Shipping & Delivery

Shipping & Delivery

There are so many moving parts to running a successful and profitable business. When a customer clicks the “confirm payment” button on your website, it doesn’t stop there. One of the final and most important parts of your supply chain is delivering your goods safely and efficiently to your customers’ doorstep – while keeping costs down and maintaining your profit margins. 

If you are a startup or small business handling relatively small order volumes, shipping and delivery might seem straightforward – you may even be handling orders manually. But things might start to get a little more complicated if your order activity cranks up or if you start shipping overseas. If you aren’t prepared to handle shipping and delivery, you may risk poor communication with customers, expensive shipping costs, late deliveries and other issues. These issues could push your customers to abandon their shopping cart and shop elsewhere and impact your bottom line. In fact:

• 60% of consumers have purchased from a competitor with more convenient delivery options (Metapack)
• 40% of customers think the post-purchase experience is the most memorable part of a brand experience (Convey)
• 51% of consumers want real-time updates of their orders (Retail TouchPoints)

To retain your customers, it’s important to have a good grasp of how shipping and delivery work so that you are prepared to handle your business operations now and in the future. This means building a shipping and delivery strategy and choosing the right courier services and shipping solutions. In this guide, we’ll cover the fundamentals of shipping, delivery and fulfilment to help you run and grow your business with confidence. 

What is shipping and delivery and how does it work?

Shipping and delivery is the final stage of a supply chain. It involves picking, packing, labelling, sending, tracking and delivering shipments to your customers. But of course, it’s not as simple as that. 

The shipping process looks slightly different for every business. The options you choose may not work for similar businesses, and vice versa. That said, there are some fundamentals that stay the same such as working with couriers, freight forwarders and various other third parties to deliver goods to customers. In addition, most small businesses today use shipping tools and software to automate and streamline each part of the shipping process and get real-time updates such as when a shipment has been cleared by customs and when it has been signed by a customer upon delivery. 

What are the key considerations when developing a shipping strategy?

Developing a shipping strategy ensures that your whole team and key stakeholders know what’s going on and can play their part. It gives you a greater sense of control to maintain profit margins and improve your customer journey. As with any strategy, you can change it as you go along but there are some basics to consider when building a shipping strategy:

• Build a strong team
• Choose your shipping methods
• Determine shipping costs
• Choose and order packaging 
• Look into shipping insurance 
• Understand customs, taxes and duties 

Build a strong team

Every retail and ecommerce business has different needs and team structures, but the importance of a strong team is universal. There are a number of options:

• Dropshipping: Dropshipping doesn’t require you to stock goods or handle shipping. Instead, a customer places an order on your website and a third-party supplier sources, packs and ships it directly to them. It’s completely hands-off. Inventory is owned, stocked and shipped by the supplier. 
• Outsourced fulfilment: This is when you hire a third-party fulfilment company to handle certain parts of your order fulfilment process such as storing inventory, picking, packing and shipping orders. Inventory is owned by you (the retailer).
• In-house fulfilment: This requires you to handle all stages of the fulfilment process including product sourcing, storing inventory, selling, packing and shipping by hiring an in-house team.

What are the pros and cons of outsourcing fulfilment?

Regardless of the option you choose, you need to ensure orders are shipped to customers with all of the correct information quickly and cheaply. Whether you have an in-house team or outsource, everyone involved should be properly trained on shipping options, operational processes and the software you use. 

Choose your shipping methods

The next step is deciding the shipping methods you will offer customers at the checkout. There are a number of methods with different costs (for both you and your customers) and delivery times. It’s important to strike a balance between pleasing customers and affordability. Can you afford to take on some of the costs yourself by offering free shipping to customers? Or would it be more affordable to offer a couple of flat-rate options instead? Carefully weigh up how each method will impact your financials and also assess what your competitors are doing to ensure your shipping rates are competitive. 

What are the different shipping and delivery methods?

There are a number of different shipping methods to consider. We’ve outlined some of the most common methods below:

• Offer customers free shipping: Free shipping can be a good way to attract and retain customers and reduce cart abandonment. That said, free shipping means the costs are passed onto you. There are a few strategies to help offset free shipping costs such as setting a minimum order amount, but we’ll touch on these a little later. 
• Charge carrier shipping rates: Some ecommerce platforms have integrations with carriers such as DHL and USPS. Charging real-time carrier shipping rates can be appealing to customers as they get to choose the type of delivery service they want or need. 
• Charge a flat rate: Charging a flat shipping rate is a popular option for businesses that sell products that are relatively similar in weight and size. 
• Charge what you get charged: Another option is to charge what you get by carriers. Consumers often don’t mind supporting startups and small businesses to help them grow, but if you do choose this method it’s vital to be completely transparent. 
• Offer local delivery: Local delivery is a great option for businesses that have a local customer base or in nearby postal codes. By offering local delivery at a reduced price or for free over a certain order amount, you can potentially reduce your shipping costs and attract more local customers.
• In-store pickup/click and collect: This option is the most cost-effective as there are no costs involved from your end. That said, it only works if your customers are in your local area and you have a facility where they can collect goods from.

