To get the best ROI when it comes to shipping, you need to consider all factors associated with shipping your products. To help choose the best shipping strategy for your business, you first need to understand what goes into the ultimate cost of shipping your goods. You can also choose to outsource your logistics to a third-party logistics provider (3PL) which will be able to handle all of your shipping needs for you. Because 3PLs ship such large quantities for multiple brands, they can negotiate higher discounts for their customers. They are also integrated with all of the major carriers and have the shipping systems in place, giving you easier access to the widest range of shipping options.
With almost every one of the shipping providers—including FedEx, UPS, USPS, and DHL—the price you pay will depend on the following factors:
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Shipping Volume
How frequently you ship products can greatly affect the price you pay to ship. Ecommerce businesses that ship thousands of products each month have more leverage to negotiate cheaper per-item rates than businesses that only ship occasionally. Some ecommerce platforms and marketplaces like Shopify and Amazon offer in-house shipping services or discounted rates.
Shipping Distance
Another factor that will have an obvious impact on price is the distance you are shipping the product. Most shipping providers will offer an estimate of how much it will cost to ship to a specific destination depending on where you are shipping from.
The distance is broken down into areas known as shipping zones, which are numbered geographical areas that carriers ship to, named numerically, ranging from Zone 1 to Zone 8 for all domestic shipments in the US. Shipping carriers utilize zones to measure the distance a package travels, not based on miles but instead on groupings of zip codes, from the origination point to the package destination.
“In eFactory, I can see all the states that we’re shipping to, the volume of shipping, to understand where everything is going. It allows me to weigh all of things: do I need to offer air shipping, do I need to do two day, one day—down to that granular level of detail.”
Shipping Speed
Generally, the faster you need something to reach its destination, the more money you will pay. Depending on where you are sending your products, most shipping providers offer either overnight shipping or same-day delivery, at an additional cost.
Standard transit time, in which you don’t have to pay an additional fee, is usually between one and five business days. Partnering with a 3PL that has multiple fulfillment centers can cut costs associated with shipping speed since your products can ship from whichever location is closest to the end customer.
If you are shipping LTL freight primarily, consider consolidated shipping as a way to expedite your freight while also potentially saving money.
Many ecommerce brands use hybrid shipping services to get a lower overall cost without sacrificing quality, speed, or reliability. Most major shipping carriers offer hybrid services, like UPS SurePost. If you’re unsure what weight class is the most cost-effective for your brand (FTL versus LTL) you may qualify for hundredweight shipping.
Packaging
Packaging and shipment size kind of go hand-in-hand. The size and weight of your product will have a direct impact on the type of packaging you need. Smaller and lighter items could be shipped via envelope, while larger items will require boxes.
You should also factor in the cost of packaging materials, such as foam or paper cushioning, to ensure your product arrives in good condition. Some shipping providers offer flat rates depending on the type of packaging material. In other words, if your items can fit in the packaging, it ships for the price of the packaging, regardless of the weight. Flat-rate shipping services will often save you money if you ship heavier items.
Pickup Locations
Pickup and drop-off locations are the places you bring your products when you want them to be shipped. If you ship often, you will want to use a shipping provider that has a lot of pickup locations for the sake of convenience. You can also arrange to have shipments picked up directly from your chosen location. However, this service can cost extra depending on your shipping carrier.
Insurance
Most shipping providers will offer you the opportunity to buy insurance on your shipments. The type of insurance you can purchase depends on the value of the items you are shipping, your shipping origin and destination, and the shipping method of transportation.
The most common type of shipping insurance is carrier liability insurance, which covers the goods being shipped and the cost of shipping up to $100 in the event the shipment is damaged or lost. For international shipments, you may also want to purchase international shipping insurance.
Should You Consider Outsourcing to a 3PL?
Using a 3PL to outsource order fulfillment can help automate and handle the shipping for you. When you choose to work with a 3PL, you can store and manage your inventory at one of their fulfillment centers. Because they can integrate directly to your online shopping portal, when an order comes in your fulfillment partner will be able to pick, pack, and ship the purchase order on your behalf.
There are a number of shipping advantages when outsourcing to a 3PL:
Lower shipping rates: Because fulfillment warehouses ship such large quantities for multiple brands, they can negotiate higher discounts and share those discounts. They are also integrated with all of the major carriers and have the shipping systems in place, giving you easier access to the widest range of shipping options.
Shorter delivery times: By strategically choosing a 3PL that has multiple locations throughout the country to store your inventory, it means that you can store your inventory closer to your customers which can also help to lower the cost of shipping since those packages will ship shorter distances.
Experience: 3PLs have years of experience with shipping and stay up-to-date on latest service offerings and pricing changes in the market, so they can advise on best practices and recommended carrier offerings.
Optimizing for B2B or Commercial Shipping
If you are building your ecommerce brand and want to ship products to commercial addresses (for retail or just B2B customers) you’ll need to adjust your shipping strategy to meet different requirements. Commercial shipping is often bulk volume. Many major carriers can do both small parcel shipping and FTL or LTL freight shipping—but you may also need a different carrier for your B2B transportation.
The considerations are the same as noted above here: volume, distance, packaging, speed, and delivery times. B2B customers may have more specific requirements than individuals, so giving them flexibility is key. Real-time tracking for constant updates is also helpful for commercial shipping.
Bottom Line
Shipping can be one of the most challenging aspects for ecommerce sellers because there are so many variables to juggle. Every business faces unique factors that need to be thought out and planned for in order to develop the most cost effective and efficient shipping strategy. Understanding all of the variables and being able to change as your business grows can be integral to your long-term success. It is important to take into account all of the aspects of shipping as you develop the best strategy. Choosing a 3PL to help with your order fulfillment process can often make it much more efficient as well as cost effective.
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