THE ESSENTIAL GUIDE TO

ECOMMERCE SHIPPING
 INTRODUCTION
For your customers, excellent shipping is a service they take for granted. Amazon
has set the bar high, and while you don’t need to copy everything they do, there is
a lot that goes into building a seamless shipping experience.

Communication is king — it always has been. But with your online business, there
are systems, processes, and costs to consider. The success of your e-commerce
operation depends on customer loyalty, so you need to create value for them
at every opportunity. In this guide, we’re going to explain the ins and outs of
e-commerce shipping so that you can achieve the best customer experience
possible.

The success of your e-commerce operation depends

on customer loyalty, so you need to create value for
them at every opportunity.

It would be fair to say that the customer experience depends entirely on the
product delivery experience. It includes everything that happens from the moment
they click to buy a product, including the shipping options, the cost, the packaging,
and of course, an unforgettable unboxing experience.

Each of these elements is completely within your control, and with this
introduction to e-commerce shipping, our goal is to give you a comprehensive
framework that covers all of the essentials, and more.

We’ll help you understand how to bring it all together with a shipping solution that
fully integrates with your inventory management and customer management
systems, and how it will ultimately help you grow your business.

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 QUICK LINKS
Introduction.......................................................................................................................................................... 2
Shipping Rates and Methods................................................................................................................... 5
2-Day Shipping, Ground Shipping, Air Shipping......................................................................... 5
Advantages of 2-day shipping................................................................................................................. 6
Lower cart abandonment rates.............................................................................................................. 6
Improve customer loyalty............................................................................................................................ 7
Exceed customer’s expectations............................................................................................................ 7
How to stay in control of your 2-day shipping costs................................................................. 8
Overnight/Next Day Shipping.................................................................................................................. 8
- What is the lowest cost overnight shipping option?...................................................... 9
- Quick Comparison of Next-day shipping services............................................................ 9
- Overnight Shipping: FedEx, UPS, USPS................................................................................... 9
International Shipping
- Is International Shipping Right for Your Business?......................................................... 11
- What are the lead times for international shipping?..................................................... 12
- Which companies can you use for international shipping?...................................... 13
- International Shipping: UPS, DHL, USPS, FedEx................................................................ 13
- What can go wrong with international shipping for small businesses?........... 14
- Tips for International Shipping....................................................................................................... 15
Free Shipping
- Considerations Before Offering Free Shipping................................................................... 17
- Set a minimum order threshold.................................................................................................... 18
- Offer bundles or mix-and-match incentives......................................................................... 18
- Raise the cost of the product.......................................................................................................... 18
- Offer Free Shipping in Limited Locations............................................................................... 19
- Create a Membership Program for Free Shipping........................................................... 19
- Offer Multiple Shipping Options at Checkout..................................................................... 19
- Shipping Software................................................................................................................................... 19
- Returns and Free Shipping............................................................................................................... 20
How To Calculate A Minimum Order Threshold For Free Shipping.............................. 20
- Know Your Margins................................................................................................................................ 21
- Free Shipping Delivered..................................................................................................................... 21
What to Charge: Shipping Rates............................................................................................................ 22
- Charge Real-Time Carrier Rates..................................................................................................... 22
The benefits of offering integrated real-time shipping costs............................................ 23
Considerations before switching over to real-time shipping............................................. 23
Flat Rate
- Charge a Flat Rate................................................................................................................................... 24
- The benefits of flat-rate shipping for ecommerce stores............................................ 25
- Flat-rate shipping restrictions......................................................................................................... 25
 QUICK LINKS

First Class Shipping

- USPS ................................................................................................................................................................ 26
- Is USPS First Class Shipping Right for You?.......................................................................... 26
USPS Priority Mail Shipping....................................................................................................................... 26
Shipping Zones: An Introduction
- What are Shipping Zones?................................................................................................................ 27
-Calculating Shipping Zones.............................................................................................................. 27
-The Impact of Weight on Shipping Cost by Zone.............................................................. 28
-Shipping Zones + Speed of Delivery............................................................................................ 28
-How to Reduce Shipping Zones and Costs............................................................................. 29
Shipping Cost Strategies............................................................................................................................. 29
Packaging and Marketing.......................................................................................................................... 31
Ecommerce Packaging................................................................................................................................ 31
Where you can obtain free packaging supplies
- Free Shipping Supplies from FedEx, DHL, UPS, USPS................................................... 34
Shipping Carriers
- FedEx................................................................................................................................................................ 35
- USPS................................................................................................................................................................. 35
- DHL.................................................................................................................................................................... 35
- UPS.................................................................................................................................................................... 35
Insurance, Tracking, and Returns
- Shipping Insurance................................................................................................................................ 36
- What is shipping insurance, and how much does it cost?......................................... 36
- UPS Shipping Insurance Costs 2020........................................................................................... 36
- FedEx Shipping Insurance Costs 2020...................................................................................... 37
- USPS Shipping Insurance Costs 2020....................................................................................... 37
Order Tracking
- Should you provide Ecommerce Order Tracking?........................................................... 39
Ecommerce Returns
- Returns Statistics..................................................................................................................................... 40
- Creating your Returns Policy........................................................................................................... 40
Customs Documentation, Duties, and Taxes
- Certificate of Origin................................................................................................................................ 41
- Export Declaration.................................................................................................................................. 41
- Commercial Invoice............................................................................................................................... 41
- Duties and Taxes...................................................................................................................................... 42
Labelling your Packages
- What makes a good shipping label?......................................................................................... 43
- Creating Shipping Labels................................................................................................................... 43
Ecommerce Shipping Best Practices Summary......................................................................... 44
 S H I P P I N G R AT E S
& METHODS
In modern day ecommerce there is no such thing as a single strategy for success.
One-size-fits-all doesn’t work, and in order to succeed, you need dynamic
shipping methods that meet the individual needs of your buyers, your margins,
and your budget.

When it comes to choosing the right shipping methods, it’s important to offer a
number of affordable and fast shipping options. This factor alone can help you
reduce shopping cart abandonment rates while boosting your conversion rates
simultaneously. Ultimately, it all comes
down to giving your customers a choice. By
giving them multiple options, you let them
pay the amount they’re happy to pay, but
essentially always give them the service
they want.

Here are the top shipping methods to

consider as part of your ecommerce
shipping strategy.

2 - D AY S H I P P I N G
A two-day shipping method involves you sending your packages from the carrier
to the recipient within a two-day period. This method was standardized by Amazon
offering 2-day shipping to Prime members. Now that it is so commonplace,
customers expect it from everyone. Or you risk losing the sale to Amazon!

Two-day shipping begins once the carrier takes possession of the order. Ground
shipping and air shipping are the two methods that enable deliveries to take place
in a two-day period.

GROUND SHIPPING
This method utilizes trucks for the transportation of the packages and is much
cheaper than shipping by air. If you use ground shipping for your 2-day turnaround,
then your orders will most likely need to travel across a shorter distance. The
precise number of days in transit will be defined by the destination along with the
point of origin. (See section on Zones below) 5
The vast majority of merchants who provide a two-day shipping option via a
ground network will ship their products from warehouses or fulfillment centers in
different regions to enable them to cover more ground.

Over 50% of buyers will abandon their cart due to high shipping costs. Ground
shipping helps to keep costs low, while still being able to offer a relatively quick
delivery time if their are close to your point of origin.

AIR SHIPPING
This method is utilized to quickly send packages to
destinations that are usually international or on the other
side of the country. As the name suggests, airplanes are
used to ship goods, and although it costs more than
ground shipping, for some orders it is the only method
that can ensure a 2-day delivery time.

T H E A DVA N TAG E S O F O F F E R I N G A
T W O - D AY S H I P P I N G M E T H O D

Put yourself in the position of a customer, and compare a retailer offering a 2-day
shipping method versus a lead time between 3-7 days. Furthermore, if a customer
can find a similar product on Amazon, they can order it from there and receive it
quickly.

