The Complete Ecommerce Shipping Guide: Methods, Costs, Carriers, & More
-
By Rachel Burns
March 14, 2019
Updated note: With the COVID-19 pandemic, ShipBob’s fulfillment network remains fully operational. We’re taking all precautions to reduce the spread of the novel coronavirus and keep our employees safe. If you need help fulfilling orders, request a pricing quote here. Learn more at our COVID-19 updates page.
Your ecommerce shipping strategy is key to your online store’s success:
- 38% of customers say they’ll never shop with a retailer again following a negative delivery experience.
- 60% of customers have chosen a competitor with more convenient delivery options.
- 74% of shoppers rate free shipping as important when checking out.
- 45% of customers have abandoned a shopping cart because of unsatisfactory delivery options.
An ecommerce shipping strategy is about more than just free shipping and fast delivery, though those can be integral parts of the plan. This guide will point you to all of the resources you need to plan your ecommerce shipping strategy.
Table of contents:
- Ecommerce shipping methods and strategies
- Ecommerce shipping costs
- Ecommerce shipping rates
- Shipping carriers
- Ecommerce packaging
- Shipping labels and insurance
- Tracking shipments and returns
- Ecommerce shipping integrations & APIs
Let’s get started! But first…
What is ecommerce shipping?
Ecommerce shipping encompasses all services required to transport products purchased online from a retailer to the customer’s delivery destination. With the right partner, ecommerce shipping can be manageable, affordable, and fast.
Ecommerce shipping methods and strategies
There’s no such thing as a one-size-fits-all ecommerce shipping strategy. The right ecommerce shipping strategy for your business will depend on your audience, budget, margins, product, and a variety of other factors.
As a rule of thumb, offering a combination of fast and affordable shipping methods can help reduce shopping cart abandonment and increase conversions. Here are 6 shipping methods to consider making part of your ecommerce shipping strategy.
1. 2-day shipping
Thanks to Amazon Prime, 2-day shipping has become synonymous with online shopping. It may only seem accessible to ecommerce giants, but there are ways for all businesses to offer 2-day shipping to their customers without breaking the bank.
“We’d hate to see our customers go somewhere else because we don’t offer 2-day shipping, so during our third holiday season with ShipBob, we used their 2-Day Express program.”
Francesca Cavallo, Co-Author of Rebel Girls and Co-Founder of Timbuktu Labs
2. Same-day delivery
Same-day delivery guarantees your order will be delivered on the same day it’s purchased. 61% of consumers are willing to pay more for this shipping speed. Successfully executing on same-day delivery requires coordinated operations, resources, courier services, and technology.
3. Overnight shipping
When two-day shipping is the norm, how can ecommerce brands stand out? Enter overnight shipping: a shipping method that guarantees customers will receive their order on the next business day. Different carriers offer different overnight shipping services at different price points.
4. Expedited shipping
Expedited shipping refers to any shipping method faster than standard ground. The exact turnaround for expedited orders can vary depending on the carrier and shipping services. Offering expedited shipping can help your online store reduce shopping cart abandonment, meet customer expectations, and build customer loyalty.
“We can compete with platforms where customers are looking for 2-day shipping, great customer service, and a product that does what it’s expected to do. ShipBob helps us deliver on our customer expectations, and they are continually evolving and getting our products into our customers hands’ faster and faster.”
Matt Dryfhout, Founder & CEO of BAKblade
5. International shipping
Whether you’re based in the US and looking to expand globally or located overseas and want to begin shipping within the US, international shipping can be challenging and expensive for any business. Different countries have different regulations, tariffs and taxes, and requirements for incoming shipments, so it’s important to find experienced fulfillment partners who can not only help you navigate international shipping but also provide affordable shipping rates.
“We’ve seen a reduction of 70% on shipping costs in the US, which helps keep conversions high. When we joined ShipBob, only 20% of our customers were in the US. By the end of the year, that number will be around 40%.”
Greg MacDonald, Founder and CEO of Bathorium
6. Freight shipping
At its most basic, freight shipping is the transportation of cargo across the globe via air, land, or sea. Any shipment that is larger than 30 in x 30 in x 30 in or weighs over 150 pounds is considered freight. Ecommerce businesses use freight shipping to receive inventory from their manufacturer and send product to fulfillment centers or distributors.
Ecommerce shipping costs
73% of shoppers expect affordable, fast deliveries whenever they shop online — but you need to make sure you’re offering shipping rates that are affordable for you, too. Ecommerce shipping and logistics costs can seem complex, so let the resources below be your guide.
1. Calculating shipping costs
Shipping costs vary depending on a variety of factors including the package dimensions and weight; the shipping destination, shipping service, and shipping carrier used; and the value of the contents. Keep reading to learn more about how ecommerce shipping costs work.
