How to Sell Online / Shipping & Fulfillment

Next Steps After The Sale: Your Guide to Small Business Shipping

/ 12 min read
small business shipping tips

Next Steps After The Sale: Your Guide to Small Business Shipping

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After all the steps you’ve taken towards building your shop online, your hard work has finally paid off. And you’re starting to hit your numbers.

That’s it, right? Not exactly… This is just the beginning.

Shipping is more than just a necessary cost center.

It’s where the customer experience is defined and brand loyalty is born.

The post-purchase experience is your opportunity to reinforce your brand and deliver on the expectation you’ve set.

But where do you start?

Most sellers simply figure shipping out along the way, through mistakes. But this guide teaches you how to do shipping right, the first time.

We’ve put it all together for you.

In this guide, we’ll help you understand what goes into ecommerce shipping and fulfillment so you can deliver on your customer expectations.

You’ll learn:

  1. The cost of ecommerce shipping
  2. Common return policies and processes
  3. How to determine what to charge your customers
  4. Packaging and branding best practices
  5. How to create a shipping strategy
  6. Popular shipping tools

The Cost of Shipping

Before you set up shipping rates and methods in your shopping cart, you need to understand how your shipping and fulfillment costs are calculated.

Once you’ve done this, you’ll be able to make the right business decisions on what to charge your customers for shipping, what services to offer, and how to ship.

Shipping Rates

Shipping rates are calculated from the following factors:

  1. Service and speed.
  2. Dimension and weight.
  3. Destination.
  4. Shipping volume.

Service and Speed

Industry giants like Amazon, eBay, and Walmart have transformed customer expectations.

Most consumers expect a shorter delivery time and many shipping options. And they want it to be free.

As a rule of thumb, the more expedited the shipping service is, the higher its shipping rate will be. But there are many other factors that go into a rate.

With carriers offering a multitude of services based on so many factors, there is no one-size-fits-all service or carrier.

Mapping the right service to the right request, however, is crucial for cost-effective shipping.

Here are the main questions that impact the cost and service required:

  • When does the package need to arrive?
  • Is a guaranteed delivery or delivery commitment required?
  • Is tracking required?
  • Is the recipient address commercial or residential?
  • Is signature confirmation required or any other service add-on required?
  • Are you shipping alcohol, or other specialized products, or any hazardous materials?

Dimension and Weight

As more expedited shipping brings higher cost, so do larger and heavier parcels. Different carriers and services have different restrictions, rating structures, and requirements.

This can make comparing rates rather tedious without a multi-carrier rate calculator. In general, carriers calculate shipping cost based on weight and dimension in the following way:

  • Dimensional weight. FedEx, USPS, and UPS charge based on dimensional weight (or DIM) for their services. Dimensional weight is based on the package size rather than its actual weight. Carriers charge based on the larger amount between a parcel’s actual weight or dimensional weight. This means that you’ll be charged more for large light parcels and less for smaller, heavier parcels. Always make sure you enter your package dimensions to determine the best rate.

How a dimensional weight rate is calculated:

(Length x Width x Height)/Divisor

The higher the divisor is, the lower the rate will be. Here are the Dimensional Weight formulas for UPS, FedEx, and United States Postal Service (USPS):

CarrierDomestic Formula
UPSLxWxH 139
FedExLxWxH 139
USPS *cheapestLxWxH 166

  • Flat rate services. All major carriers offer some kind of standardized, flat rate shipping. You select carrier-provided, standard packaging and pay a flat rate no matter the weight inside. Regardless of the destination, if it’s a domestic shipment, you’ll pay the same rate.
    • USPS and UPS flat rate boxes generally allow up to 70 lbs
    • FedEx One Rate boxes go up to 50 lbs
  • Cubic Pricing: The USPS offer cubic pricing for Priority Mail shipments. The way this works is if you ship a small heavy parcel, it will not be charged at the same rate as a larger parcel of the same weight. For items under 20 lbs, this is how to determine an eligible Cubic rate:

(Length x Width x Height)/ 1728 = Cubic Feet

This amount then falls into 5 categories ranging from 0.1 to 0.5 cubic feet.

If you qualify for full cubic pricing, click here to see the rates.

Destination

The third factor that impacts shipping costs is distance.

More precisely, it’s the distance between the shipper’s address and the recipient address.

Carriers base their domestic rates on zones.

The most common zone system in the US is USPS, but UPS and FedEx also measure distance based on zones.