Here are just a few of the benefits of offering a 2-day shipping method for your
ecommerce business.

LOW E R CA RT A BA N D O N M E N T R AT E S
There are plenty of reasons why shoppers abandon
their carts and fail to complete the sale. In some
cases, you might not always know the reason why.
However, research has proven the two most common
factors causing people to leave are slow delivery
times and higher than expected shipping costs.

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Offering a range of options to satisfy the needs of customers who want their
products quickly and those who are happy to wait a little longer for a lower price
is key. So, in order to help drive conversions up, offering a reasonably priced,
expedited delivery option, such as 2-day delivery, is crucial.

I M P R O V E C U S T O M E R L O YA LT Y
Once your customers experience
an amazing delivery experience
that is both quick and on-time,
they’re more likely to buy from you
again. Delivering on expectations
is paramount! You can encourage
repeat purchases with your
marketing and use tactics such as
shipping inserts to help promote
these behaviours. (More on this
later!)

Offering two-day shipping on your

website gives you the option to win
your customer and not lose them
to a marketplace. Selling through
your own site gives you more
control over the entire experience.

E XC E E D C U STO M E R S ’S E X P E CTAT I O N S
The consumer of today expects a quick shipping experience. By offering 2-day
delivery, you satisfy their need for instant gratification, which leads to a positive
experience, better reviews, and more recommendations.

Offering 2-day shipping can help you secure more orders. Research shows that 25%
of shoppers cancel their orders because of slower than expected shipping speeds.
However, as an e-commerce store owner, you need to balance this option against
your margins.

2-day shipping across the entire country is not always going to be possible,
particularly for those in more remote areas or who might be located on the
other side of country from your fulfillment centers. Often referred to as dynamic
shipping, you can ensure that the option for 2-day shipping is only offered to those
who are located in an area that qualifies them for this service and hidden from
those who are outside the eligible areas.

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USE GROUND SHIPPING & SHIP FROM
KEY FULFILLMENT CENTERS
Placing products at different locations across the country will allow you to utilize
ground shipping options that are within 2 days of your customer base. You can use
third-party logistic providers to increase your coverage. Basically, no matter where a
customer orders, you will have product within 2 days of ground shipping service.

Not everyone can afford to operate their own fulfillment centers. You can use third
party logistic (3PL) providers that do the order fulfillment for you. They are a great
way to scale your operations and increase your coverage across the country. But
not every one operates in multiple locations, so be sure to ask.

USE USPS PRIORITY MAIL

Priority Mail offers 2-3 day delivery for packages over 1 pound. You can check their
coverage and estimate delivery times here, and it is important to note that most
of the country – especially major urban areas – are within 2 days for delivery.
This means you can offer a reliable 2-day option at much lower cost
than other services.

O V E R N I G H T/ N E X T D AY S H I P P I N G

This option is pretty clear: your customers are

guaranteed to get their order the next business
day. It’s similar to next-day delivery or one-day
shipping, but the exact date of delivery to a
customer will depend on the time they place their
order.

Most shipping carriers will have specific cut-off

times and once a certain time has passed, next-day
delivery options are no longer guaranteed. In some
cases, and depending on the carrier you choose,
orders that are taken over the weekend might
require an additional day.
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W H AT I S T H E LOW E ST C O ST OV E R N I G H T
SHIPPING OPTION?
The cheapest overnight shipping options will depend on a variety of factors,
including the delivery timeframe, parcel weight and dimensions, delivery location,
and any discounts you might get with the carriers.

USPS has a long-time reputation for offering the cheapest overnight shipping
when a package is below 2lbs. Below are a few quick links to the USPS, FedEx, and
UPS price calculators to help you work out the cost of overnight shipping. These are
retail prices, however; you should be using shipping software that is connected to
commercial pricing to get the best discounts.

USPS Shipping Cost Calculator

FedEx Shipping Cost Calculator
UPS Shipping Cost Calculator

QUICK COMPARISON OF
N E X T- D AY S H I P P I N G S E R V I C E S

The cost of overnight shipping services can vary between carriers, and
while it is considered to be expensive, it’s important to shop around
for the best deal. In this section, we compare the different next-day
delivery options from USPS, FedEx, and UPS.

FedEx Overnight Shipping

FedEx is typically the highest cost of the three we’re looking at. They
actually offer three different choices for overnight delivery options.
Here’s a summary of each.

FedEx Overnight Standard – This is the lowest cost of FedEx’s

overnight options and will guarantee delivery by 3 pm to almost any
address in the U.S.

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FedEx Overnight Priority – This is in the middle in terms of cost and
will deliver to most U.S. addresses by 10:30 am the next day. For those
who are considered to be in a remote delivery area, however, they can
expect to get their package by 5pm.

FedEx Overnight First – This option is the most expensive, but offers
the quickest delivery, which in some cases will be by 8 am the next
day. For those in extended or remote locations, they can expect their
package by 2pm.

Each of these options will allow a shipper to customize pick-up and

delivery options, including adding proof of delivery.

UPS Overnight Shipping

Similar to FedEx, UPS provides three different choices for next day
delivery services. They have a reputation for delivering more overnight
deliveries on-time than any other carrier.

UPS Next Day Air Saver – This is the least expensive of UPS’s overnight
options, offering a guaranteed delivery by 3 pm.

UPS Next Day Air – This is in the middle in terms of cost and will
deliver to most U.S. addresses by 10:30 am the next day.

UPS Next Day Air Early – This option is the most expensive but offers
the quickest delivery by 8 am the next day.

UPS also provides online tracking with each of these options.

USPS Overnight Shipping

The overnight shipping option offered by USPS is called Priority Mail
Express. This is their quickest domestic mail service. They also have
options that can guarantee delivery before 10:30 am the following day.

Out of the three carriers listed here, USPS is the lowest priced shipping
option out of all of them.

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 I N T E R N AT I O N A L S H I P P I N G

Selling internationally is no longer as challenging

as it once was. While in the past it was reserved
for larger corporations, international ecommerce
shipping is easier than it’s ever been.

Although taking orders, handling transactions, and

security have made it easier to source items from
around the globe, the physical logistics still require
a little time and attention. However, you can still find reasonably priced
international shipping options that can help you get your products from A to B
without too much trouble.

Getting in front of a global audience is key for the

continued success and development of your business.

The internet has made it easier than ever to get in front of more people. With more
than 70% of buyers making international purchases, there’s no wonder that over
60% of online merchants are already offering global shipping options.

According to research, ecommerce stores that provide international shipping

options grow up to 60% quicker than others who do not.

I S I N T E R N AT I O N A L S H I P P I N G
RIGHT FOR YOUR BUSINESS?

If you want to consider whether or not international shipping is right for your
business, take a look at these questions:

• Do you have any language barriers that would require you to change your
product or customer support?
• Which countries are your site visitors from?
• Have you had any requests from people to ship your products
internationally?
• Do your competitors ship internationally?
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Other key factors around the fees and the legalities to consider are listed below.

What type of goods are you shipping?

As you’ll appreciate, there are specific products that you won’t be able to ship
internationally. These prohibited items are considered to be dangerous or HAZMAT,
but there are also certain weight restrictions as well.

What are the regulations for the different countries you are shipping to?
You should check the regulations in each country you might be asked to send
products to, and make sure there are no limitations on the product, or the
ingredients/materials used to make them. You might also need to provide the
correct documentation so the package can be successfully received.

Which country are you shipping items to?

Whether you use your website analytics or another system, you need to know
where there is a demand for your product. You can then undertake research to see
if it makes good financial sense for you to ship products to those destinations.

What are your potential profits?