2. Dimensional weight
All major shipping carriers use a pricing technique called dimensional (DIM) weight to calculate shipping costs. Dimensional weight takes into account the size of a package to determine the shipping cost. Shipping carriers like USPS, FedEx, and UPS calculate shipping charges based on whichever is greater: the weight of the package or its DIM weight. Whichever is higher becomes the billable weight for which your business will be charged.
3. Reducing shipping costs
For growing businesses looking to lower shipping costs, working with a third-party logistics (3PL) provider can make a big difference. Outsourcing shipping services to a 3PL can help ecommerce businesses scale operationally and leverage shipping discounts. A 3PL’s network of fulfillment centers can also help ecommerce stores save on shipping costs while reducing transit times.
“Using five fulfillment centers across the country is great because our product is high-quality and heavy, so it helps us cut down shipping costs.”
Francesca Cavallo, Co-Author of Rebel Girls and Co-Founder of Timbuktu Labs
4. Shipping zones
Shipping zones measure the distance between a package’s origin and its destination. In the continental US, these can range from Zone 1 to Zone 8. Carriers use shipping zones to calculate shipping rates. Shipping zones are calculated based on where your package is shipped from. This means that two different points of origin shipping to the same destination may be shipping to completely different zones. As a rule of thumb, the higher the shipping zone, the more expensive a package will be to ship.
5. Shipping and handling
Shipping costs refer to the cost of getting the package from the shipping carrier to the end consumer. Handling fees cover everything else, including the labor associated with retrieving items on picking lists, moving inventory, packing shipments, generating a shipping label, loading the shipment onto a truck, and any other fulfillment center operations.
We also put together this handy table for calculating what price point to sell at:
| Fee type | Dollar amount |
| Cost of goods | $20.00 |
| Shipping fee | $3.00 |
| Packaging cost | $0.75 |
| Credit card processing | $1.00 |
| Total cost | $24.75 |
| Optimal profit margin | 50% |
| Price to sell at: | $49.50 |
Ecommerce shipping rates
Different ecommerce businesses use differently rate structures to charge customers for shipping. Here are two popular ecommerce shipping rate options.
1. Flat rate shipping
Flat rate shipping refers to charging the same fixed shipping rate, either across all orders or for all orders that fit a specific weight range, order value, or other classification. Flat rate shipping should be the blended average shipping and handling cost across orders in a category. That said, the shipping cost of some orders will not be completely covered, while others will be overcharged in comparison.
2. Real-time carrier rates
Some ecommerce stores display real-time carrier rates at checkout. The exact shipping rates are automatically pulled from the carriers based on the customer’s location and delivery preferences. This allows you to charge customers the exact amount that it costs your business to ship the order. Shopify’s Advanced plan offers this option, as do shipping APIs.
3. Offering free shipping
Offering free shipping can reduce shopping cart abandonment, increase conversions, and build customer loyalty. You can offer free shipping while staying profitable in a few different ways:
- Including the shipping cost in the product price
- Requiring a spend threshold in exchange for free shipping
- Taking a recurring fee in the form of a loyalty program in exchange for free shipping on all orders (e.g, Amazon Prime)
“By encouraging customers to meet a spend threshold for free 2-day shipping, we’ve seen great results without harming our margins. Offering this shipping option has increased our average order value in these zones from $75 to $148.”
Ryan Casas, COO of iloveplum
Shipping carriers
To build your ecommerce shipping strategy, you’ll want to be familiar with the different shipping carriers and the shipping services they offer.
1. USPS
USPS is king when it comes to last-mile delivery. Because USPS already runs local residential routes daily, it’s often the cheapest option for ground shipping. Other shipping carriers often pass shipments off to USPS for the last leg of an order’s journey. To calculate USPS shipping costs, click here.
2. FedEx
FedEx offers a wide variety of delivery options at several different price points. FedEx also offers a program called FedEx Small Business geared toward growing companies in need of shipping solutions. Calculate FedEx shipping costs and transit times by entering package details using their Rate Finder tool.
3. UPS
UPS offers several shipping services across a variety of shipping destinations and transit times, as well as the ability to schedule pickups and manage customer returns. Like FedEx, the UPS Small Business program also provides resources for small business owners. You can receive shipping rate estimates through UPS’s Estimate Shipping Cost calculator.
4. DHL
DHL is known for its global reach and international shipping capabilities. Calculate export and import rates and transit times with DHL’s Rate Quote and Transit Time tool.
Ecommerce packaging
The ecommerce packaging you use to ship orders directly affects your shipping costs and customer experience. Packaging is often the first in-person interaction your customers have with your brand — here’s how to make sure it’s a great first impression.
1. Choosing your packaging
Corrugated, chipboard, paperboard, oh my! The packaging options for your ecommerce shipping may seem endless. Here are some helpful considerations that will help you choose your packaging:
- What is your product?
- How is your product shaped?
- How heavy is your product?
- Is your product oversized?
- How fragile or durable is your product?
