Ship Orders Like a Pro: How to Create an Ecommerce Shipping Strategy

Written by
Rebecca Smith

Oct 29, 2018

Oct 29, 2018 • by Rebecca Smith

For many consumers, shipping is the difference between making a sale or ditching a cart. Three-quarters of shoppers want to see businesses ship orders the same day they pay for it.

They don't just want it fast. They want strategic options.

PayPal studied shopping charts and found that 43 percent of shoppers abandon their carts when shipping charges are above their expectations.

So how do you marry customers who will pay to get it fast with customers who flee at the sight of shipping and handling charges? You do it with integrated ecommerce shipping solutions that appeal to your core demographics.

Why Simple Shipping Solutions Lose Customers

What is your current shipping strategy? How did you come up with it?

If you're like many businesses, you decided to offer a single shipping option and rolled with it. After all, customers buy your products--not your shipping services.

Unfortunately, that's not true.

Customers buy your products in part because they fit a moment--and if your shipping strategy costs them money or extends past the moment, then your product might not be right for them after all.

Slapping together a shipping solution isn't the answer. You need a shipping strategy tailored to your customers, their needs, and your business. We'll show you how to set one up in the next section.

How to Use an Ecommerce Shipping Strategy

Your shipping strategy is a way to appeal to customers while differentiating yourself from your competition.

Want proof? Look no further than our greatest e-commerce foe: Amazon. Amazon offers multiple shipping options ranging from free shipping to next day delivery. Its Prime delivery system revolutionized ecommerce by sending out packages same or next-day with little to no cost.

Four Steps to Changing the Way Your Ship Orders

Set a shipping strategy by following these four easy steps:

  1. Assemble your multi-stakeholder team
  2. Set KPIs
  3. Choose from four strategy options
  4. Implement and repeat

How to Build a Multi-Stakeholder Strategy Team

Setting your shipping strategy isn't as simple as choosing an option and running with it because the strategy you select impacts four core components of your business:

  • Fulfillment
  • Customer service
  • Web development
  • Marketing

If you offer a shipping option, these four stakeholders need to be able to match it. Getting them on board will answer all the essential questions including:

  • How will you message shipping to customers?
  • What options appeal most to customers?
  • Is it possible to A/B test shipping options?
  • Do you need a landing page and how quickly can you put it together?
  • Does fulfillment know how to work with each option?
  • Do you have the operational process in place?
  • Will adding options slow shipping?
  • What happens if customers report poor shipping experiences?

These are questions that only a multi-stakeholder team can fully offer. Your team will work together to not only develop your initial strategy but to successfully iterate it and find what works best for your customers.

KPIs to Measure Your Success

If you're not assessing how well your strategy works, then you're guessing.

Together with your team, choose the KPIs that mean the most to your business.

Start by using current analytics for your shopping carts. When do customers abandon their carts? What is current customer feedback on shipping practices?

Then go out and gather more data. Ask existing customers what they like most about your shipping and what they'd like to see in the future.

From there, you'll see one or more common KPIs appear:

  • Expand your audience
  • Decrease cart abandonment
  • Improve the average value of each order
  • Increase operational efficiency

With the right KPIs in place, you have something to measure how well your initial and subsequent strategies work. They'll also point you in the direction of the best-targeted strategy in the first place

Shipping Strategies

Before choosing your shipping strategy, you need to go through some additional analysis based on your current sales:

  • What is your average package size?
  • What is your average package weight
  • Where is your warehouse or product origin country?
  • What is your destination country or region?

Each of these questions directly informs your margins with your chosen shipping strategy. Generally speaking, you want to avoid overcharging customers while also ensuring you don't lose on shipping.

Striking this balance requires a lot of math. You'd be shocked at how much it costs to transfer a product from a warehouse directly into a customer's home. Many ecommerce businesses find that $1 here or $3 there seems small at the outset, but it adds up and hurts both you and the customer.

Shopify created a useful chart for calculating the cost of shipping and handling for a product. They recommend including the following figures in your calculation to find the total price:

  • Cost of product
  • Packaging
  • Shipping
  • Customs/Duties
  • Credit card/merchant fee
  • Profit margins

From here, you'll know exactly how much you can afford to spend on shipping.

In an ideal world, you can offer free and one-day shipping options because these are now common customer expectations.

Alternatively, conditional free shipping, flat rate shipping, and free shipping from return customers are excellent options.

How much will your shipping cost? Use calculators from the USPS, UPS, and FedEx to get started.

Implement, Measure, and Reset

Congratulations on choosing a better way to reach your customers! With your new strategy in hand, it's time to implement and measure your strategy.

Take your baseline KPIs (like cart abandonment, average order value, etc.) and measure how the new shipping strategy changes your sales.

Give it three months, and get the band back together to reset your shipping strategy based on the numbers. Remember, saving customers time and money will help your sales explode.

Avoid These Three Shipping Mistakes

Retailers make some fatal mistakes when it comes to shipping that makes customers abandon their carts even when you offer options they want.

Avoid these three mistakes when you implement any new shipping strategy.

Don't Force Them to Log In for Shipping

Make shipping and handling costs transparent and never force a log-in to show shipping costs.

Don't Pad Profit Margins on Shipping and Handling

Are your profit margins low? Don't pad them with shipping or handling costs. Customers see right through businesses attempting to inflate their profit margins, and they abandon those transactions.

If your shipping costs so much that it eats into your profit, then there are ways to alter your strategy to improve the cost without tacking on a fee. Additionally, you can use your approach to increase your average sale, which also helps pad your bottom line.

Don't Underestimate the Value of Customer Service

Whether you offer next-day or next-hour delivery, don't neglect your customer service obligations.

Keep customer service in the loop with all shipping and handling issues occurring in fulfillment so that everyone's aware of where packages are and what customer complaints might be.

Provide a straightforward connection between shipping and customer service so that no agent ever has to utter the words "I don't know."

Amazing customer service makes the difference when postage issues happen, so lean into providing the best support possible.

These Shipping Hacks Win Customers and Grow Reach

Want to go the extra mile? Consider adding these hacks to your shipping strategy to surprise and delight customers.

1. Offer Tracking Information

Let customers know when to expect your delivery--whether it's tomorrow or next week. Tracking information builds anticipation and helps customers plan around deliveries.

Tracking information also gives you more opportunities to reach out. As customers visit your site to check their shipping status, you can add interfaces that encourage new sales.

2. Invest in Unboxing Surprises

One of the most exciting trends in shipping strategies is the unboxing trend.

Companies use their packaging to compete with others in their sector. Branded unboxing experiences make customers feel special, and encourages them to share.

Unboxing videos are a social media trend with views of videos of customers opening customer packages jumping 57 percent in the past year.

Not sure what unboxing is and why it's taking off? Head over to YouTube and Instagram and search "unboxing" to learn more about the magic of a well-packed box.

3. Add Some Kind of Free Shipping

Free shipping should be on your list of priorities. Whether it's free shipping all-around or free shipping with a minimum purchase order, it needs your attention.

Is it a necessary evil? Yes, but don't blame us--thank Amazon.

Grow and Thrive with the Right Shipping Strategy

Customers visit your site for your product, but whether they leave with a purchase often depends on your shipping strategy. A poorly-designed fulfillment system costs you and your customers more money than you want to spend. It doesn't have to be that way.

When you use a thoughtful, measurable approach to ship orders, you add value to your company. You can also shore up missed opportunities to grow your sales, minimize loss, and create more valuable customers.

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