International shipping could be a real money maker for your business, especially
when there is a demand for your product overseas. International customers are
more likely to pay the cost of shipping, but make sure that you know your cost
before charging them!

LEAD TIMES FOR

I N T E R N AT I O N A L S H I P P I N G

It can be challenging to calculate the lead times

for shipping internationally, particularly for those
who do not use expedited shipping options.
Generally speaking, the less you pay, the longer
the lead time. It is possible to get quicker lead
times, but with quicker delivery times, you can
expect to pay more money.

It’s not unusual for international deliveries to

take weeks to deliver, and if you’re going to offer
this service, you must ensure your customers are
aware of the maximum lead times before they
place their order. As we’ve already mentioned a
couple of times in this guide, communication is
king. An informed customer is a happy customer.
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 WHICH COMPANIES TO USE FOR
I N T E R N AT I O N A L S H I P P I N G

The cost of sending packages internationally will typically depend on the country
they are being shipped to. There are also other things to consider, such as taxes,
tariffs, and other such fees. In order to accurately calculate shipping costs and find
out the cheapest way to send products internationally, you’ll need to play around
with the different shipping rate calculators, and enter in the different countries you
could potentially need to ship to, along with the product weights, etc.

UPS International Shipping

UPS gives you the option to input a range of data, such as the weight, destination,
origin, shipping date, and more. Here’s the link to their online price calculator. It will
then give you the different rates for all of their international shipping services.

DHL International Shipping

DHL offers a range of international shipping options, from urgent same-day
shipping to non-urgent, lower cost choices. Please note that they do not offer all
of their quick delivery services to every country. Here’s the link to their online price
calculator.

USPS International Shipping

USPS provides a range of options that are based on the destination and overall
weight of the shipment. They offer flat-rate pricing for international services as well
as other options. Here’s the link to their online price calculator.

FedEx International Shipping

FedEx makes it quick and easy to work out the cost of international shipping by
simply entering the origin, destination, and parcel weight. Here’s the link to their
online price calculator.

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W H AT CA N G O W R O N G W I T H I N T E R N AT I O N A L
SHIPPING FOR SMALL BUSINESSES?

International shipping isn’t for everyone. There are three major factors that can
heavily impact your bottom line and your customer experience. Make sure you
carefully consider these points when making the decision of whether or not
international shipping is right for your business.

Unknown fees
Every country you might want to ship to could present you with a different cost
option. Importation fees and duties are a typical ‘unknown’, and in some cases,
these are levied on your customers, who won’t be happy they’re being asked to pay
more than they expected.

Documentation
You might encounter issues
when you ship parcels across
borders, particularly when your
goods arrive without a correctly
completed commercial invoice
or the right certificate of origin.
Once you know the rules and
requirements for the countries
you wish to offer shipping to,
this can all be easily put in place.
However, it is something that
needs due care and attention.

Timeframes for delivery

Global shipping times vary greatly. Again, the destination is an important factor in
the timeframe, along with the carrier and the option you choose. However, lead
times can vary from 1 week up to 1 month. These times could be extended if there
are any errors or missed details from the recipient.

Incorrect Postage
If you get the postage wrong then you might have to deal with a return, or
additional charges being requested from your customer. Aside from this,
underpaid postage can cause delays to your deliveries. International customers
could refuse packages that take too long and request a refund.

If you decide to handle the shipping yourself, then make sure you utilize the correct
label and mail class.

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 T I P S FO R I N T E R N AT I O N A L S H I P P I N G

To help you avoid delays, overpayments, and errors, we have listed a few best
practices about how to ship products internationally.

Know your numbers

This specifically relates to the
dimensions of your orders. The
dimensional weight of your goods can
impact the cost of shipping. As such,
using both the dimensions and the
weight of your products together, you
can get a more accurate cost. Best
practice dictates that you should always
round up to the nearest ounce or pound.

Packaging
We’ll cover packaging more in depth
a little later in this guide, but if you are
shipping any fragile items, then you
need to make sure these are packaged
very well. If you consider the length
of the journey the package needs to
make, along with the factor of differing
climates and potentially much higher
temperatures than at home, then this
will always help to ensure your products
arrive in the best condition.

Do comprehensive calculations
All businesses need to turn a profit with
the products they sell. Whether you’re
shipping in-state or internationally, you
need to make sure you factor in all of the
costs before making the decision to offer
shipping to an individual country.

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For each, you need to consider the cost of expedited shipping vs. standard
shipping, and account for the handling and shipping totals on a country by country
basis. This includes:

• Packaging supplies and materials

• Shipping costs, incl. taxes and duties
• Staffing costs
• Warehouse equipment
• Rent
• Warehouse or logistics management software

For instance, if your total monthly costs from all of the above areas come to
$40,000, and you ship 2000 orders each month, then your per-order handling and
shipping cost is $20.

The amount you charge for international shipping will typically depend on the rates
you get, your average order value, and the total handling and shipping costs. It is
highly unlikely you will be able to provide free shipping internationally, but you also
shouldn’t look to make a profit from your global shipping charges either. If you do,
and these charges are unexpectedly high, you could see a decrease in international
sales.

Try to be clear about the countries you do and do not ship to, and wherever
possible, try to give the customer as much information you can about their
expected delivery lead times at the point of purchase. To make sure you cater
to as many needs as you possibly can, you should consider adding an express
international shipping option alongside your standard choice.

While this may not get selected often, it has a subtle effect on making the cheaper
option seem more palatable from a cost standpoint.

Other choices you should consider offering include shipping insurance and order
tracking. Both of these can increase buyer confidence, and for private carriers, such
as DHL, UPS, and FedEx, they usually retain control of the package throughout the
entire journey, which makes order tracking more dependable.

For government carriers, such as USPS, they will usually change carriers at the
point the parcel arrives in the destination country, and this can restrict your order
tracking options.

Giving your customers a tracking reference, and the option to track and trace their
own orders can also relieve a little pressure on your customer support team as well.
This is because they have the information they need to check the delivery status
on their own.
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 FREE SHIPPING

When you put the word ‘free’ in front of a customer, it can significantly impact
their decision to buy from you. 9 out of 10 consumers signify free shipping as a
major motivation for buying products online more often.

We’ve already mentioned that higher than expected delivery charges are a leading
cause of cart abandonment, but there’s more! Over 90% of consumers state that
they will take extra actions to make sure they qualify for free shipping. Shoppers
often expect free shipping when they spend over a certain amount, and this can
also help you sell more products, as customers look to top-up their baskets to make
sure they hit that minimum order quantity.

When a business is considering free shipping, the obvious concern is margin

and profitability. While there is no one-size-fits-all approach to offering this perk,
it is possible to strike a happy medium between delivering better conversions
without having to break the bank. In the next section, we look at a few of the key
considerations you need to make before adding this to your ecommerce fulfillment
strategy.

C O N S I D E R AT I O N S B E FO R E
OFFERING FREE SHIPPING
Unless you sell particularly high-ticket items in
your ecommerce store, offering free shipping
across your entire portfolio might not always be
feasible. However, there are a lot of ways you can
offer free shipping and not run yourself out of
business.

First, If you’re not currently offering free shipping,

then you should post that clearly on your product
pages. “Shipping calculated at checkout” is a good disclaimer; online shoppers really
hate getting to the end of checkout only to find shipping costs are not included.

No matter what method you employ, clearly stating shipping costs and policies is
an absolute MUST for ecommerce companies. Customers hate finding out they are
paying for shipping, and when they have questions about returns they want them
answered easily.
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Set a minimum order threshold
You can raise the average order value (also known as AOV) for your ecommerce
store by implementing a minimum spend threshold for your orders. Lots of retailers
market free delivery across their site in this way.

The key to doing this successfully is to make it easy for your customers to find
related products by offering bundles and making upsell suggestions on your site.
You can also add an announcement bar that shows them how close they are to
earning free shipping.