You can find the zones specific to your ship from location for each carrier, but here again, is where a multi-carrier rate calculator will save you a lot of time and hassle.

You also have to consider your international destinations.

Here are just a few things to keep in mind:

  • Confirm product shippability. There are certain products that are forbidden from entering some countries. For instance, it is illegal to ship playing cards to Brazil. And you can’t ship collectible stamps to France.
  • Additional taxes, duties, and documentation. While these are outside of carrier fees, shipping internationally will introduce additional charges and requirements like Value Added Tax, duties and tariffs, and customs declarations.
  • Update your shipping policy and pricing. Selling internationally is more expensive, so make sure that you’ve taken the appropriate steps to charge and estimate for delivery for your international customers.

For additional international information, ShipStation has created an international shipping guide.

It’s filled with insight into things like carriers’ permitted countries, customs requirements, and more. For your own copy, check out ShipStation’s guide.

Volume

Just like you prefer high-frequency, loyal customers, so do carrier companies.

Shipping at a higher volume can lead to volume-based negotiated rates with these carriers.

Talk to your carrier account manager to see which discounts may be available to you. Establishing a relationship with your carrier helps you gain other benefits as well.

Most online retailers use multiple carriers to match the best carrier, service, and rates to fit their business needs.

Shipping software can help make this process easier with all carriers and rates in one platform.

Furthermore, using a third-party shipping app demonstrates to a carrier that you are not exclusive to them. To try and reign you in, they’ll likely negotiate rates with you.

Saving on Additional Shipping Costs

  • Packaging: Carriers will frequently offer complimentary packaging. But also consider insulation and cushioning, inserts, custom boxes and envelopes. We’ll cover packaging and branding a little later, but be sure to incorporate it in your cost calculations.
  • Insurance: Most service levels from the main carriers have a default insurance value:
    • FedEx and UPS generally have a default value of $100 and with some exceptions.
    • USPS Priority Mail Express shipments include up to $100 of insurance.
    • Priority Mail shipments may include up to $50.
  • Third Party insurance: Should you need more coverage, third-party insurance providers like Shipsurance offer competitive rates over carrier charges. Typically, carriers charge between $0.75-0.85 per $100 value, with a minimum cost of roughly $2.50. Shipsurance, however, only charges $0.55 per $100, and with no minimum cost.

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Returns

Even the most popular and highly-rated products on earth get returned.

Returns are an inevitable part of an online business. And running an ecommerce business requires you have to have a good returns strategy in place.

Did you know a majority of customers look at your returns policy before making the purchase?

A purchase decision is a risk-reward decision. Buying online involves more risk because you don’t physically get to hold the product or inspect it.

Having a customer-focused returns policy removes this risk for the customer. It removes the barrier to purchase.

A FedEx Express Canada study showed that 73% of respondents rated “ease of returns process” as a top decision-making factor when shopping online. And with a great returns policy and experience, shoppers are more likely to become repeat customers.

ShipStation users who give their customers access to ShipStation’s Branded Returns Portal saw a 16% increase in average order volume. And customers were 29% more likely to shop again from the merchant.

A quick note for merchants selling internationally.

International returns may be more expensive and time-consuming and you could incur another round of duties and tariffs.

If you sell to international customers, make sure your returns policy has explicit, clear, and transparent communication on how you handle returns.

The EU market has strict guarantees and returns regulations for example.

Depending on the item value, you may simply want to offer a refund or send a replacement without requesting the item to be returned.

What to Charge Customers

Now that you know what goes into the cost of shipping, you have a decision to make: what to charge your customers?

Every business wants to save on margins while staying competitive and attractive to customers.

The right choice depends on your business needs and you may select different methods for different scenarios.

Free Shipping

There are ample studies and surveys that stress shipping costs are among the top factors driving shopping cart abandonment. But we understand you have to protect your profit margins.

While shorter delivery times are becoming more popular, many customers are still willing to wait longer when offered free shipping.

This means you can select more cost-effective shipping services. Studies also show customers are willing to add products to their shopping cart to get free shipping when there is a minimum price that must be met.

For instance, “Free shipping for orders over $75.” This means you can increase your sales and average basket size if you set a free shipping threshold.

If the parcel is under 16 ounces, USPS First Class Mail offers the best rates. Beyond that, USPS Priority Mail will frequently offer the best rates for parcels up to 10 lbs.

