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Home Running A Business The Quick Guide to Nailing Your Shipping Strategy
Shipping might seem like a small logistical element of your business, but it can play a huge part in everything from your marketing to your operations. With the advent of free shipping, 2-day shipping, same-day delivery, in-store pickup, and more, the way you get your products from the shelf to your customers’ hands is crucial to your success.
Consumers demand speed, security, and convenience all at a ludicrously low price—but the businesses that make it happen secure a valuable piece of the market. Let these stats sink in for a minute:
Consumers have high expectations, and big brands live up to them, making it harder for small businesses to compete. However, modern-day technology and delivery solutions make it possible for even the underdogs to keep up when it comes to competitive shipping.
But offering free same-day delivery to differentiate your brand is easier said than done. While shipping can be a powerful sales element, you need to make sure your company can actually fulfill (and profit from) your delivery strategy.
Fortunately, nailing your shipping strategy isn’t rocket science. It just takes a little know-how, tactical thinking, and a handy-dandy calculator. From choosing your shipping methods to packaging like a pro, we’ll walk you through it all in this guide.
Before we get into the nitty-gritty of shipping calculations, let’s explore your delivery options. None is necessarily better or best—each has its pros and cons.
The customer might not always realize it, but there’s no such thing as free shipping. Nothing is free, and someone has to pay the price: either you or your customer. Nonetheless, free shipping is still a powerful sales tactic that e-commerce giants and small businesses alike use to satisfy consumer preferences.
Flat-rate shipping is a popular delivery option that makes sure you don’t extremely overcharge or undercharge your customers. It’s simple and predictable, making it easy for you to estimate your expenses and plan your cash flow.
Real-time carrier shipping is when customers can see up-to-date shipping rates that carriers charge live in their cart. These rates are automatically determined using weight, dimensions, and shipping destinations.
Now that you have a few shipping options in mind, it’s time to break out that handy-dandy calculator. Get out your financial statements so that you can start creating a few informed financial scenarios and projections.
The following package determinants will all factor into your shipping costs:
To get actual estimates for your packages, you’ll need to use the shipping service’s calculators. Here are the most popular small business shipping couriers and their shipping calculators:
Keep in mind that COVID-19 has had a huge impact on shipping carriers and what they’re able to accomplish. Make sure you check your carrier’s updated terms to see what they’re currently promising and capable of doing.
Once, packaging could be a product enveloped in bubble wrap inside a drab brown box: simple and bland, but efficient.
However, today’s online shoppers have higher expectations. Packaging is no longer a vessel to get a product from Point A to Point B—it’s an extension of your brand and an opportunity to create an experience for your customer.
Consumers want an unboxing experience that validates their purchase. The process of opening your package is an opportunity to impress and earn repeat business—yes, before they’ve even encountered the product. A staggering 39% of US adults on social media agree that unboxing videos influenced them to buy certain products.
Here are some ideas to create a compelling unboxing:
Yes, creating an unboxing experience is going to increase your shipping costs, but this is a powerful marketing opportunity. For a few minutes, you have the undivided attention of your customers—time to shine. Creative packaging might cost an extra few pennies on every box, but it’s oh-so-worth-it.
What packaging will you choose to safely transport your products: boxes, padded envelopes, poly mailers, or something else? And what will you use to protect the product inside: bubble wrap, packing peanuts, or inflatable airbags?
Even tiny decisions like these can have a big influence:
Strive to find packaging that fits your product’s unique shape. A nice snug fit is what you’re looking for—both for a customer unboxing experience and for your profit margins.
Check your carrier’s shipping options. Most offer free packaging for different types and sizes, so you may be able to save a no-hassle pretty penny.
At first, you may create your labels by hand. However, as you scale, this becomes an inefficient (and likely impossible) method.
If you’re fulfilling the shipping yourself, you can upgrade and print your labels using a plain-ol’ printer. Or, better yet, you can use a fancy thermal label printer to create self-adhesive labels.
Insurance and tracking options are generally inexpensive, but every additional penny eats into your profit margins. You’ll need to decide (depending on your products’ value) if additional coverage is essential to your business.
If you ship a variety of products, you may choose to purchase insurance on high-value items instead of all your products. This strategy could help prevent big losses without requiring a significant ongoing investment.
Many carriers will provide complimentary coverage up to certain dollar limits. For example, UPS will cover packages up to $100 at no additional charge, but that’s only if UPS is responsible for the loss of product or damages.
Most carriers also provide free tracking to you and your customers, but remember that nothing is free. Seemingly complimentary features like insurance and tracking will likely be built into the price of shipping through that courier, so make sure you do your research and compare your options.
In your business’s early days, your inventory probably sat in your closet or behind your desk. When a customer made a purchase, you found the item, packaged it up all nice and pretty, took it to your preferred courier, and shipped it from there. This process is manageable early on, but it becomes unrealistic as you scale.
When businesses grow their operations, they commonly begin outsourcing their fulfillment to third-party logistics (3PL) companies that handle all of the processing, packaging, and shipping. Besides 3PL partners, e-commerce giants like Amazon offer their own storage and shipping options—like Fulfilment by Amazon (FBA). Let’s explore the pros and cons of both self-fulfillment and professional fulfillment services.
There’s no right or wrong answer when it comes to how you fulfill your orders. You’ll just need to evaluate your time spent and crunch the numbers to see what’s more valuable to you.
Remember, neither decision is final. You may choose to experiment with self-fulfillment for a time and see how it goes, or you may try fulfillment services for 6–12 months to see how you like it. Month-to-month fulfillment contracts are more expensive, but they’ll give you an easy way to test out the waters before you lock into a more affordable annual or multi-year contract.
As you can see, a lot goes into creating a successful shipping strategy. Even the smallest details can have a huge impact on your customer experience, business operations, and bottom line.
Whether you’ve been shipping products for a while or are just dipping your toes into the world of delivery, don’t fret about perfection. Be willing to experiment and try new things. Mix it up with your packaging and track the impact. Experiment with using fulfillment services and see if they save you time and money. You’ll never know if there’s a better way unless you give it a try.
Research, experiment, measure, and make adjustments so you can eventually dial in your shipping strategy. With these often complicated logistics under your belt, you’ll be ready to take on any challenge thrown at your business.
Jesse Sumrak is a Social Media Manager for SendGrid, a leading digital communication platform. He's created and managed content for startups, growth-stage companies, and publicly-traded businesses. Jesse has spent almost a decade writing about small business and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped startup. When he's not dabbling in digital marketing, you'll find him ultrarunning in the Rocky Mountains of Colorado. Jesse studied Public Relations at Brigham Young University.
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