. Receiving inventory

In this step, the businesses receive inventory from manufacturers or suppliers. They stock it either at their warehouse or local fulfillment centers.

2. Organizing stock

The retailer organizes the item with the help of SKUs (Stock Keeping Units) to quickly locate the item.

3. Picking up the ordered products

When a shopper places an order, it is tracked across existing inventories for pick and pack. Having an efficient inventory management system with a central database helps to effectively trace and pick the items.

4. Product packaging

In product packaging, you pick the right box type and size and pack the items inside it with packaging materials to ensure safe delivery.

5. Shipping

The packaged product is collected from the fulfillment center and shipped to the destination. For merchant shipping, your customers choose what type of shipping they want based on what they are ready to pay.

6. Exchange/return

This is also a part of the order fulfillment process. When a customer makes an exchange/return request, the processing starts immediately to pick up the product and return it back to the retailer.

What are the types of order fulfillment?

Basically, there are three types of order fulfillment methods. Let’s see what these types are here.

1. Third-party fulfillment

In simple terms, third-party fulfillment or third-party logistics (3PL) is when retailers outsource the order fulfillment process. The 3PL service providers manage everything from receiving and stocking inventory from merchants to delivering the orders to customers.

When should you go for 3PL?

2. Merchant fulfillment

Also known as self-fulfillment or in-house fulfillment, it refers to handling order fulfillment on your own without involving any third party. It is best for small-scale businesses where the daily orders are less.

When should you go for merchant fulfillment?

3.Drop-Shipping

Dropshipping is not to be confused with 3PL. Here, the retailer receives the order and forwards it to the manufacturer who then handles the delivery logistics. You can say the retailer remains in the front and keeps a profit while the manufacturer fulfills the order.

When should you go for dropshipping?

Why is order fulfillment beneficial to your e-commerce business?

An efficient order fulfillment leads to an excellent customer experience. It, in turn, builds brand loyalty.

Some of the benefits of order fulfillment are-

Businesses need to put efforts to speed up the order fulfillment process. It decreases the cart abandonment rate and triggers a positive shopping experience.

After all, when you do business, you have one goal in mind. No, we aren’t talking about sales, but a happy customer!

Now that we have taken you through a quick tour of order fulfillment, it’s time to know more about shipping strategies for e-commerce businesses.

What is e-commerce shipping?

E-commerce shipping is the way in which the ordered products are delivered from the retailer to the delivery location as specified by the shopper.

It is one of the most essential components of the e-commerce fulfillment supply chain and is integral to it. Without a proper shipping process in place, the entire order fulfillment system fails. As a business owner, it is your responsibility to ensure the timely and efficient delivery of products to the end customers.

Why should you care about e-commerce shipping?

The shipping price and speed are two of the top influential factors driving shopping decisions. The current statistics put the cart abandonment rate at 70% across the web. This means that of the 100 potential customers, 70 of them leave without completing the transaction. High shipping cost is the number one reason why 44% of shoppers leave the site without buying. Similarly, 6% of the shoppers abandon their carts for slow shipping.

Now, if you combine these two factors, it clearly shows that you lose 50% of your potential customers if your shipping strategies are not aligned with the needs of your shoppers. Imagine the frustration of knowing that your customer has not completed the transaction. Oops, that hurts!

The cart abandonment statistics speak for themselves. If you’re dropshipping or have outsourced the shipping to some 3PL services, you needn’t have to worry. But if you’re storing, managing, and shipping products to your customers, you’ll have to devise strategies to gain a positive customer experience.

What are the shipping strategies to keep customers happy?

Shipping strategies aren’t just about the options you’ll offer to your customers. It is more complex and involves the size and type of products you sell, the regions you’ll deliver, the delivery options, and the shipping speeds you choose to offer.

So, where do you start? How do you decide on the shipping strategies to boost conversion rates? Worry not, we’ll guide you!

First, there’s no one-size-fits-all shipping strategy. In fact, even for your business, it’ll keep changing as your business grows or the needs change.

1. Shipping variables

The start of a good strategy is to understand the shipping variables. Some of them include but are not limited to-

Collect information on these shipping variables and understand how they affect your shipping strategy. Of course, the size and weight will vary as per the customer’s orders. Also, the destination will vary depending on where your customers are. At first, everything will seem hazy and out-of-track. As you keep gathering information, you’ll get a grip on all your shipping variables.

2. Shipping rates

This is the amount your charge customers for shipping products to them. This appears on the cart and checkout page.

a. Free shipping

Some e-commerce businesses offer free shipping irrespective of the order value. Who wouldn’t love it if they are offered free shipping?

