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Retail Shipping Explained: Options And Best Practices (2024)

retail-shipping-explained:-options-and-best-practices-(2024)
Retail Shipping Explained: Options And Best Practices (2024)

When it comes to retail shipping, customers want two things: they want it cheap and they want it fast.

There are scenarios where that’s not entirely the case. But for the most part, think of the Amazon effect: 62% of shoppers expect their orders to arrive in less than three business days, even when choosing free shipping.

Shopping decisions are increasingly dependent on shipping times. So what can you realistically do? And what shipping options do you have to consider to keep buyers happy?

A good shipping strategy doesn’t mean you need to offer every option possible. It’s about finding a balance between the options that are affordable, align with customers’ needs, and are doable when it comes to your ecommerce logistics.

Ahead, you’ll learn the different retail shipping options available and how to pick the best ones for your brand.

Table of contents:

What is retail shipping?

Retail shipping is when businesses ship products directly to consumers. In ecommerce, consumers can order things online and then have them delivered to their homes, offices, or wherever they want. There are several kinds of retail shipping, including standard, expedited, and next day.

Different types of shipping options

Let’s look at some retail shipping strategies retailers are using and how to figure out if you can offer them too.

Fast shipping options are in demand but come with a high price tag

“Fast” is a relative term. It depends on your geographical location and your buyers’ expectations. For example, if you’re shipping in North America, people are used to getting orders within a few hours.

Many ecommerce organizations can’t absorb the cost of fast delivery services. They have to pay someone to get in the car from the warehouse and drive a package directly to a customer’s house to get it there on time. It’s also a logistical challenge.

A concentrated network of warehouses and distribution centers is a big requirement for offering fast shipping options like same-day delivery. In the United States, for example, 100 well-placed warehouses that stock the same items would be needed to cover all Tier 1 and Tier 2 cities, as well as some Tier 3s, like Portland, Oregon.

Chances are you don’t have millions of dollars to invest in such a large delivery network.

Unless you plan to build more warehouses to offer fast shipping options, consider working with a third-party logistics provider (3PL) to manage order fulfillment. You ship your stock to their warehouses, then sync your store to their inventory. Whenever an order comes through, they’ll pick, pack, and ship the package to your customer.

How Momofuku found their 3PL partner | Shopify Plus

Same-day delivery

Same-day delivery combines the convenience of online shopping with the immediate gratification of purchasing a product in-store. Mass-market buyers have these high expectations, especially in the US.

Supply Chain Dive reports that 99% of retailers say they will offer same-day delivery by 2025.

Same-day delivery is ideal for customer segments that include young, urban, time-constrained consumers. These are the groups whose shopping decisions increasingly depend on shipping times.

How can brands manage same-day delivery? With Shopify’s smart order routing, you can automatically route orders from the best fulfillment location, whether it’s a warehouse, retail store, or 3PL.

Discover a better way to fulfill orders with smart order routing

Overnight shipping

Overnight shipping is the second quickest way, after same-day delivery, to ship orders. It’s also referred to as one-day shipping, or next-morning or next-day delivery. Names aside, overnight shipping guarantees that customers will receive their package on the next business day.

In the United States, popular carriers including USPS, FedEx, UPS, and DHL all offer overnight shipping. As customers become more attuned to online shopping, the demand for faster delivery and shipping is inevitable. Overnight shipping is a great option for most retailers who want to meet those expectations.

Two-day shipping

Two-day shipping can offer a competitive advantage like same-day and overnight delivery. But people will expect it to be free. A study by Ware2Go, a UPS company, found that 42% of shoppers expect a two-day shipping option during checkout.

Expedited shipping

Expedited shipping is a vague term, but it means faster than your normal shipping time. Today, you want to aim for your standard shipping to be fast: around two to four business days for national orders.

Affordable shipping options can lead to increased orders and higher AOV

If you know your costs are standard across all your product lines, you’ll have a solid understanding of how much it takes to pay for the shipping—especially if your shipping area is within a certain radius. Affordable shipping options like free shipping can help your conversion rates and reduce cart abandonment.

Free shipping

Customers now expect free shipping and returns. JungleScout’s 2023 Consumer Trends Report states that 80% of consumers expect free shipping when ordering a certain dollar amount of products, and 66% expect free shipping for all online orders.

Unexpected shipping costs are also one of the main reasons people abandon their online carts.

Despite the benefits free shipping offers to customers, someone has to pay for it. You can absorb the cost of free shipping by:

  • Factoring shipping into product pricing
  • Using free shipping as a promotional tool to drive sales
  • Focusing on upsells and cross-sells
  • Improving customer lifetime value to earn more revenue over time
  • Offering free shipping to loyalty club members only

You could also use free shipping for orders over a specific dollar or item amount—like free delivery on orders with more than two items. Shoppers will add additional items to their cart to qualify for free delivery.

Shipping heavy or large items? Free shipping may not be the way to go. Those extra costs have a deeper impact to your profit margins. In most cases, it’s not worth offering it.

After migrating over to Shopify Plus, ONE Championship worked with creative agency 360&5 to bring its new vision to life. The first step: adding a free shipping bar to its website.