- What packaging does the manufacturer already include?
- Do you want to use plain or branded packaging?
2. Custom packaging
In the competitive ecommerce landscape, high-quality custom packaging can help your brand stand out. Custom packaging is more than just a container for your product — it can create a better customer experience. Branded packaging helps you make a great first impression, stay memorable, generate buzz, and build brand loyalty.
3. Common packaging mistakes
Click through for a video from ShipBob’s founders discussing the most common packaging mistakes ecommerce businesses make, including choosing too large or small of a box.
4. Eco-friendly packaging
The Environmental Protection Agency estimates that packaging makes up one-third of all household waste. As ecommerce sales continue to rise, so, unfortunately, will the waste they produce. Your business can help reverse this effect by choosing packaging that’s as good for the planet as it is for business.
Shipping labels and insurance
Shipping labels and shipping insurance are the nitty-gritty of ecommerce shipping — they’re not glamorous, but they’re definitely important to ensure that your customers have the best customer experience possible.
1. Shipping labels
Shipping labels provide shipping carriers with important information about the origin and destination of your package. Without clear shipping labels, your customers’ orders could be lost, delayed, or mishandled. In turn, this can create a negative customer experience, damaging brand loyalty, and ultimately losing sales. Shipping labels often include the return address, destination address, package weight, shipping class, and tracking number.
2. Shipping insurance
Shipping insurance offers reimbursement to senders whose parcels are lost, stolen, and/or damaged in transit. If you’re shipping fragile items or very expensive products, you may want to look into shipping insurance, which can significantly increase your shipping cost.
Tracking shipments and returns
The shipping process doesn’t end once the carrier picks up an order. You need to continue to offer a great customer experience during and after the order’s journey, from sharing tracking numbers to creating a seamless ecommerce returns process.
1. Order management
Order management refers to the process of receiving, keeping track of, and fulfilling customer orders. Having the right order management strategy and software in place can help reduce stockouts or backordered products, and ultimately unhappy customers. Order management software centralizes all of your critical data to streamline the fulfillment process and help you make better business decisions.
2. Tracking ecommerce shipments
When you ship an order, whether in-house or through a 3PL, make sure to pass the tracking number on to the customer. An order management system allows you to track the shipment each step of the way — and your customers can do the same.
3. Managing ecommerce returns
Returns can be a huge headache for ecommerce businesses, but having the right ecommerce returns process in place pays off: 95% of shoppers who are happy with the returns process said they’ll purchase from the same retailer again. That said, shoppers who are unhappy with the returns process are 3x more likely to never purchase from that retailer again.
Working with a 3PL can help you leverage years of industry experience, knowledge, and best practices to manage returns at scale.
Ecommerce shipping integrations & APIs
Your ecommerce tech stack can have a huge impact on your shipping strategy, from your shopping cart software to any shipping APIs you use. Making sure that these systems integrate seamlessly with one another is crucial.
1. Shopify shipping
Those who have a Shopify store have a variety of different ecommerce shipping options, including Shopify Shipping, shipping apps like ShipStation, and working with a 3PL like ShipBob. ShipBob’s technology integrates directly with Shopify to automatically fulfill orders as customers place them.
ShipBob’s 2-Day Express program allows merchants using Shopify to offer guaranteed 2-day ground shipping to eligible shipping destinations. The customer’s zip code is validated at checkout to determine if the order qualifies for a discounted 2-day shipping option based on whether the items ordered are available in a ShipBob fulfillment center near them. The 2-Day Express program has been proven to help reduce shopping cart abandonment and increase the average order volume on Shopify stores.
“With ShipBob’s 2-Day Express program, we’ve seen a 24% increase in our average order value for qualifying orders placed on our Shopify Plus store.”
Noel Churchill, Owner and CEO of Rainbow OPTX
2. WooCommerce shipping
Like Shopify, merchants using WooCommerce have several options when it comes to ecommerce shipping — including partnering with a 3PL. With ShipBob, merchants can connect their WooCommerce store in minutes, store inventory and ship orders from major US cities, automate fulfillment, and pass shipping information back to customers.
3. Shipping APIs
Shipping APIs give ecommerce brands the ability to integrate shipping functionality directly into their online stores, helping streamline the checkout and order fulfillment process. This technology works in the background of your site to pull in data from external servers and display shipping information to customers.
Ecommerce shipping with ShipBob
Now that you’re equipped with the tools you need to build an ecommerce shipping strategy that’s right for your business, consider making ShipBob a part of that strategy.
ShipBob’s software integrates with ecommerce platforms and marketplaces to automate ecommerce fulfillment for ecommerce merchants. With a network of fulfillment centers across the US, ShipBob lets merchants split inventory across locations to reduce ecommerce shipping costs and time in transit.
Talk to a fulfillment expert, get pricing, and learn more about how we help ecommerce businesses scale at the link below.
Written by: