Affordable ecommerce shipping and fast shipping seem at odds – how do you balance the two and come out on top?
Anyone who recognizes that ecommerce customers have high expectations these days also recognizes that fast shipping is part of what keeps those customers happy. We’ve seen non-essential items on Amazon be delayed because of COVID-19, and that’s cause quite a bit of grumbling from both customers and ecommerce businesses. While guaranteeing fast shipping to your customers is definitely a good thing–16% of people have abandoned a shopping cart if the estimated delivery time is too slow–it’s a double-edged sword. Your customers will love getting their order in one or two business days, but it can also be cripplingly expensive.
The solution is complicated. If shipping faster costs more, do you pass the cost along to your customers? Do you let it eat into your profit margin? Believe it or not, there are other options. Is it possible to have your cake and eat it too? Yes, but you’ll need a crash course in logistics if you’re going to find affordable ecommerce shipping. Let’s dive in!
1. Implement zone skipping
If you’ve ever had to ship your inventory cross-country and had the accompanying jaw-drop when you discovered how expensive that was going to be, you’ve encountered shipping zones before. The further you ship your products, the more it’s going to cost — obviously — so how do you get around it?
The answer is zone skipping. To skip zones, you need to store your inventory strategically so that you can choose which location to ship from (and pick the closest one). For example, if you get an order from a customer in Los Angeles and you have inventory stored in Miami and Las Vegas, you’ll want to send them that product from Vegas to save a bunch of money on shipping (and ensure that the order gets to them speedily).
Whether you store and manage your own inventory or rely on a national fulfillment network of warehouses, zone skipping is a smart money saving solution. For example, you’ll probably keep some inventory in a warehouse in Miami, have a location in Pennsylvania to hit the northeast, maybe one in St. Louis for the midwest, and one in Las Vegas to cover the west coast.
2. Consider dimensional weight
Shipping carriers don’t just measure the weight of your packages in pounds and ounces anymore – if this is news to you, this could be a major opportunity to decrease your costs. When a carrier determines the cost of shipping, they charge you the greater of the two weights – dimensional and actual. Actual weight is just what it sounds like, but dimensional weight measures the size of your package. The bigger it is, the more it costs to ship, even if it’s as light as a feather. It makes affordable ecommerce shipping tough for businesses with large or bulky packages, because they always get charged the dimensional weight.
The good news is if your dimensional weight is greater than your actual weight, you can decrease the size of the package to save money. The more you can minimize the volume of your package the more you can save. Think about how to streamline your packaging experience, whether it’s removing unnecessary infill, using boxes that are more specifically fit for your inventory, or getting rid of any bulky extras that you’re throwing in. Making any one of those changes, even if it seems small, can add up to be huge over time.
3. Determine whether to ship flat-rate or not
For something that claims to simplify the costs of shipping, it is a lot more complicated than it seems at first glance. However, offering flat rate shipping has the potential to save you money, so let’s go over what kinds of businesses can save big with flat rates.
Each carrier has its own flat rate shipping system, so it’s well worth your time to check out a full explainer of flat rate shipping. However, it boils down to a few specific instances in which flat shipping could help you save big.
The first is if your products are small, but heavy – this means you’re getting hefty shipping charges due to the actual weight of the product, and shipping in a flat rate box that doesn’t charge by weight could save you a lot. The second is if you ship from coast to coast frequently – for example, if you have a warehouse on the east coast but a lot of your orders come from the west coast. When you ship with UPS or USPS, the flat rate shipping charge doesn’t change depending on distance, so you’d likely save big there. It could also be a good choice if you need to charge your customers a flat rate, or if you fulfill your orders yourself (and then you could take advantage of the convenience).
If you don’t fall into the above categories, though, stay away from flat shipping. It will likely cost you more in the end.
4. Offer bulk rate shipping discounts
Buy more, pay less. That’s the dream, right? It is when you can manage to get a bulk rate discount from your shipping carrier. If you’re selling a high volume of products and you haven’t looked into getting a bulk discount, you need to get on that ASAP. However, it can be kind of confusing to figure out how to get that discount, as it’s not exactly something that the shipping carriers freely advertise.
There are a few ways you can try to get discounts for more affordable ecommerce shipping from carriers. If you’re a small business and you’re fulfilling everything yourself, you’re most likely to get bulk rates by using a platform like ShipStation or Shippo. They’ll let you compare prices and figure out the cheapest way to ship your items as quickly as possible, and they’re able to take advantage of bulk rate discounts by negotiating with carriers on behalf of all of their clients. Shopify offers a very similar service through their own platform, called Shopify Shipping.
However, unless you’re an enterprise-scale company, the chances are good that the best rates are going to come if you partner with a 3PL fulfillment company. They typically ship a huge volume of packages and are thus able to negotiate a discounted rate – without you having to do as much work.
5. Beef up your last mile options
The last mile – metaphorically speaking, anyway – is the last step between the warehouse and the customer. This last step can sometimes take the longest. If you’ve ever tracked a package on its way to your house, you may have noticed the significant gap of time between it being out for delivery and actually being delivered. That’s because this step is complicated and relies on a lot of different cogs spinning together as one machine. It can depend on the third party you work with, how busy they are, where their facility is located, what courier they use, and many other factors that are completely out of your control.
As you can imagine, cutting down on the time and cost spent in the last mile is critical. But how can you do it?
First, don’t be afraid to A/B test different courier services to see which one does better. Something like a drone delivery service, while very cool, is probably way too expensive. But trying different companies can help you find that sweet spot between costly and quick. While Fedex and UPS frequently outsource to USPS for the last mile because of their coverage, other options have popped up in the last few years. Just like Uber Eats or Lyft, drivers contract with companies and use their car to complete deliveries – in this case, getting your package to the customer’s door.
You can also consider a pick-up option, which cuts out that last mile entirely. Make the customer come to you! If you have brick-and-mortar stores, setting up in-store pickup is an easy choice. If not, you may even want to consider participating in something like the UPS Access Point program.
6. Encourage larger average order sizes
In general, the more items you can ship in the same box, the more you can save on shipping. And when you’re saving on shipping, you can give some of those savings back by offering upgraded fast shipping or free shipping. But how?
A common way to encourage larger order sizes is to offer free shipping once they hit a certain minimum (like $50). However, you can try a new take on that, which is to offer upgraded shipping once they hit the minimum, which will reward them for ordering more by getting it to them faster. To set your minimum, look at your average order amount and set it a bit higher than that, which should bring your overall average order amount up over time. To do a trial run, try doing a customer appreciation campaign with upgraded shipping at your new minimum to gauge the popularity.
Another option is to sell in kits or in bulk when you can. By packaging best-selling or complementary products together you can easily increase the size of the order (and it’s an easy upsell for your customer as well). Ultimately, the more items you can fit in one shipment, the cheaper it will be to get it there quickly. This is a great way to balance affordable ecommerce shipping with fast shipping speeds.
7. Minimize the weight of your product and/or packaging
Hot take: no one cares about your inserts. Not-so-hot take: the unboxing experience is a crucial part of the impression you make on your customer. Both are true; how?
It’s true that unboxing is a big part of your image, and it takes on a life of its own on social media. The problem is that when companies think of unboxing, they think the more the better – and that’s not necessarily true. Practically, those materials take up valuable space and weight in the box, leading to marginal increases in shipping cost that become significant at scale. They also take longer to assemble, and all of the inserts you throw in will be tossed in the recycling bin (or the garbage) eventually, even if they do bring in an extra lead or two. It’s not worth it.
What is worth it is designing smart. Your unboxing experience doesn’t have to be over the top and filled to the brim with extras – a smart, thoughtful experience is just as meaningful for your customers, and packaging trends are moving that way as well. Consider talking to a package design company to see how you can really wow with design and ditch the inserts, or think about how using less can actually be more effective (like moving towards a more environmentally-friendly image).
8. Restrict where you offer fast shipping
Lastly, fast shipping does not have to be an all-or-nothing game. With the U.S. being the size that it is, at a certain point, you’re going to have to make some exceptions to where you can get to quickly. Just ask anyone in Alaska or Hawaii– they’ll be the first to tell you that it takes ages for shipments to arrive. Finding fast and affordable ecommerce shipping for the entire U.S. is going to be pretty difficult, especially if you’re not working for a 3PL, so you’re going to have to make some sacrifices. Sorry Alaska and Hawaii.
To make conditional fast shipping work for you, you can set parameters that will allow you to offer fast shipping where it is reasonable and affordable to you. This could be within major urban zones, or areas within a certain radius of the warehouse(s) that store your inventory. You can consider shipping to more remote areas, or places a certain distance outside of your core shipping radius, to be like shipping outside the lower 48. Even if you can’t offer fast shipping to all of your customers, you can at least increase your conversion rate where you do offer it without breaking the bank.
Fast shipping and low costs are a balancing act. With customers expecting everything faster than ever (and freer than ever) it can feel overwhelming to try to make everyone happy. In reality, you’re going to be best served by cutting your own shipping costs as much as you can, and taking advantage of any deals you can get by using special services. Hope that cake tastes good!