The 7 Sins of E-Commerce Shipping
by Jason Stark
When it comes to small parcel shipping, many hidden pitfalls can impact your business — we call these the seven deadly sins of e-commerce shipping. These can be anything from a minor inconvenience to a significant problem that will grind your business to a halt. The best thing to do is learn from businesses' past mistakes and make sure you don't let those crucial lessons go to waste.
While there are many more e-commerce shipping mistakes, we decided to focus on the seven most impactful things you need to avoid today:
1. Not using the right software
Using the right software (or suite of software) is crucial for e-commerce shippers and any business in general. Using the right software can make your life easier, save money (sometimes a lot), and provide a better customer experience. Some of the most critical things you will need your software to do are:
- Push live shipping rates to your customers in the shopping cart
- Address verification
- Rate shopping and managing multiple carriers
- Passing orders from your website to your order management system (OMS) or warehouse management system (WMS) if they are the same
These are just a few of many examples. The point is if you aren't doing any of these things now, or are doing them manually, stop and reevaluate your software today.
2. Only using one carrier or service
It used to be conventional wisdom for a shipper to put all of their volumes into one carrier to maximize discounts. While in some cases there can still be some benefit to doing that, the parcel shipping industry landscape has changed dramatically in the last few years.
We aren't the only ones thinking this way. Here's an industry expert talking about utilizing multiple carriers:
Given what we saw in 2020 with carriers capping pickups and even outright canceling them, it's never been more essential to utilize a mix of carriers. As a result, many shippers see savings on shipping costs and an improved customer experience through faster transit times.
3. Missing delivery deadlines
One of the most critical errors that any e-commerce shipper can make is not delivering a customer's package by the expected time. As soon as your customer hits the buy button, the clock is ticking. Today, many e-commerce platforms will send a customer an automated email as soon as the tracking number is generated, meaning the customer will likely be keeping an eye on the shipping process.
We all know that delays from carriers can happen, but the biggest mistake is not accounting for your fulfillment processes and timelines. If your website says 3 to 5 days, your customer expects it not to take longer than five days. The issue here is that many e-commerce shippers forget to consider the fulfillment process. It can take upwards of 24 hours to pick, pack, and ship the item in many cases. This means you're already a day behind on transit. The best thing to do is be as straightforward as possible with your customers about these timelines and not hide them in the small print.
4. Not being up to date on changes to services and price changes
If you are not using live shipping rates on your website, the worst thing you can do is not be aware of shipping cost changes by one of your carriers. Unfortunately, every year some businesses lose massive amounts of money because of this. When a company has a set shipping cost to keep things simple for its customers, that's where the issue comes in.
When they don't realize these changes have happened, many won't know that they have been paying upwards of 5% more for shipping until the bill comes due. One of the biggest things you can do to minimize this impact is to have your software set up to rate shop. Rate shopping means your software will choose the most cost-effective shipping method based on service level.
5. Not providing a paid vs. free option
As painful for some businesses as it may be, not having a free shipping option could be killing your conversion rates. Today's shoppers have an abundance of choices regarding where and how they shop online, and it's become the norm to have free shipping. Building in shipping costs to the cost of goods has become standard practice despite how you may feel about this.
This doesn't mean you have to sacrifice service or experience for your customers. Most consumers report being ok waiting upwards of five days for their package, as long as the right expectations were set upfront. This means that as long as you communicate the right expectations in the buying process, you can provide a more cost-effective shipping option than you might be used to using and keep your customers happy.
6. Using the wrong size box to ship
We've all seen it — the laughably oversized box for a tiny item. For shippers like Amazon, who now provide most of their logistics and deliveries, this might make sense from a warehouse efficiency perspective. However, using the wrong size box could be tanking your shipping costs. There is a practice known simply as diming or dimensional weight with most carriers. Using the dimensions of the box and a negotiated diviser, the carrier will come up with a dimensional weight.
This weight can often be higher than the actual weight, thus increasing the cost of your shipment. So again, this is something that can dramatically change how much you are paying for your freight and potentially eat away at your bottom line.
7. Not knowing your true costs to ship
Most e-commerce shippers know precisely how much it costs for them to ship a package from point A to B. Few know exactly how much goes into each shipment, however. When it comes to calculating shipping costs, everything needs to be considered. From the cost of the label itself, right down to the cost of the packaging tape and filler paper. Everything must be taken into account on a per-package basis so you know exactly what to charge your customer.
Most shippers get into trouble by not rolling all of their costs into a per package equation and not being aware of ancillary charges that can come back after the package has been delivered. This is important because you could be losing hundreds, if not thousands, of dollars every month on these often forgotten costs. Knowing these numbers and baking them into what you are charging for shipping can save your company severe amounts of money.
There can be many hidden costs in shipping, which can save your business time and money. However, knowing your business requires knowing your processes and the carriers you ship with. Understanding these costs and setting the right expectations with your customers can keep you from committing these and many other sins of e-commerce shipping.