“Amazon has changed the game around consumer expectations for both delivery times as well as costs. Brands should test out pricing strategies that include the ability to support some sort of free shipping tier to drive real growth.

Consumers will often pay an extra few for a product that can be here sooner and has “free shipping” (even if the true cost of that shipping was just actually baked into the product).” — Adam Grohs, Co-Founder/CEO, Particular.

Flat Rate Shipping

If you’re not able to offer free shipping, flat rate shipping is a good alternative.

With a little preparation and analysis of your average shipping costs, you can offer a set amount for different service levels.

This works well if your parcels are generally similar in size and shipping rate.

The shipping rate may fluctuate slightly, but it evens out in the end if you have consistent shipping rates for your parcels.

This is especially true if you can use services such as USPS Priority Flat Rate in a cost-effective way.

Real-Time Rates

This option may be particularly appealing for oversized items, specialized products, and B2B businesses.

In some shopping carts, sometimes with the help of third-party apps, you can set up real-time shipping quotes.

You, the merchant, have less risk of under or overcharging for shipping. And your customer will trust that you are offering fair rates.

Packaging and Branding

Another important part of the shipping and fulfillment process to consider is packaging.

We mentioned it in the section about the cost of shipping, but here again, is an opportunity to look at the shipping process not just as a cost center. Remember, this is where loyal and repeat customers are born.

When you sell on marketplaces like Amazon, your packaging must adhere to certain criteria: unbranded or carrier-branded packaging, no inserts, and more.

But when you sell from your store, you can make your mark. Especially in ecommerce, since your packaging is such a physical touch-point for your customer. Reinforce your brand and deliver on your customer expectations.

There are all kinds of stats out there that show customers are more likely to buy from you again if the fulfillment experience is exceptional.

In addition, one survey even suggested 40% of customers regularly post interesting packaging or unboxing videos on social media—spreading your brand even further.

Custom boxes are not out of reach with companies like Arka. Add an extra touch like branded tissue paper from companies like noissue, and customize where you can with logos on shipping labels, packing slips, and more to create a memorable unboxing experience.

You can be as creative as you want. We’ve seen merchants add stickers, handwritten notes, and other items to orders.

We’ve covered all your bases on branding your shipping here.

Fulfillment matters. As ad costs continue to go up, it becomes increasingly important each day to thrill and wow your customers.

This means shipping quickly. This means adding things into your fulfillment kit that your customer never expected, i.e. a branded koozie, a handwritten note, a get started guide, and much more.

This all can lead to better retention. Furthermore, if you look at brands that grow faster, they often focus on what the outside and inside materials look like.

At Hunt A Killer, for example, we brand the outside of the box just like Freshly, Blue Apron and several other brands. Having just an extra touch of branding can make you more memorable for your customers. Fulfillment is not a place where you want to cut corners.” — Eric Carlson, Co-Founder, Sweat Pants Agency

Whether you have custom-branded packaging or more cost-effective generic boxes, keep your packaging light and compact. The bulk of the cost of shipping is determined by size and weight. For this reason, poly mailers are a popular choice for online retailers and are ideal for apparel and items that do not easily break.

In most cases, consumers care more about how fast their packages comes than how pretty the package is. However, even the smallest touches can put you emotional ahead of your competitors. A great example is from Pique Tea (piquetea.com).

They sell tea crystals, which are convenient for travel but are also great for fasting and diet programs. To help get you started, they give a 28 day program and booklet that helps you understand the actual health benefits. I felt like that gave me a clearer idea of how to use and drink the tea.” — Alex Birkett, Sr. Growth Marketing Manager, HubSpot

Your Shipping Strategy

At this point, we’ve covered some of the main components of your shipping process: what goes into your shipping costs, what you should charge your customers, and how to approach shipping and packaging from a customer experience perspective.

You’re well on your way toward becoming a regular shipping expert.

If we bookend the fulfillment process, it really boils down to two things: your orders from wherever you sell to your shipping however you ship.

Wherever You Sell: Multi-Channel

While merchants find success selling on their own website or a single primary channel, which can really make a difference is a multichannel strategy.

When we looked at numbers of ShipStation users selling on multiple channels, we found that a simple rule holds true: the more channels you add, the more you sell.

Do a little bit of market research and understand the strengths and pitfalls of marketplaces like Amazon, eBay, and Walmart to find the opportunity that is right for you. One of the key questions you have to ask yourself is: can I manage their marketplace requirements?