Offer bundles or mix-and-match incentives

You can take the base product, and then create a relevant gift set or bundle. While
a little more time consuming during the set-up stage, this approach can have a
significantly positive impact on the amount of money each customer spends on
your site.

This is a great idea to attract sales from new visitors, or to entice returning
customers to buy the same bundle they like over and over. Getting free shipping is
an extra incentive.

Another successful approach is to group a range of products in a mix-and-match

section on your store.

Whatever path you take, offering bundles will help you sell more products, increase
your AOV, and optimize your shipping costs.

Raise the cost of the product

When a customer tries to order a single item and realizes the cost of shipping
is equal to or more than the product, they’re highly unlikely to buy from you.
However, with more moderately priced products, you do have the option to cover
the cost of shipping in the price itself.

Consider your own buying behavior: would you pay $20 for an item with $10 in
shipping costs, or would you prefer it for $30 with free shipping? What if you
offered that item for $25 with free shipping, effectively splitting your shipping cost
with the customer?

Consider carefully your abandoned cart rate. You may be worried about losing sales,
but you actually may convert more because you don’t have people abandoning
their cart due to high shipping costs. It gives the illusion of free shipping, without
you having to foot the entire cost of the service yourself.

It’s important to bear in mind that while you might not cover the entire cost of
shipping in the increased price, your free shipping offer will help you convert
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more visitors to buyers, and subsequently, the additional revenue you make will
offset any difference.

Considering a sale on your store? Online shoppers find free shipping offers twice
as compelling as discounts. The next time you’re thinking about slashing prices,
consider offering free shipping instead.

Offer Free Shipping in Limited Locations

Shipping costs are certainly not equal across the board. If you’re running a targeted
marketing campaign, trying to get more customers from a specific region, or you
just know that shipping is cheap for your business anywhere within 2-days of a
particular shipping service, then you should consider limiting free shipping by
location.

You can make this noticeable with pop-ups and banners that promote the free
shipping in that area. Depending on your website, you can limit those popups with
geofencing; either way, this option works best with some of the others outlined
above.

For example: Free Shipping to California residents. Not in California? Get Free
Shipping on Any Order Over $55!

Create a Membership Program for Free Shipping

An option that’s gaining in popularity is setting
up membership programs. To qualify for free
shipping, customers will have to sign up and pay a
yearly or monthly fee.

This method is particularly useful if you have other

perks or bonuses you can combine with the free
shipping offer.

Offer Multiple Shipping Options at Checkout

Giving customers more than one option will increase their perceived value. When
you display rates - including the free option - show the estimated delivery date.

Customers will be able to select a faster option (and choose to pay for shipping
themselves) versus selecting the standard, slowest, and low-cost option for your
business. Either way, you will have happier customers.

Shipping Software
No matter the cost the customer sees, you need to ensure you’re keeping costs low
on your end. Great shipping software will select the cheapest shipping method for
the desired level of service automatically.
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Utilizing multiple carriers ensures you get access to a wide variety of services and
lets you take advantage of the strengths (and avoid the weaknesses) of each carrier.

Great shipping software will select the

cheapest shipping method for the desired
level of service automatically.

Returns and Free Shipping

One consideration to highlight with this approach is that some customers might
decide to return items. There is some evidence to suggest that free shipping can
lead to higher return rates for products. So, while free shipping is a great way to
boost your AOV, you may notice a higher return rate.

If you do start to notice a higher return rate, and this is harming your margins,
then you might need to alter the terms of your return policy or amend your free
shipping offer. Some ecommerce retailers do this by charging for return shipping
(or not providing return labels).

Whatever policy you choose, make sure that return and shipping policies are clearly
stated and easy to find on your website. A lot of customers will wonder and look for
it when considering a purchase, so make sure you’re not losing business because it
isn’t clear.

CA LC U L AT I N G A
MINIMUM ORDER THRESHOLD
FOR FREE SHIPPING

In order for a free shipping strategy to be cost effective, you need to ensure the
minimum amount you set is higher than what your customers might typically
spend. By encouraging your customers to increase the value in their carts, it can
help to offset the cost of logistics for your business. (A platform like Shopify has an
easy to view analytics dashboard that shows you AOV over a given time period.)

For instance, if you ask a customer to spend twice as much as they originally
intended, it could be setting the bar too high. Similarly, if you set the threshold too
low, it could negatively impact your margins. We’re going to dive into how to set
this up in the next section.
20
To work out the right level, a good strategy is to increase your average order value
by 25-30%. If the value amount comes out at an odd number, it’s a good idea to
round up to the nearest 5 or 10 ($73 becomes $75), making it easier for customers
to know what’s expected of them.

There are a lot of useful apps for prompting customers that they are close to
earning free shipping. Make sure the threshold is clearly indicated on your site so
that customers understand they will be charged for shipping until their order is
above that limit.

Know Your Margins

The trick with all of this is knowing your cost
and profit on every order. Do you have products
with margin high-enough to cover the cost of
shipping an average order? Make free shipping
available whenever those items are added to
the cart (upsell those products too).

Ideally, if you implement a minimum order

value approach, the increase in AOV will cover
the cost of shipping. If your average order value
is $43, and your average margin is 30%, then
boosting your AOV to $55 means you added
about $4 in margin (30% of the $12 increase).
Does that margin make free shipping possible
for your business?

Free Shipping Delivered

Sales are great, but repeat loyal customers are
the foundation for success. To create these you
need to understand consumer expectations:
they don’t want to pay for shipping. If you
don’t offer it, then state so clearly on the site. If
you want a minimum order, or only offer it for
certain products, then make that clear as well.

Creating a frictionless checkout experience

should always be the goal. Shipping is just
another consideration - don’t let it negatively
impact your brand. When done correctly,
shipping can be a real asset to your business.

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 W H AT TO C H A R G E : S H I P P I N G R AT E S

Shipping rates seem complicated at first, and rightfully so. There are a lot of carriers
and different services available. Understanding what you’re paying - and why - is
the hardest part of shipping, but it can be learned easily with a bit of help. In this
section, we review the different ways to charge for shipping and explain a little
more about each option.

Charge Real-Time Carrier Rates

Figuring out how much to charge your customers
for shipping isn’t always straightforward. With
different products having different costs, different
weights, sizes, and other variables, offering free
shipping or 2-day shipping isn’t always going
to work. Similarly, you don’t want to be seen
as overcharging on your shipping, as that will
adversely affect your brand. However, when your
customers are located across all points of the
country, or even abroad, the cost of shipping for
one client will be remarkably different for another.

Real-time carrier shipping takes a more indicative and precise approach to

setting and establishing the right shipping costs. This is when the exact shipping
costs that are charged by a carrier are automatically populated at checkout for a
customer. It accounts for their location, the weight of the product, and the package
dimensions. It is only calculated once a customer has added all of their items to the
cart and encompasses their entire order.

Real-time shipping can give your business the ability to charge

each customer the exact amount it will be charged for the
shipping of an order, and this approach can help you ensure that
you never under or overcharge a customer for their shipping.

Combine this by showing different shipping options and the expected delivery
for each will give your customers additional information that improves their
experience. Setting clear expectations allows you to foster trust with your
customers.
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 THE BENEFITS OF OFFERING
R E A L-T I M E S H I P P I N G C O S T S
If you’ve become accustomed to manually setting the shipping rates on your
ecommerce store, or you’ve ever had to do this yourself, then you’ll know that it’s
extremely time-consuming and leaves room for human error. Implementing real-
time shipping rates can help you in a number of ways and is becoming increasingly
popular with ecommerce operations across the globe.

Ensuring your customers are being charged the correct amount

Real-time shipping calculations can make sure your customers do not get under
charged or overcharged for their shipping. It leaves you free from having to worry
about whether you are charging too much or too little.