Some put a conditional clause to free shipping. The conditions can vary such as-

Cart abandonment is high on price points like $100, $250, $400, and $500. These are psychological triggers. Give free shipping on these trigger points. It’s proven that free shipping on minimum orders increases cart value by 30%.

Even though you make the customer believe that you’re offering free shipping, the fact is that you have to find ways to discreetly pass the shipping cost to the customer. It may be in the form of increased product price or negotiating with the shipping carrier for discounts.

b. Real-time carrier rate

When you try hard but cannot offer free shipping, you can be forthright to customers about the shipping costs by displaying real-time carrier rates at checkout. The benefit is customers get to know the costs upfront with no unexpected additional costs. It allows you to charge the exact amount from customers. Many e-commerce building platforms allow you to pull out the shipping rates directly from the carriers, calculate the costs automatically and display them to the customer at checkout.

c. Flat rate

Charging a fixed shipping rate works great when you have products of similar sizes and weights. But if you’re selling a wide variety of products, charging a flat rate will either undercharge or overcharge your customers.

d. Mixed rate

You can mix the shipping rates and allow customers to pick up the best for them. So, you display the rates and estimated delivery dates for same-day delivery, overnight shipping, express shipping, or standard. The customer chooses what is best for them based on the date and rate.

e. Table rate

The table rate is the custom shipping rates you calculate for your business model and needs. For instance, WooCommerce has a plugin to personalize the shipping rate based on multiple factors such as product weight, quantity, cart value, shipping zones, and product category. The store owner sets the rules and the plugin automatically calculates and displays the shipping rate at checkout.

3. Delivery method

It is a known fact that fast and affordable shipping can help reduce shopping cart abandonment and increase conversions. Given a choice, e-commerce retailers would want the products to reach customers on the same day. But that’s not always a possibility Here are some of the delivery methods employed by e-commerce businesses.

a. Time Slot Delivery

Here, the customers get to select the date and time they want to pick up their order or have it delivered to their location. Many shipping carriers also offer an option to change the time slot a day before the parcel delivery date.

b. Curbside/ Store/ Collection point pickup

It allows customers to pick up their online orders in person. It’s a great option for businesses that have a physical store and staff available to handle the pickup counter. It’s also great for customers wanting to reduce their shipping costs.

c. Local delivery

Local deliveries are good for delivery locations within a set radius. It is cost-effective if you have a delivery vehicle for call-in or in-person orders. It works well if you restrict it based on a minimum order limit or to certain products only.

d. Same-day delivery

Definitely, not every e-commerce business is Amazon! 61% of the shoppers are ready to pay extra if e-commerce businesses can ship the products to them on the same day. Easier said than done because the biggest challenge is depending on a reliable carrier. Even if the businesses are ready to ship the parcel, the carrier must be efficient enough to deliver it the same day to the customer. Not that it is not possible. To make it happen, you have to streamline your processes, manage inventory, and have excellent coordination with the shipping partners.

e. Overnight shipping

In this delivery method, the products are shipped immediately to ensure that they reach the customers the very next business day. Big shopping giants like Amazon and AliExpress have mastered it. You aren’t on the same boat but you can manage it as many courier services offer overnight delivery services. Cost is the only prohibiting factor.

f. 2-day shipping

Again, the 2-day shipping works for established e-commerce giants who have orders in bulk volumes. For small businesses, it is nearly impossible to deliver products within two days to faraway destinations without having to shell insane amounts of money.

g. Express shipping

It refers to faster shipping than the standard process. The delivery days depend on the destination and the shipping carriers. If slow shipping is indeed the reason for cart abandonment, you can try this on an experimental basis to see if there is any improvement in customer satisfaction.

h. International shipping

International shipping can be expensive and a steep learning curve for e-commerce businesses. Every business wants to expand globally and e-commerce provides the perfect platform to do so. Regulations, tariffs, and taxes differ between nations. It’s important to find the right shipping partners who can help you with all the regulatory work in international shipping.

An important point to be considered while displaying shipping methods on your online store:

Try not to display the shipping speed such as 1 day or 2 days during checkout. The user here gets confused about how to accurately determine delivery dates.

The users may end up getting disappointed if they pay for next-day arrival only to learn that the product will arrive 3 days late due to holidays or slow processing times.

Instead, display the delivery date at the time of checkout.

Here, the display is clear with the shipping rates and the delivery dates. When your store states that the parcel will “Arrives by Aug 19”, it is taken as a promise and increases customer satisfaction. But don’t forget to add some extra order processing time while displaying the date lest the customer is disappointed by your broken promise. And if the parcel delivery is before time, you can always proudly email them that their parcel will arrive early before the estimated date.

4. Shipping solutions

To build your e-commerce shipping strategy, you’ve to be familiar with the shipping carriers and the services they offer. There are a large number of shipping solutions at your disposal. Some of the popular shipping carriers include USPS, FedEx, DHL, and UPS. Other than this, there are numerous country-specific shipping partners for domestic shipping.

To make your task simple, we have already studied some of the popular shipping carriers across different countries and their rates.

The shipping carriers play a significant role in your business success. Their handling and delivery of products are also crucial for enhanced customer satisfaction. Many e-commerce businesses now prefer third-party shipping solutions. These integrate the best shipping carriers at discounted rates and offer advanced shipping tools for easy management.

With e-commerce revenue said to reach $1.4 trillion by 2025, the onus is on you to select a shipping solution efficient in product delivery through innovation and automation.

5. Product Packaging

As much as the product size, the proper packaging of items helps to minimize shipping costs. A well-thought product packaging has two benefits you get from the customer, one is it helps deliver the parcel safely without getting damaged improving customer experiences and second is it helps create brand value.

The standard packaging options include boxes, packets, and envelopes. The packaging should be user-friendly and sturdy enough to prevent product damage. Make your brand logo and name visible on the package as it helps to improve brand value.

With the unboxing experience becoming the new trend, the design and quality of packaging are just as important as the product itself.

E-commerce companies can switch to sustainable packaging and there are means to achieve it.

Eco-friendly packaging helps you cut down your carbon footprint. Also, customers prefer to buy products from brands that focus on sustainable packaging and shipping.

6. Shipping software

A shipping tool helps you to put the customer at the center of your sales process. It streamlines sales, shipments, and deliveries. It is also a great help to customers who can complete their checkout in a few clicks.

a. Integrations

The shipping tool allows you to integrate orders from anywhere you sell. Many, in addition, also allow you to upload orders from your offline physical store. This is known as Point-Of-Sales (POS) system.

b. Rate calculation

Shipping rates aren’t easy to calculate. You don’t want to get into the mess!

An efficient shipping tool calculates the sales taxes and customs fees based on delivery location and displays the final rate to the customer.

c. Order management

You can easily manage your online orders. It gives you the flexibility to sort addresses, combine orders going to the same addresses, or drop ship from a single system.

d. Delivery options

Specific shipping carriers allow customers to place an order and collect them at collection points or order online and collect them at the physical store. The rates, the delivery date, and the address in the case of a collection point are all displayed.

e. Discounted rates

It provides discounts for e-commerce businesses based on the average volume of products they parcel. You can pass on this discount benefit to your customers.

f. Compare rates

Some third-party shipping tools integrate all major carriers so that you can browse rates and services across carriers before you decide.

g. Returns management

It provides you with the ability to generate return labels and provide them to customers.

h. Tracking & customer communication

A good shipping tool offers real-time tracking. The shipment confirmation message is sent to customers to reduce inbound queries.

i. Automation

A really good shipping tool automates repetitive tasks and decisions. All you have to do is review it and confirm.

j. Pickup, packing, and shipping labels

A shipping tool gives you the flexibility to print shipping labels to ensure error-free order fulfillment. It also allows you to select the appropriate packaging box. You can book parcel pick up or drop it at their designated collection centers.

k. Reporting

Shipping tools provide business owners with captured data across customers, location, products, and carriers to analyze and optimize results for good business decisions.

l. International

A shipping solution offers pre-populated Customs forms to remove hassles associated with overseas shipping.

Automating your shipping process improves your business and allows you to dedicate more time to your customers.

Note: After the parcel delivery, don’t forget to send a review form to the customer to know how satisfied they are with the shipping experience.

7. Shipping & return policy

The shipping policy on your website is a living document answering queries regarding customer order shipping and returns.

Your shipping and return policy should be transparent and clearly convey the terms to the customers on the online store. Create a FAQ on the shipping policy page answering about how to manage returns, lost items, or damaged goods. You don’t want your customers confused on returns, exchanges, or refunds.

It has to be a clear and concise presentation with easy-to-read information on order processing times, shipping costs, delivery pickup, international shipping, refunds, exchanges, order edits, and potential service interruptions.

Conclusion

E-commerce has its own set of challenges. But with the right mix of planning and strategies, you can find plenty of ways to shine. Shipping and order fulfillment are the major aspects to consider to make your customers happy. Plan things out, your business will see an uptrend.

The bottom line is that you need efficient shipping strategies to run a successful online business. Create one and constantly work on it. There is no turnaround. But once you get a grip on it, the seemingly complicated will get simple and you’ll be able to provide great shipping (err... shopping) experience to your customers.