The basics of eCommerce shipping: benefits, factors and management
This post was last updated on January 6, 2023.
After all the effort that goes into building a brand, promoting a product line, and running a business, it hardly seems fair to have to grapple with the complexities of eCommerce shipping. Nationwide freight networks? Last-mile delivery service? Really?
But eCommerce shipping is, quite literally, the fulfillment of the promise small business owners make to their customers with every order. It’s as important as the goods you stock, the logo you design, and the prices you set. As the core function of eCommerce logistics, shipping is central to the success of your online store.
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Why eCommerce shipping should be a top priority
Ecommerce shipping may come at the end of a transaction, but it can also be the start of an enduring customer relationship. A good experience can inspire future repeat business.
Meanwhile, shipping issues can lead to complaints and lost business. A survey from FarEye found that nearly four in 10 consumers said they wouldn’t give a retailer a second chance after a poor eCommerce shipping experience.
Therefore, shipping shouldn’t be an afterthought. Shipping has impacts across your business, including:
Product design - The size and shape of your products and their packaging will determine how easy they are to ship, so considering delivery options early in the product development process can save you from headaches down the road.
Customer service - “Where is my order,” or WISMO, inquiries account for up to half of all customer service calls, according to Tecsys. Sound shipping strategies can reduce the burden of supporting post-order logistics.
Marketing - Shipping promotions (“free shipping”) can incentivize sales, but you need to understand your costs to ensure that you don’t erode margins in the process.
On-site experience - Shoppers expect to access accurate and location-relevant shipping information easily throughout your online store, so you’ll need to make sure to download the appropriate apps and customize your settings to reflect your shipping policies. Wix merchants can access a range of shipping options that integrate seamlessly with their selling tools.
Fulfillment logistics - The number and type of shipping services you offer affects the complexity of your back-end order management and eCommerce warehousing operations.
Great expectations: with eCommerce shipping, consumers want it all
When it comes to figuring out the best way to handle shipping for your business, there are multiple factors you’ll want to keep in mind. These include:
Speed vs. cost
These days, most shoppers expect shipping on online orders should be both fast and free—due in large part to eCommerce powerhouses like Amazon.
When asked to choose whether shipping speed or price is more important, Wix and Shippo found that 89% of consumers prioritize free or low-cost services, whereas only 11% prioritize quick delivery. At the same time, shoppers expect even standard delivery to arrive quickly. Deloitte found that 58% of consumers wouldn’t pay extra to receive orders within two days.
Porch piracy has grown nearly 24% year-over-year, according to Safewise, with a total of 260 million packages stolen after delivery in the past year.
Carriers and retailers are combating this trend with up-to-the-minute notifications once items are delivered, and taking steps to give shoppers even more transparency and control. UPS found that 74% of consumers want the ability to track packages in real time, while 72% want to be able to schedule a delivery window.
One in 10 consumers say that the carbon footprint of their delivery is a top purchase consideration, according to a ShipStation survey. As interest in sustainable eCommerce grows, the ability to offer low-impact shipping options can differentiate your brand.
How to create an eCommerce shipping program
Given the high expectations surrounding eCommerce fulfillment, structuring and pricing your shipping options is a crucial strategic decision. To create the right offering for your audience, follow the below steps.
01. Dial in the right speeds
While consumers generally expect shipments to arrive quickly, there’s no need to default to overnight service. Explore a range of options to understand how you can best streamline your operations. Methods to consider include:
Media mail and other slow services - Media mail for select products can offer substantial savings, but consumers may find mail service too slow unless they receive a tradeoff benefit, such as bargain-basement pricing or free delivery.
Ground shipping - Once considered the default delivery option, ground shipping can take as long as five business days. This option is generally less expensive, but may try customers’ patience.
Two-day shipping - The “golden standard” of shipping on many major marketplaces, this expedited option ensures that customers receive goods no more than two days after purchase.
Overnight shipping - To reliably achieve next-day delivery capabilities, you may need multiple distribution hubs so that your goods start their shipping journey close enough to customers to arrive on time.
Same-day delivery - In the post-pandemic era, 34% of consumers now place same-day orders, according to PYMNTS.com. However, same-day shipping is still a costly logistical challenge.
Costs aren’t the only factor that you’ll want to consider when weighing different delivery speeds. Your customers’ demographics and preferences should also play a role. To understand what shipping services your buyers need, consider:
Stated preferences - Use surveys, emails, and other forms of communication to ask your customers for feedback on their preferred shipping method, speed, and price.
Product type - You customers’ expectations likely vary depending on what you sell. For example, McKinsey found that customers expect same-day delivery for groceries, but are willing to wait up to two days for electronics. Similarly, customers may be willing to wait longer and pay more for items like furniture, which require custom design or in-person setup services.
Location - Speedier delivery options tend to be more prevalent—and economically feasible—in dense urban areas.
Brand identity - If your brand is associated with bargain-basement pricing, then low-cost shipping will be important. On the contrary, if your audience values eco-friendly practices above all, then shipping fees may be less important than transparency about your carbon footprint.
02. Select shipping service providers
Once upon a time, retailers had few options outside the postal service for shipping their wares beyond. But now, a wide variety of services exist to help you achieve the agility you need. Among them:
Traditional freight carriers - The “big three”—FedEx, UPS, and the USPS—are still dominant, accounting for 75% of all package volume in the U.S. While they offer an extensive delivery network, their rates may be high, as their pricing favors mass volume. You’re also competing for service with major retailers, who may take priority during crunch periods like the holiday season. As alternatives, consider DHL and smaller regional carriers.
Dropshipping - Manufacturers who offer dropshipping services can help to streamline your shipping operations. Simply route orders to your dropship supplier, who is responsible for delivering your product directly to customers. By eliminating an intermediary step, dropshipping can help to speed up your delivery times—although you lose control and visibility over the process.