Automated shipping cost calculations

Rates are automatically updated and displayed when a customer reaches the
checkout and they enter your shipping destinations. It saves you the time and
hassle of having to do the calculations manually. Your shipping software will also
use the service they selected at that price.

Boost international sell-through rates

As we’ve already discussed in this post, working out international shipping options
isn’t easy. When you use real-time shipping calculations, you know the rates are
being set correctly to their precise destination.

C O N S I D E R AT I O N S B E FO R E S W I TC H I N G
T O R E A L-T I M E S H I P P I N G

If you’re thinking of moving to a real-time shipping rate system, there are a few
key considerations you need to make. Here are a few points to review to help you
define what your shipping strategy could look like.

Decide which countries you are going to ship products

Earlier in this guide, we covered the complexities of shipping internationally. While
real-time shipping will give you the ability to ship almost anywhere in the world,
it’s important to make sure you do your homework with regards to the regulations,
taxes, and tariffs that are applicable to each region first.

Choose the right carrier to work with

Even if you only ship one product, you will need different carriers and services to
reach customers across the country or the globe. A wide product mix means you
23
will be shipping a lot of different size packages, at different weights, and a multi-
carrier option is absolutely necessary. With carriers like UPS, FedEx, and DHL,
however, you get better discounts the higher your volume. A rate analysis is
necessary to compare what your costs will be using one carrier or employing a
multi-carrier option.

Software can solve much of this problem

for you by auto-selecting the service
that is best for each shipment.

Essential Hub is a technology platform that integrates with a lot of different

software partners. Every customer is recommended software based on their need,
and Essential Hub implements the business rules and automation on that software
for that customer.

Incorporating the cost of handling

When you use real-time shipping rates, your customers pick up 100% of the cost of
shipping. However, your handling costs, which include packaging, for example, will
not be included in these rates. It’s important to be mindful of this when you review
your product mark-up and margins.

While there isn’t a one-size-fits-all option for shipping, real-time shipping comes
pretty close to meeting the needs of most. It saves you time and is one of the
easiest ways to protect your margins.

Charge a flat rate

The overall sustainability of your business depends on setting the right prices
for your shipping. If you aren’t optimizing your shipping costs, then you could be
losing money unnecessarily. Flat-rate shipping is another approach that many
ecommerce stores take.

Flat-rate shipping is a service offered by the USPS and

FedEx. It means whatever fits in the flat rate box ships
at a predetermined price. It can be very useful for heavy
items, and gives you predictable shipping costs if you are
struggling to understand everything that goes into it.

With USPS, Priority flat-rate shipping gives you a single

cost for deliveries that take between 1-3 days. Most of the
US is within 2 days of Priority Mail service.

24
The benefits of flat-rate shipping for ecommerce stores
Aside from being easy to manage from a cost perspective,
it also means that each product won’t have to be weighed,
and this also has obvious time benefits too. The upper
limit for this service is 70 lbs. The simplicity of the flat-rate
shipping service, and the fact that you get a predictable
cost are some of its most appealing factors.

• Send goods of up to 70 lbs

• Certificate of mailing included
• Free insurance to the value of $50 for each package
• Tracking included as standard

In some cases, flat rate shipping is also defined as offering a single price for
shipping across the board. In this instance, we are referring to the USPS flat-rate
shipping service. Essentially, flat-rate shipping means that cost of shipping is not
impacted by the shape, size, or weight of the item.

Flat-rate shipping restrictions

With USPS flat-rate priority mail shipping, there are a number of restrictions to the
types of goods you can send via that service. These are:

• Alcohol
• Air bags
• Explosives
• Firearms or ammunition
• Gasoline
+ more

Charging Customers Flat Rate

Whether or not you are utilizing flat rate for your packages, you can still charge
customers a flat rate on all orders. If you know your average shipping cost on each
order you can make that a flat rate to charge on all orders. Some customers will
overpay, some will underpay, but it will average out and still cover costs.

You can mark this up a little bit to be safe, or even make it “Shipping & Handling”
and include a handling fee to cover the cost of getting the package out the door.

The benefit of charging a flat rate is twofold: customers get some transparency
– they know what they will be charged no matter what. You also don’t have to
worry about setting up complex shipping rules. As long as you audit your average
shipping cost per order each month to make sure you’re covering costs, you’ll be
fine.

25
USPS Priority Mail Cubic
The best-kept secret in shipping is probably the Cubic program offered by the
USPS. Packages that are under 20 pounds and with no dimension longer than 18
inches are eligible. Not all software programs offer this pricing competitively, so be
sure to check what rates you’re seeing.

The cubic program is based on dimensions, not weight. You multiple the length x
width x height and divide the result by 1728. Anything under .5 cubic feet is eligible
to ship, and the rates are very competitive, especially for heavier packages and
farther zones!

We recommend every ecommerce business to look at cubic pricing. You can

compare rates on the USPS website against your shipping software.

USPS First Class Shipping

The First Class Package Service from USPS is a cost-effective and fast way to
ship goods that are lightweight anywhere in the U.S. It is designed to be used for
packages that weigh up to 15.99 ounces. When compared with other services, such
as Parcel Post, Parcel Select Ground, and Priority Ground, it is more cost-effective.

Tracking is included free of charge; there are a range of pick-up programs, and it
delivers to any U.S address, PO Box, and certain FPO, DPO, and APO locations.

The shipping rates for the USPS First Class Service is calculated by the shipping
distance and the parcel weight. Unlike other providers, there is no surcharge for
rural or residential deliveries. You also get the option to add extra services, such as
insurance and signature confirmations.

Is USPS First Class Shipping Right for You?

For packages lighter than a pound (or

15.99-ounces) it is the lowest-cost option out
there. It is the go-to option for lightweight
packages delivering to U.S locations.

USPS Priority Mail Shipping

The Priority Mail Shipping Service will ship packages that are up to 70 lbs. in weight
within 1-3 days. It includes tracking, and delivery time estimates can be obtained
26
by visiting the Priority Mail delivery map. Notice that major metropolitan areas and
most of the country is within 2 days of almost any location for shipping.

For a flat rate, you can ship packages to any state for the same price under the
Priority Mail Flat Rate service.

Priority Mail has a great program for heavier packages that are still under 20 lbs.
called Priority Mail cubic. Packages can’t have a dimension over 18 inches, but it is a
very economical option that charges based on size, rather than weight. The prices
are extremely competitive compared to UPS and FedEx, especially to farther zones.

You can ship from your home or business using the Click-N-Ship service or from
any Post Office location. Regular shipments should schedule a regular pickup
service.

The benefits of the USPS Priority Mail shipping service include:

• Quick Delivery Times – 1-3 days

• Rural and Residential delivery incur no additional charges
• USPS tracking is included free of charge
• Free collections from business or home address
• Options for region, flat-rate, cubic and prepaid pricing

SHIPPING ZONES: AN INTRODUCTION

In this section, we discuss how distance can impact transit costs and timeframes.
We have taken a comprehensive approach to explaining how shipping zones work
because they are a fundamental part of the order fulfillment process.

What are Shipping Zones?

A shipping zone is a geographical area that carriers deliver packages in. Zones
range from 1-8 for domestic shipping options, and essentially measure the distance
a parcel needs to travel. Contrary to popular belief, this is not measured in mileage,
but by zip codes. The origin of a parcel is Zone 1, and the destination zone is the
shipping address. What’s Zone 3 for one origin address will be different for another.
You need tables to determine the Zone your delivery address is in.

Calculating Shipping Zones

Shipping zones are calculated dynamically depending on the location your
package is being sent from. This means, that if your packages are coming from
27
different origins but going to the same destination, they might ship to different
zones.

