E-Commerce Shipping Methods, Benefits, and Costs
E-commerce shipping covers all processes involved in transporting products bought online. With the right partner and shipping method, delivery can be fast, affordable, and manageable.
What Steps the Shipping Process Includes?
Three main steps are order receiving, processing, and fulfillment. When an order is received, it can be fulfilled provided that items are in stock. Order processing involves verifying the customer’s name and address to ensure that all data is accurate. A picking list is created as a next step so that goods are prepared, packed, and transported.
Shipping Strategies and Methods
There are a number of shipping methods that international freight forwarders can use, including overnight and 2-day shipping, same-day delivery, and expedited, international, freight, and hybrid services. With freight shipping, for example, cargo is transported by sea, land, and air and via intermodal transport in Europe and globally. Retailers typically use this mode of transportation to ship products to distributors and fulfillment centers and to get inventory from manufacturers.
International shipping involves moving products from a country of origin to a country of destination located overseas or globally. This method is considered expensive and challenging for any e-commerce retailer. This is because the different countries have their own requirements, taxes, tariffs, and regulations to meet. Most e-commerce businesses choose to work with a fulfillment partner when shipping goods internationally.
Expedited shipping is basically any method that is faster than standard delivery. The turnaround depends on factors such as destination, carrier, and quantity. E-commerce retailers that use expedited shipping enjoy benefits such as improved customer satisfaction and loyalty and lower shopping cart abandonment rates. E-commerce retailers also use overnight shipping to ensure that packages and envelopes are delivered on the next business day. Same-day delivery is another expedited shipping method whereby customers are guaranteed to receive orders on the same they goods have been purchased. Surveys show that over 60 percent of customers are willing to pay extra for expedited delivery while 56 percent of buyers aged 18 – 34 actually expect same-day delivery.
Costs vary substantially based on factors such as value of contents, carrier, shipping method used, destination, and package weight and dimensions. Dimensional weight is one factor that forwarders take into account. Shipping costs are typically calculated based on whichever is greater, dimensional weight or the weight of the package itself. Additionally, carriers typically charge handling fees which include costs involved in generating a shipping label, packing, moving inventory, loading products on a truck, etc.
In most basic terms, when retailers calculate the price point to sell, they account for credit card processing, packaging costs, the cost of goods, and shipping fees. The four categories above make for the total cost before profit margin. Some retailers offer free shipping to build customer loyalty and reduce cart abandonment. They are still able to stay profitable by offering loyalty programs, setting a spend threshold, or including shipping fees in the price of products.