E-Commerce 101: Shipping your products
You might have a good looking e-commerce site, best products, lowest prices, but it will count for nothing if you are unable to fulfill your order efficiently. Shipping is often being ignored by first time etailers, for instance they just couldn’t handle it when their business is picking up. Try to imagine if you have like 100 orders per day, how do you fulfill the orders effectively in terms of time and cost? It is an art to master and hopefully by reading this, you will be more prepared than ever.
The first thing you have to do is comparison shopping, basically sourcing for the most reliable and cheapest way to send parcel. Look up for those published rates at your local shipping vendors’ website. For example, you should check with USPS, UPS, FedEx etc. if you resides in United States. Whenever necessary, try meeting up with the sales representative from these shipping vendors to explain your requirements at the same time exploring options.
Here’s a basic checklist for sourcing your shipping vendor:
- Shipping rates – How is it calculated based on weight, dimension and location? Registered or express parcel rates?
- Location – Is it convenient for you to send parcel? Are you planning to fulfill orders from overseas?
- Pick-up service – Can the shipping vendor pick-up parcel from your place? How much and what’s the pick-up schedule?
- Others – What are the requirements and benefits of opening an account? Is tracking code provided?
Depending on your business, you might require services from multiple shipping vendors. For example, USPS offers cheaper rates to send heavier items, and UPS or FedEx offers convenience to send lighter stuffs.
Once you figure out the cost to ship the products, you need to develop a sensible shipping policy to pass onto your customers. If you are charging too much, you risk losing business. Bear in mind that shipping is never a profit center, customer will be put off if you are charging more than required.
Your profit will be cut though if you don’t charge enough. The simple logic is to charge exactly the fee required to ship the items.
If you have high profit margin or light-weight items, consider free shipping provided you can afford to do so. Customers love free shipping and it’s one of the biggest factors to persuade online purchase.
Packaging & Handling
Packaging is another cost that you have to consider, and absorb in some cases. Are you using packing materials provided by the shipping vendors, or your own branded ones? Branded packaging enhances your brand impression but could eat up your profits. It is worth considering though when your business becomes substantial.
Some etailers do charge handling fees, which consist of the cost of the packing materials and the cost of labor to pack items. In most cases, it doesn’t make sense to pass along these costs to the customers. You don’t want to be charged at the cashier for providing the plastic bag and packing the items, don’t you?
Return & Exchange
Don’t forget that a portion of your customers will request for return or exchange, especially if you are selling apparels. The question is, who is responsible for paying the cost of returning the item, and sending out the exchanged item?
Generally, it makes sense to state it clearly in your return & exchange policy, in which your customer has to bear the shipping cost of returning the item to you. It is a small price to pay to make your customer happy by footing the opposite bill, just make sure you budget it into your costing. It is completely different though in the case of defect item, which you should be responsible for the two-ways bill.
Always remember that order fulfillment is ultimately important to make your customer happy, and possibly return for more. It takes a lot of courage for customers to place order for the first time, so don’t let them wait too long to receive the order!
Image credit: ba1969
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