Determine shipping costs

Once you’ve chosen your shipping methods you will then need to calculate shipping costs. Every couriers and shipping company offers different options and will have slightly different rates. You also need to account for packaging costs (boxes, inserts, wrapping, etc), customs/duties tax and other hidden fees – it’s amazing how quickly these costs add up. It’s a good idea to compare several couriers and check out any offers to get the best deal.

What are the main factors that affect shipping rates?

Shipping rates can vary depending on factors including:

• Size
• Wright 
• Dimensional weight 
• Delivery times
• Origin and destination address
• Shipping distance 
• Taxes and duties 
• Tracking requirements 
• Insurance 

How can I reduce shipping costs?

Regardless of whether you handle fulfilment and shipping often has many hidden costs that can add up surprisingly fast, but there are a few things you can do to help you keep costs down and increase your profit margins:

• Explore alternative packaging options: Consider using lighter packaging such as mailers instead of boxes as they’re much lighter and the dimensions are smaller. 
• Avoid excess packaging: Most shipping rates are based on weight and/or dimensions, so evaluate whether you’re wasting money on excess fancy packaging and inserts.
• Find discounted packaging supplies and offers: You can often get discounts if you buy packaging supplies in bulk quantities. Keep your eyes peeled for offers and discounts.  
• Negotiate with couriers: When shipping higher volumes of goods you may be able to negotiate a deal with your courier. It’s worth a shot!
• Consider using a fulfilment partner: Having an in-house fulfilment team involves all the costs of hiring staff. Outsourcing to a fulfilment company that stores inventory, picks, packs and ships for you can offer considerable cost savings. 
• Set up a business account: Setting up a business account with your chosen carrier has perks including discounted shipping rates, faster delivery and other benefits. 

Choose and order packaging 

The final step is choosing and sourcing packaging and any marketing materials you want to include with orders such as product brochures, discount vouchers, etc. Quality packaging keeps goods safe and minimises the risk of damage. But packaging has also come to mean much more than simply the box or parcel in which you send goods – it can say a lot about your brand and contribute to the overall customer experience. Consumers are also becoming increasingly aware of their environmental impact so sustainability is another factor you may want to consider, e.g. choosing cardboard inserts instead of plastic. 

What are some popular packaging options?

There are many different types of shipping boxes and packaging options including:

• Bulk cargo boxes
• Rigid boxes
• Folding cartons
• Corrugated boxes
• Branded shipping boxes
• Carry handle boxes
• Padded mailers
• Envelopes and bags 
• Custom packaging 
• Packaging inserts (discount offers, samples, gifts, personal notes, etc)

Some couriers such as DHL, UPS and USPS offer free packaging. Otherwise, there are many product packaging supplier and companies that can create and customise product packaging for your brand. It’s worth shopping around to compare price and get a good deal.

Source: smallcardboardboxes.com

Look into shipping insurance

Shipping insurance can offer security in the event that your packages are lost, damaged or stolen while in transit. Some couriers offer insurance as part of their service so always factor this in when choosing a courier. Regardless, shipping insurance is relatively inexpensive and is a small price to pay when compared to how much you’d lose, especially for expensive goods. 

Understand customs, taxes and duties 

If you are shipping goods overseas you need to complete the relevant customs declaration forms to declare the contents of a package, the value of goods and other information. Your shipments may get held up by customs if you don’t complete the forms correctly. Every country has slightly different requirements, so make sure you understand what you need to include. 

There may also be additional custom taxes, tariffs and duties that your customer needs to pay when they receive the goods, so make sure this is communicated clearly to avoid anyway unwanted surprises. 

What are shipping best practices?

• If shipping internationally, ensure your goods are fit for the journey.
• Look out for shipping restrictions in certain countries to avoid having goods held up or breaking any laws (some items are forbidden in certain countries).
• Understand shipping terminology - it will help you have better conversations with couriers. 
• Set up a business account with your chosen courier - you’ll get access to discounts, awards and other perks. 
• Choose a reliable courier that understands your business needs and is eager to develop a long-term relationship.

Who can help me with shipping and delivery for my business?

Although you may have a shipping and delivery team within your business or consider implementing one as your business scales, you will also need to work with couriers. Couriers play a vital role in your supply chain by delivering goods safely and efficiently to your customers. There are a number of courier services to choose from to meet your needs, but the key is to choose a courier that you trust. Learn more about couriers and the services they offer. 

You can also reach out to other businesses in the community for advice and recommendations or browse the shipping and delivery resources available on SavvySME.