There are a number of ways you can establish the shipping zones for your
e-commerce order fulfillment.

• For USPS Shipping Zones, use this link.

The cost of shipping your goods is directly impacted by the shipping zone,
and while some carriers will offer a flat rate that allows you to pay a fixed price
regardless of where you’re shipping to in the U.S, there are others which are known
as ‘zoned’.

Using USPS as an example, their Priority Mail, Retail Ground, Priority Mail Express,
and Bound Printed Matter services are Zoned. Library Mail, USPS Marketing Mail,
First Class Mail, and Media Mail are not zoned.

For zoned services, the higher the zone, the bigger the cost. Or put another way,
the farther the package has to travel, the higher the cost.

The Impact of Weight on Shipping Cost by Zone

Aside from destination, origin, the service you use, and the carrier you choose, your
shipping rates will depend on the dimensions and weight of your package. Most
carriers use a weight-based method to charge you for shipping – meaning you will
pay more the heavier the package. The notable exceptions are flat-rate services and
the USPS Priority Mail cubic program.

The Impact of Shipping Zones on Speed of Delivery

It goes without saying that when you ship a package
to a nearby location, for instance in Zone 1 or 2, then
it will arrive quicker than shipping to Zone 7 or 8. The
lesser time a package spends in transit, the better it
is for your customers. It also reduces the risk of loss or
damaged parcels.

If you needed any more information to support

the benefits of reducing your shipping times, then
research suggests that almost 25% of people will
cancel an order if the shipping is slow. So, if you have
a single location for your inventory, and your orders are continuously taking 5 days
or more to arrive in higher zones, you might find it challenging to justify the higher
shipping costs and dissatisfied customers.

28
This is an excellent example of why taking a multi-carrier approach makes sense.
Using UPS or FedEx ground services to higher zones means transit times of 4-5
days (or more). USPS Priority Mail is often cheaper at higher zones and transit times
are 2-3 days.

How to Reduce Shipping Zones and Costs

A solution to reducing shipping times would be to consider outsourcing your
fulfillment, as this can offer you a greater degree of flexibility. By analyzing your
order history records you can determine a third-party fulfillment location that
will help you reduce your costs and speed up delivery times on basic services like
ground, because you’re shipping from more locations.

If you choose to use multiple fulfillment centers that are situated closer to your
customer clusters, this gives you the option to further reduce your delivery
lead times and costs. If you are having to continually use air shipping, which is
expensive, then this could present a more appealing and affordable option. For
these compelling reasons, distributing your inventory across multiple fulfillment
centers can completely transform your logistics and shipping costs.

By understanding how shipping zones work, you can tweak your fulfillment
strategy to provide more affordable and time-efficient deliveries. Aside from
becoming a leaner operation, it will improve your customer experience, reduce the
risk of lost and damaged packages, and improve your bottom line.

S H I P P I N G C O ST ST R AT E G I E S

Different ways to approach shipping costs:

• Offer free shipping on all orders

Whether or not you offer this will depend solely on your margins and your
competitors. If you sell low value products with a tight margin, offering free
shipping across the board might not be feasible. However, if you have healthy
margins and your competitors also offer free shipping, then you need to consider
free shipping as an essential option.

• Offer free shipping with a minimum order quantity

If your product margins are tight, you might want to consider setting a minimum
order quantity before unlocking the free shipping option. Not only can this raise
your average order value over time, it will also encourage people to try out more of
your products – especially if you’re upselling products during checkout. This isn’t
29
something that is out of the ordinary, and many of the major ecommerce retailers
offer this.

• Offer free shipping to certain locations

We have explained in an earlier section how
to calculate shipping zones. For those zones
that are closest to you, or your distribution
centers, you might choose to offer free
shipping. You can enable technology on
your site to help you determine when this
offer is shown or not.

• Offer free shipping for loyal customers

This is something that you consider for those who order from you on a regular
basis. Again, it will depend on your margins, and you would need to work out
an appropriate threshold to activate this offer. Incentivizing repeat customers
to participate in a loyalty program turns them into brand evangelists: those that
promote your brand for you!

• Offer free shipping for an annual ‘shipping surcharge’

More ecommerce stores are offering customers the option to pay a one-off
fee to get deliveries free for a year. This works like a subscription charge that
gives customers a free-delivery card for 12 months. Again, you need to consider
the threshold, cost, and whether or not you only offer this to customers in
certain zones. However, for those customers who order from you regularly, it
can encourage them to order from you more often and give them extra value
compared to other companies they consider buying from.

• Increase the price of your products to cover all or part of the shipping
Including the price of shipping is a common practice, and it can help you offer
free or low shipping costs to your customers. Whether or not this works for you
will depend on your margins, and it will also depend on your shipping charges. For
many, it strikes a nice balance between offering affordable shipping for customers
and a fairly priced product.

• Let your customers cover the full cost of shipping

This is by far the easiest option, and it protects the totality of your margins. It means
you can stay competitive with your prices, and leaves your customers picking up
the full cost of the shipping charges. Protecting profit isn’t always the best way to
grow your business, however; experimenting with any of the options above will
provide an opportunity to see how customers respond once you’re covering part
of the shipping.

30
 PAC K AG I N G A N D M A R K E T I N G

In the modern-day world of ecommerce, companies need to stand out, make

an impression, and find clever ways to entice people back to their store to order
products again. Product packaging and inserts is actually a relatively low-cost way
to market to your customers, and the ‘unboxing’ experience can have a significant
impact on how they feel about your brand.

ECOMMERCE PACKAGING
Your goal should always be to stand out from the competition. The most common
ways to do this include improving your product, social media marketing, or
optimizing your web design.

While these actions are great there’s one aspect of the buying process that you
shouldn’t take for granted: the unboxing experience.

Brands are so worried about landing new business that they don’t think about
what happens when customers receive their order. Done right, unboxing can be a
great way to boost retention and create loyal customers.

What is unboxing?
“Unboxing” is when a customer opens up your order, the same way they’d open up
a gift for their birthday or Christmas.

Not only does branded packaging offer an experience to the customer, it’s one of
the best ways to promote your brand. Let’s understand why and what you can do
to create an incredible unboxing experience.

Why branded packaging matters to ecommerce

With so many brands competing for customers’ attention, branded packaging is
the one investment that could make you stand out. Here’s why:

I T B U I L D S A G R E AT F I R ST I M P R E S S I O N
First impressions matter, and it’s no different for ecommerce brands.

One of the biggest obstacles in ecommerce is that you’re not there with the
customer face-to-face. A great unboxing experience fills that gap by creating a
31
powerful connection.

Branded packaging shows you value your customers’ satisfaction and will go every
step of the way to deliver. As a result, you’ll boost their perception of your brand.

I T C R E AT E S LO YA L C U S T O M E R S
The best customers are not the ones who only buy once from your store.
They’re the ones who repeatedly come back to your store for more and
drive repeat purchases. They tell their friends about you too!

Brands are so focused on landing new clients

that they forget one thing: keeping their current
customers happy. 41% of an ecommerce store’s
sales come from only 8% of its customers.

Branded packaging is one of the most effective

customer retention tactics. The reason why it
works so well is that it drives emotion and makes
the purchase feel unique — customers won’t feel
like they’re just another sale.

I T G E N E R AT E S E P I C U S E R - G E N E R AT E D
CONTENT (UGC)
User-generated content (or UGC) refers to any content created by a brand’s
consumers. These can include:

• Blog posts
• Reviews & testimonials
• Pictures on social media
• And more

UGC is one of the most effective ways you can promote

your brand online. 79% of customers believe that UGC
influences their buying decisions.