Shoppers could see how far they were from free shipping, which made a big impact on carts for international markets. Using upsell and free shipping automations, the brand grew its cart size by five times, on average.

Flat-rate shipping

Flat-rate shipping means shipping prices don’t rely on weight, shape, or size of a package. You are charged a single rate for shipping a package based on how much you can pack into a flat-rate shipping box.

You can use a flat rate to set a per-item fee that doesn’t account for product weight. It’s also a simple way to add a free shipping option to your store.

Flat-rate shipping is simple for customers to understand, because they pay one price. It also can be a selling point to promote on your website. Use it for:

  • Small packages of merchandise where shipping is trivial to item cost, such as jewelry
  • Product lines where all items are roughly the same weight and size

Flat-rate shipping isn’t recommended for international customers. Static checkouts using flat-rate shipping don’t account for any information about taxes, duties, or courier fees. There is no way of knowing the upfront fees, so international customers may be turned off by paying more upon delivery.

Real-time carrier shipping

Real-time carrier shipping refers to including the exact shipping rate carriers charge at checkout for any order. These rates take order dimensions, weight, and shipping destination into account, then show the rate to the customer once they are at checkout.

Unlike flat-rate shipping, a real-time carrier means you charge customers exactly what the carriers charge you. It’s also a benefit for international customers so they can get an accurate rate from any location.

With Shopify, merchants can choose to charge buyers the discounted shipping rates available through Shopify Shipping. And if they have their own pre-negotiated rates with carriers, they can connect their carrier account and charge buyers the pre-negotiated rates.

Ecommerce shipping methods to expand markets

Customers don’t always understand why you can’t deliver in one day. The pressure to offer fast and affordable shipping methods while competing with Amazon has driven ecommerce brands to get creative.

There are cheaper options for today’s fast-growing market volumes. Companies can shift the rules of the game by using existing store networks for same-day shipping.

Retailers are also turning unused retail space, known as “dark stores,” into fulfillment centers to offer click-and-collection pickup, while cutting fulfillment costs.

Popular click-and-collect shipping options include:

  • Local delivery. Customers purchase products online and you deliver it to their homes.
  • Curbside pickup, or buy online, pickup in-store (BOPIS). You allow customers to place an order online and pick it up at a local store.
  • Ship to a friend. Customers place an order online or in-store and you ship it to their friend or loved one.
  • Buy in-store, ship home. Customers place an order in-store, then you ship it to their homes.
  • Locker pickup. Self-service kiosks where customers can pick up their orders when it’s convenient for them.

Shipping best practices

Entering the race for fast and cheap deliveries can be hard. Often retailers will fall short on volumes required for operations and be stuck with high delivery bills and low ROI. Yet there are ways to shift gears and succeed in shipping and fulfillment.

Outsource fulfillment operations to a local fulfillment network

Fulfillment and distribution centers are expensive to build. Retailers are working with 3PLs to utilize their fulfillment networks and ship items faster. The demand for 3PLs is set to increase every year, reaching a $1.59 trillion market valuation by 2028.

Work with a 3PL with a large network of strategically placed fulfillment centers in areas you want to ship to. This lets you stock merchandise at the right locations so orders can be shipped more efficiently.

Look for a fulfillment partner that:

  • Has a strong set of last-mile partners that allow seamless deliveries
  • Has urban fulfillment networks within two-hour drive time from customers
  • Recommends which inventory to store in which warehouse
  • Fulfills orders with custom packages that create memorable unboxing experiences
  • Offers late cutoff times to ship more same-day orders

3PLs are continually working to provide greater efficiency and optimizations for Shopify Plus businesses. As a shipping partner, they can help you meet last-minute delivery deadlines and customer expectations with fast and cheap shipping options.

Note: If you’re selling in the US or Canada, Shopify Fulfillment Network (SFN) automates your fulfillment so you can offer consistently faster and more affordable shipping. It works by smartly distributing your inventory across our North American warehouses, so it is closer to your customers.

ALT TEXT: Screenshot of the Shopfiy Fulfillment Network homepage

Caption: The Shopify Fulfillment Network helps merchants manage their products in one place.

In addition to two-day delivery times and order tracking, Shopify doesn’t charge merchants upfront fees for the first six months. It’s free to store products during that time, and delivery fees only kick in once you buy them.

With Shopify Fulfillment Network, you get:

  • Affordable two-day shipping
  • Delivery date displays on your product pages
  • Custom packing slips to improve brand strength
  • Seamless inventory management based on customer data

The Shopify Fulfillment Network can help high-volume businesses fulfill quickly and affordably. Learn more.

Automate inventory management

Inventory management is key to improving shipping efficiency. Your inventory system should be fast and integrated, giving you full transparency across all warehouses and stores.

Aim to have a direct transfer of order data between your online and in-store fulfillment. Use prioritized picking logic to allow fast tracking and delivery of shipping orders. This will save time, speed up fulfillment, and reduce shipping costs.

Shopify POS unites online and offline channels and keeps inventory updated in real-time. When you make a sale in your physical store, the system instantly updates the online inventory and vice versa.