Most marketplaces place stringent requirements and criteria on their sellers.

They track seller metrics and some of the most important of these metrics have to do with shipping: fulfillment lag time, percentage of orders delivered within the promised time frame, and so on.

Marketplaces can play an important role in your business. Make sure you stay on top of your shipping strategy to handle multi-channel order sources.

However You Ship: Multi-Carrier

Just like diversifying your order sources, expanding your portfolio of available shipping services is important.

The key to getting to the best shipping solution that serves your specific business needs is mixing and matching your carriers.

Each carrier has unique strengths and weaknesses; and, the best shipping method goes far beyond offering the lowest rate.

More guaranteed delivery times and better carrier-provided insurance can help save you money in the event of failed or damaged deliveries.

Furthermore, when negotiating discounted rates, shipping 10-30% of your parcels through a secondary carrier can give you leverage on driving up discounts.

Other Shipping Models

We’ve gone through this guide with the assumption that you’re in control of every step of your fulfillment process.

This control has many benefits in how you manage the bottom line and your customer experiences. But this control can also be an intensive process.

There are two other shipping business models we should mention:

Fulfillment by Amazon and Third-Party Logistics (3PL)

Outsourcing your warehousing and fulfillment process can be a great option for your business. Sure, you will relinquish some control and you’ll definitely incur additional costs, but you can have a third-party logistics provider store your product and then pick, pack, and ship your orders on your behalf.

Amazon is an industry standard for this.

With Fulfillment by Amazon (FBA), you pay Amazon to keep your products in its warehouses, as well as fulfill and ship your orders.

FBA works for orders from different selling channel sources as well: orders from BigCommerce and eBay are compatible.

Once the order has shipped, Amazon will send you the tracking number and shipment status.

Again, there’s no one-size-fits-all solution to shipping, and you don’t have to exclusively use a third-party fulfillment company or do everything in-house.

Third-party logistics can be used for all of your products or just a portion of them. Learn more on when to outsource your shipping with partners like ShipBob.

Dropshipping

Rather than owning and housing your own inventory, you may simply send your orders to a manufacturer or supplier that fulfills orders as they come in. This is called dropshipping.

Dropshipping has gained popularity in recent years since it gives you the ability to sell a product without owning or ever even touching the inventory.

You don’t need to stock, package or ship the product and you get a cut of the profits for selling.

But with this low-risk opportunity come low rewards; this can lower your profit margins so keep an eye on the cost of acquisition for your sales.

Shipping Tools

When first getting started, most sellers simply figure their shipping process out along the way.

This is where tools are going to be helpful.

A thermal label printer will produce batches of labels at high speed without ever requiring ink. A shipping scale can avoid improperly-weighed orders getting out the door, saving you time and money. Barcode scanners can shave off hours in repetitive tasks.

In the end, most time is saved with the right shipping software.

You need a software with robust integrations on both the selling channel as well as carrier side, strong automation features for maximum efficiency, and support for the right tools like thermal printers, scales, and barcode scanners mentioned above.

We’ve compiled a comprehensive decision guide to help you find the best shipping software for your business.

Executive Summary

You’ve optimized your sales process. But it doesn’t end there. That’s where it starts.

In this guide, we’ve walked you through everything you need to know to get started with efficient ecommerce shipping for your business.

Follow this guide to ensure you create a cost-effective and customer-centric fulfillment experience that can drive loyalty and repeat purchases.

“Your shipping/IRL experience should be just as delightful as your online brand. Be imaginative!

Add fun copy to your box and inserts and even paper receipts to get customers excited about unboxing. Send enthusiastic tracking update emails to keep people anticipating what’s in store for them. AND — this one’s a game-changer — if your product requires a little extra education before customers receive it, send a “preemptive objection-reducing” email while the order’s on the way.

For instance, if you make shoes that are a little tight for the first few wears, send an email explaining how to break them in effectively. This makes customers grateful and can drastically reduce returns.” — Lianna Patch, Founder, Punchline Conversion Copywriting

Don’t think of shipping as a cost center for your business.

Look at it as an extension of your brand and customer experience.

Do it right, and you may even transform shipping into a competitive advantage to grow and scale your business!

Want more insights like this?

We’re on a mission to provide businesses like yours marketing and sales tips, tricks and industry leading knowledge to build the next house-hold name brand. Don’t miss a post. Sign up for our weekly newsletter.

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