Third party logistics (3PL) - 3PL providers handle warehousing and order fulfillment for you. But unlike with dropshipping, you’re still responsible for sourcing and sending inventory (see our guide on inventory management) to their warehouses. 3PLs are a good option if you have difficulty managing costs and shipping expectations on your own, or experience other signs that it’s time to outsource fulfillment.
Marketplace programs - Sites like Etsy offer discounted carrier rates, while Walmart and Amazon (among others) provide in-house fulfillment services. Amazon even offers Multi-Channel Fulfillment (MCF), providing delivery (as fast as one day) for non-Amazon orders. These services can be attractive if your customers prioritize speedy delivery and actively shop on marketplaces. On the other hand, shipping through marketplaces means putting yourself at the mercy of the platform. Not only can marketplaces change their pricing and policies on short notice, but you’ll need to abide by rules concerning proper packaging, warehouse limits, and more.
Your own stores - In-store or curbside pickup for online orders can be fast and free without incurring high carrier costs. And thanks to the pandemic, more than half of U.S. consumers have now tried these services, according to ShipStation. Seventy-one percent expect store pickup to be a permanent option, while 62% want ongoing curbside service.
Stores can additionally help speed up deliveries to customers’ doorsteps. Shipping orders directly from the closest available store shortens the delivery distance, potentially saving you time as well as carrier fees. Local courier services can operate out of stores to provide same-day service.
03. Calculate your shipping costs
Fully accounting for the potential costs of eCommerce shipping can guide your decision-making. Research options thoroughly to ensure that you aren’t leaving out hidden fees or indirect expenses. Consider:
Carrier fees - The fees charged by carriers are typically based on the size and weight of each package. Collect exact dimensions and weights of your products, even if you’re planning to use flat-rate packaging options; this information is crucial to forecasting your shipment costs. Carefully track cost estimates for the biggest and heaviest items you offer, but also solve for small and light products to avoid costly outsized packaging. Your shipping policy comes into play here, too. If you plan to group individual small items into a single shipment, you’ll have fewer packages to account for.
Packaging - Ecommerce packaging not only protects products during the shipping process; it can be a branding and marketing tool as well. Research packaging for differently-sized products, including the outer box and any packing material (such as protective foam, bubble wrap, or other filler; marketing inserts; instructions or manuals; and packing lists). Use packaging prototypes to run simulations and calculate the time needed to assemble a shipment. That way, you can accurately estimate warehouse staffing costs and compare them with outsourced shipping options.
Customer service - Using a reliable carrier with higher upfront fees may be worth it if it translates to fewer hours spent chasing down missing packages or compensating for items that arrived damaged.
04. Decide how to charge for shipping
With comprehensive research and forecasting complete, you can confidently set customer shipping rates. Consider these options:
Free shipping - The holy grail of shipping may not be practical for every product or every delivery speed. But due to its popularity, you’ll likely want to figure out how to offer free shipping in some form. Consider limiting free-shipping offers to loyal customers, specific time periods, customers in regions where you can leverage delivery from stores, or orders above a certain price threshold. Whatever you choose, remember there’s no such thing as a free lunch—or free shipping—so be sure to recoup your costs by other means. You could potentially offset the cost by baking it into the base price of your product. Or, you could build it into the price of express shipping or wraparound services, such as installation or tech support.
Flat-rate shipping - Charging a flat dollar amount helps shoppers can simplify things for both you and your customer. Use your earlier research to determine the right price to cover anticipated costs, and consider building flat-rate tiers. For example, you could charge $10 for orders of $50 or less, $5 for orders of more than $50, and so on. Don’t make the calculation too complicated, though, or you’ll undermine the appeal of the offer.
Table rate shipping - You can set up a matrix (or “table”) that takes into account the delivery location, number of items in a shipment, and the size and weight of items in the cart. When customers add items to the cart and begin checkout, your eCommerce site code can reference the table to dynamically display the correct shipping options and fees. (Wix merchants can easily set up variable shipping rates via their Wix dashboard, or use partner shipping apps to set and manage rates.)
eCommerce shipping FAQs
Q. I’ve run the numbers, and I’m discouraged. I just can’t compete with the big retailers on shipping price and speed. What can I do?
Our best advice? Be transparent. Following the pandemic, more and more consumers are becoming aware of (and sympathetic towards) the unique challenges that local and small merchants face. Moreover, 78% of consumers say they’ve intentionally chosen to “shop small” since the start of the pandemic, according to ShipStation.
In addition to this, you’ll want to take steps in providing the best shipping experience possible. Send automatic order updates, and make yourself available for answering any order-related questions. UPS found that four in five shoppers believe free and fast shipping is less important than certain benefits, like guaranteed safe delivery, superior customer support, and delivery scheduling capabilities.
Q. How can I most effectively add regional carriers to my shipping options?
Regional carriers can be a great option, as they can ship quicker and less expensively than the “big three” within their geographic zone.
To get started, map your existing customer base and identify regional hot spots, then research carriers that serve that particular area. You can ask others within your industry for recommendations and read trade publications, such as FreightWaves and Supply Chain Dive, to come up with more potential leads. Once you’ve identified candidates, do your research, ask for references, and check the Better Business Bureau for any track record of complaints. Consider a limited-time contract to test logistics, and, of course, iron out any glitches before working together during a peak season.
Build loyalty, one package at a time
Ecommerce shipping is complex, but with research and careful planning, you can land on the shipping options that make the most sense for your business. By prioritizing transparency and reliability, you can additionally set appropriate expectations and earn the trust of your customers.
Allison Lee Editor, Wix for eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.