Make returns easy

As you grow online sales, returns are unavoidable. In fact, in a 2023 VML report, 35% of global online shoppers admitted to over-ordering online items with the intent to return them. But it’s not all bad news: Returns give you the chance to collect customer feedback and provide unsatisfied customers with a better experience.

Considering most shoppers will buy again if the returns process is easy and positive, it’s worth the investment thinking ahead and optimizing yours.

Ecommerce automation lets you cut inefficiencies in the returns process. You can automate returns by:

  • Instantly giving customers credit or refunds
  • Pre-filing return labels
  • Supporting self-serve returns
  • Segmenting and tracking serial returners

Some apps you can use to make this process easier are:

Protect your profit margins by encouraging customers to exchange products or accept store credit. This saves you on restocking fees and shipping expenses, and helps retain customers.

Read more: The Plague of Ecommerce Returns and How to Maintain Profitability

Prepare for holidays and events

US holiday retail sales, defined as November 1 through December 31, reached nearly $964.4 billion in 2023. That’s up 3.8%, despite continued inflation and high interest rates.

When it comes to planning for the holidays, preparing shipping logistics couldn’t be more critically important.

Start early and execute a series of activities rather than doing everything at once. Set up inventory tracking to monitor stock levels through the busiest season. Run a free shipping campaign if you aren’t offering it already.

More than any other time of the year, shoppers are likely to abandon their carts if they can’t receive their order before December 25. Communicate estimated delivery times on your checkout and product pages. This can help increase conversions and align with customer expectations.

Read more: Holiday Shipping and Fulfillment Strategies

How to choose retail shipping options

Whether you’re creating a new shipping strategy or revisiting your current one, there are a few routes you can take.

You don’t want to offer customers every option possible. In fact, according to the paradox of choice, offering too many options can put a lot of cognitive load on the buyer and actually deter them from buying. People want cheap and fast—or, ideally, a combination of the two.

Before looking at what shipping options to offer, understand three things:

  • Your customers’ expectations. What do your customers expect from your brand? Some may understand you can’t offer same-day shipping like Amazon. But you can meet their expectations by offering overnight shipping, two-day shipping, or free local pickup.
  • What your competitors are doing. Your competitors’ shipping strategies won’t entirely inform yours. Yet they can help you get a better understanding of the affordable options you can provide.
  • Your shipping goals. Do you want the most cost-effective strategy? Or are you willing to pay more to meet the demands of your customer base? Some retailers use shipping as a competitive advantage. For example, if your competitor offers same-day shipping with an added fee, you could offer overnight shipping for free. The latter takes a little more time, but doesn’t cost customers a dime.

Making the most of your retail shipping experience

If there’s one thing the above article shows us, it’s that fast and cheap shipping options aren’t a nice-to-have service, they’re a must-have. The future of your company’s growth depends on it.

Investigate your options and find the type of shipping your customers want (or need). Whether that’s same-day Amazon-style shipping or flat rates, use their insight to plan your ecommerce shipping strategy.

Retail shipping FAQ

Does retail price include shipping?

It depends. In order to offer free shipping or expedited shipping, some ecommerce stores will add shipping costs into the listed price of their products. But there are several strategies an online retailer can use to offset the costs of the delivery process. Like, expedite deliveries for a limited range of products, offer discounts for bulk shipments, and even offer different shipping services depending on which part of the country their customers are located.

What is the cheapest way to ship UPS?

The cheapest UPS shipping option is UPS Ground Service. UPS’s ground shipping option delivers packages between one and five business days and supports packages that weigh up to 150 lbs and are up to 108 inches long. An 11-20 lbs package costs between $14 and $62 depending on distance. UPS claims that 90% of packages shipped via the Ground service, are delivered within three business days.

What is shipping and retail?

Shipping and retail is a combination of two different business models, where a business ships goods directly to customers, as well as selling goods in retail stores. This type of business model is becoming increasingly popular, as it allows businesses to reach more customers than ever before. With shipping and retail, businesses are able to reach customers in a traditional retail setting, while also reaching those who live far away and shop online. This flexibility allows businesses to maximize their sales potential and reach more customers than ever before.

What is the cheapest way to ship packages?

The cheapest way to ship packages depends on the size and weight of the package, the type of product, the distance it needs to travel, and the speed at which you need it to arrive. Generally speaking, the most cost-effective option is to use USPS First Class Mail for lightweight packages, USPS Priority Mail for packages weighing up to 70 pounds, and USPS Media Mail for books and other media.

What does “shipping in store” mean?

“Shipping in store” refers to the practice of purchasing items online and then picking them up at the store, rather than having them shipped directly to one’s home. This type of service is becoming increasingly popular, as it allows customers to save money on shipping costs and makes it easier to return or exchange items.

How does shipping in store work?

When customers choose to ship their orders to the store, the order will be sent to the store address they provided at checkout. Depending on the store’s policy, customers may be required to show identification when picking up their order. The store will typically contact customers to let them know when their order has arrived and is ready for pick up.

Read More

This article originally appeared on Shopify Plus and is available here for further discovery.
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