So how does this relate to branded packaging? A

memorable unboxing experience can be a goldmine
when it comes to UGC. Customers love to publish
unique boxes they get from brands. In other words, it’s
like getting free publicity for your business.
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 8 WAY S Y O U C A N C R E AT E I N C R E D I B L E
BRANDED PACKAGING

Now that you know why the unboxing experience matters, it’s time to take action.
Here are seven ways that you make your branded packaging stand out. You don’t
even need to buy expensive, custom-printed boxes:

Provide a Handwritten Thank You Note

When it comes to engaging your customers, a simple word of gratitude goes a
long way. One unique way to show customers that they matter to you is through
personalized thank you cards.

Use Inserts
Include inserts with every order. Tell a story about your brand, your product, or how
much you care about the customer for ordering. At the moment of unboxing, the
customer will never be more focused on your brand. Reinforce that with a branded
insert that enhances their experience.

Give a Free Sample

Another way to surprise and delight customers is to give them more than they
expect. You can do this by including free samples in your packaging.

Adding free samples will make customers feel like they got more value for their
money. After all, who can say no to free stuff?

Make Your Packaging Eco-Friendly

The modern customer expects brands to be sensible to social issues and adopt
sustainable practices. It’s the reason why you should make your package as eco-
friendly as possible.

The best way to do this is to use recyclable material in your packaging. We’ll take a
look at a great example of what this can look like below.

Include Discount Codes or Special Offers

To make customers feel special, you can add exclusive perks and coupons in your
packaging. With redeemable vouchers, you’ll be able to encourage customers to
buy more and drive repeat purchases.

Add Branded Stickers Inside and Out

A low-cost way to spice up your packaging is to include various branded stickers on
your box. Not only do stickers add a nice personal touch, they can also be useful to
seal packages.
33
Use Colorful Packing Materials
Instead of the same boring packing materials, why don’t you mix it up and get
colorful? If you need to protect the contents of a package, don’t just rely on brown
craft paper - get creative!

Customize your Cardboard Box

One of the best materials we recommend for branded packaging is cardboard. It’s
low-cost and easy to customize to reflect the look and feel of your brand.

W H E R E YO U CA N O BTA I N
F R E E PAC K AG I N G S U P P L I E S

Most major carriers offer free shipping supplies, and whenever possible you should
take advantage of their packaging.

Here are four carriers in the U.S. that could give you free shipping supplies. You
will need to have a business account set-up. Most of these companies will give you
the option to collect the supplies from a local office, or they will accept an online
request and deliver them directly to your address. Keep in mind that free supplies
can sometimes take longer than expected to arrive!

Get Free Shipping Supplies from FedEx
The free supplies you get from FedEx
cover FedEx Express and FedEx Ground
shipping only. They supply: Air Bills,
Boxes, Mailers, Pouches, Triangular Boxes,
Shipping Labels And Forms.
Get Free Shipping Supplies from UPS
The free shipping supplies from UPS are
available across a huge range of their
services. They supply: Stickers, Labels,
Express envelopes, HAZMAT supplies,
and pouches.

Get Free Shipping Supplies from DHL
The free supplies on offer from DHL are
used mostly for international shipping,
since this is their particular area of
expertise. They supply: Envelopes,
Shipping Labels, Mailers, Boxes, Tube
Mailers, Waybill Sleeves, and Padded
Pouches.
Get Free Shipping Supplies from USPS
USPS also provides a wide range of free
shipping supplies for business. Ordering
online is easy or you can pick up supplies
at your nearest USPS location. They
supply: USPS Tracking labels, Priority
Mail boxes, Registered Mail envelopes,
Priority Mail Express boxes, and Global
Express Guaranteed envelopes.

Keep in mind that other carriers don’t like shipping the branded boxes of their competitors.
34
 SHIPPING CARRIERS

As you define and build your ecommerce shipping strategy, you need to familiarize
yourself with the different services and costs provided by the major shipping
carriers. In this section, we give you a quick overview of the main shipping carriers
used by customers in the U.S.

FedEx
FedEx offers a wide-range of delivery options, but its Small
Business Program is something that makes them stand
out. It is targeted towards growing companies and has lots
of advantages for a range of shipping solutions at different
price points. Transit times and shipping costs can be
quickly calculated using their handy rate finder tool.

USPS
Due to the fact that USPS already runs daily domestic routes,
it is usually the lowest priced ground shipping service. Many
other shipping companies will use USPS for the last part of their
delivery, and this is due to their extensive reach and reasonable
rates. They aren’t always ideal for overseas deliveries, particularly
where order tracking is required. This is because they will
outsource their international shipping to in-country carriers. If
you want to get a shipping rate with USPS, here’s a link to their
online shipping calculator.

DHL
DHL is a global powerhouse where shipping
is concerned, so if you ship a lot of product
internationally, then they should be a key
shipping company for you to consider. They
make it quick and easy to calculate rates and
delivery times using their online calculator.

UPS
UPS offers their customers many choices in terms of the different
shipping services they provide. Many ecommerce clients enjoy
their scheduled collections and their easy customer returns
processes. Just like FedEx, UPS has a dedicated program for small
businesses, and you can get prices online using their shipping
cost calculator. 35
 INSURANCE, TRACKING, AND RETURNS
Have you considered offering shipping insurance to your clients? Have you thought
about the additional ways you can offer your customers an outstanding customer
experience once the shipment has been collected? What about your returns?

In this section we’ll cover each of these points individually, and share a few best
practices that will help you understand what needs to be considered.

Shipping Insurance
Although you can expect most major shipping carriers to offer a reliable service,
there is always an exception to the rule, and occasions arise where packages get
lost or damaged in transit. As an ecommerce business you need to make sure you
are prepared to handle these things when they occur.

During a survey conducted with online shoppers, if a shipment is lost or damaged,

then over 50% of people expect you to offer an expedited shipping service with
the replacement, and just over 40% of shoppers expect a shipping discount or a
complete refund of the costs. What these figures translate to is that your business
needs to cover the costs of any undelivered items, and in most cases, this results in
out-of-pocket expenses that can completely erode your margins.

What is shipping insurance, and how much does it cost?

Shipping insurance protects shippers against stolen, lost, or damaged packages.
If a package is insured and it does not reach its intended destination, or if it arrives
damaged, then the shipper will receive a reimbursement that is equal to the
declared value of the item(s).

The cost of shipping insurance varies between carriers, and it will always depend
on the value of the items you are shipping. The higher in value your goods are,
the higher the cost of the shipping insurance. To give you a rough idea of typical
shipping insurance costs in the U.S., we have taken the latest figures from the UPS,
FedEx and USPS websites.

UPS Shipping Insurance Costs 2020

UPS Package Protection covers parcels up to the value of $100 for free. They take
on this liability for damage or loss at no additional cost to the shipper. So, if you ship
low value items and UPS offers reasonable shipping costs for your needs, this could
be a great option.

For goods of a higher value, UPS offers a range of insurance options via their
flexible parcel insurance, known as UPS Capital. They provide ad-hoc quotes for
small packages, LTL, FTL, Ocean and Air Freight options. If you visit their site you
can get a tailored quote that can cover single, select, or all of your shipments.
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Based on the latest information, this could be as low as $1 per $100 of value, but
they do insist you speak with them directly to obtain the most accurate and up-to-
date shipping insurance prices.

You will need to call their team and speak with a licensed insurance specialist. They
will assess your individual level of risk and give you a structure that meets your
individual needs.

FedEx Shipping Insurance Costs 2020

As with all shipping companies, the cost of your insurance depends on a range of
factors. With FedEx, this is based on the type of service you select, as well as the
items you are shipping. There are always going to be limitations to their coverage,
and for this reason, it’s important to verify that the specific items you will be
shipping are not excluded or limited from their shipping insurance.

Just like with UPS, items valued at $100 or less are given coverage for free. So, if you
ship low-value items that are under this price point, then you won’t need to factor
in any additional cost for insurance.

U.S. Express Package Service, International Ground Service, and

U.S. Ground Services
The cost of shipping insurance is $3 for shipments valued between $101-
$300. For anything above $300 they charge $1 per $100 in value. If your
goods are valued at over $500, then Direct Signature Confirmation will
be included at no additional cost.

FedEx Same Day City and FedEx Same Day

The cost of shipping insurance is $3 for shipments valued between $101-
$300. For anything above $300, they charge $1 per $100 in value. The
maximum declared value of any shipment is $2,000.

USPS Shipping Insurance Costs 2020

Unlike FedEx and UPS, USPS does not offer free shipping insurance for goods that
are under $100 in value. If you are looking to get shipping insurance options for low-
value items they might not be the most cost-effective choice.
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USPS has a table that is particularly easy to use. However, always check directly to
make sure you are using their most up-to-date shipping insurance rates.

Value of Goods Cost of Insurance

Up to $50 $1.70
$50.01 - $100 $2. 10
$100.01 - $200 $2.50
$200.01 - $300 $4.70
Per $100 in value > $300 to a max of $5,000 $0.90 per $100, plus a base of $4.70

There are many moving parts to consider. If you ship low-value goods or high-
end products, you need to size up the additional cost of shipping insurance
and consider if it’s something your clients would be happy to pay an additional
premium for or if it’s something you can afford to add.

Although the chances of a package getting lost is slim, particularly with tracking,
in the event you ship high-volume or high-value items, then you will need to
understand the costs of not buying insurance.

As an ecommerce operation, shipping high volume means that lost or damaged

items are inevitable. Similarly, if you ship high-value items, the cost of replacing just
a single one of these could make shipping insurance an obvious choice.

The rule of thumb is that if you are in any doubt, buy insurance. It’s often low-cost
and worth the additional investment if something goes wrong with an order.

Your delivery experience is part of the

overall customer experience. In fact,
according to a survey, up to 70% of
customers fail to re-order from a store
if they have a poor delivery experience.
Items that get damaged or lost in
transit might not always be in your
control. However, you can still impress
your customers by responding quickly
and effectively should an incident
occur. Shipping insurance lets you do
this, at little or no cost to your business.

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 ORDER TRACKING

In terms of your tracking options, you will find that all of the major shipping
companies will give you tracking information with your orders. However, you’d be
surprised to learn just how many companies don’t pass on this information to their
customers.

Not only is this going to create more inbound inquiries for your business, it could
also be a missed opportunity in terms of delivering great customer service. As
we’ve already mentioned on more than one occasion, the customer experience is
EVERYTHING.

Order management and setting clear delivery timeframes and expectations is

paramount to this experience, and when done incorrectly, it reflects poorly on your
business.

So, if you want to optimize your processes to deliver great customer service as a
standard, then you need to provide your customers with accurate delivery dates,
tracking information, and wherever possible, delivery notifications. Not only will this
ensure they get a great impression of your organization, but it will negate the issue
of your team having to deal with customers calling or emailing wondering about
the status of an order or asking about expected delivery dates.

Should you provide Ecommerce Order Tracking?

Ecommerce tracking will provide you with estimated delivery dates, the ability to
track and trace any order at any time, along with getting periodic updates on the
progress or status of an order. Because so many people already utilize tracking with
their shipments, customers increasingly expect to receive this service as standard.
There are plenty of other compelling reasons why you should provide order
tracking to your customers. They are:

1. It’s expected by customers

People expect to be able to monitor their own orders, and they’re accustomed to
having visibility on the progress of their shipments. If you fail to provide tracking,
you might not meet their expectations, and be viewed as a less-than professional
organization.

2. Reduce operational costs

As you already know the time and cost of dealing with client’s inquiries can quickly
add up. If you don’t reply promptly to their questions, this can have a detrimental
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effect on your customer service and your reputation. Providing tracking is a great
way to reduce some of those inbound queries and you can automate the process;
saving you both time and money.

3. More control and better visibility

Once you’ve picked, packed, and shipped the order, you hand over a certain
amount of control to the shipping company. With order tracking, you’re able to
address any issues as soon as they arise. A good fulfillment strategy can help you
reduce issues and maximize your ability to provide a great service from order
through to delivery. Some software systems will provide you greater insight into
any issues before your customer will even be aware.

In an age when visibility and trust are two fundamental factors, providing tracking
to your customers is now considered to be an expected and essential service.

ECOMMERCE RETURNS

There’s no doubt that returns are a major headache for ecommerce operations.
However, having the right policy in place for your returns can make a huge
difference. Returns are a part of business, and if you don’t have a process in place
then you risk alienating the customer from future sales. If a customer needs to
make a return, and they deem the process to be inefficient, they are 3x less likely to
buy from you again.

Ecommerce Return Statistics

In the U.S alone, online merchants had to deal with more than $350 billion in
returns in 2018. So, while it might seem like a minor element, developing a robust
returns policy for your customers is essential.

• 6 out of 10 people will review a return policy before they decide to buy
• Almost 50% of online retailers offer free shipping on returns
• Around 80% of shoppers expect free return shipping
• Over 90% of people say a simple returns process means they will buy again

Creating your Ecommerce Returns Policy

In the same way you create a shipping policy that’s easy to understand, your
returns policy needs to be transparent and straightforward. Make sure there are no
hidden fees, and if you expect your customers to contribute towards the cost of a
return, you must ensure this is presented clearly when they place the order.
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Similarly, if a customer is waiting on an exchange or refund, they will want to know
the progress of their return. Similar to tracking packages, you should also give your
customers access to tracking for any returns.

The ultimate goal is to create an

informative, hassle-free, transparent
return policy with no surprises
The ultimate goal is to create an informative, hassle-free, transparent returns policy
- with no surprises! Do this, and your customers will keep coming back.

C U ST O M S D O C U M E N TAT I O N

When you ship products internationally you will be required to complete

documentation. The specific documents you need to complete will depend on the
individual details of your shipment.

Here’s some more information on the different types of documents that might be
required.

Certificate of Origin
This is an official document that authenticates the origin of a shipment. It is usually
prepared by the exporter.

Export Declaration
This declaration provides data on the nature, amount, and value of the goods that
are being shipped. This is given to the statistical office and is used for the purpose
of compiling data on foreign trades. It is also used as an export control document.

Commercial Invoice
A commercial invoice will detail the true value of the goods that are being shipped,
and it is primarily used in the calculation of taxes and duties. This is also completed
by the exporter and is needed to prove ownership and for the purchaser to arrange
any payments.

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 D U T I E S & TA X E S

Any taxes or duties are levied by the country that is importing the goods in order to
protect local industries from foreign competition. If any taxes or duties need to be
paid, this will typically be done prior to the goods being released from customs.

The cost will depend on any trade agreements, the intended use of the product,
the value of the goods, the country they were manufactured in, and the products’
harmonized system code.

There are a number of these fees that can be paid ahead of time, and it’s important
that you decide which you will choose to pay before you make a shipment. If you
don’t, you might have a very unhappy customer if they are asked to pay additional
fees in order to take delivery of the goods they’ve ordered.

Delivery Duty Paid (DDP)

This is where the fees are paid for by the merchant. With this option, as the
merchant, you are accountable for paying all taxes, duties, including all of
the warehousing costs, including customs clearance, handling expenses, and
transportation. Usually, the carrier pays the bill and this is forwarded to you. If you
can do this, it provides a much better experience for your customer.

Delivery Duty Unpaid (DDU)

This is where the fees are paid for by the customer. As the merchant, you will still
need to pay for all of the transportation costs, but any local taxes or duties will need
to be paid for by the customer. If you fail to make your customers aware of this then
it can often lead to a difficult delivery process, and disputes. None of these are good
for your business, your reputation, or your customers.

Once again, setting clear expectations is extremely important!

Labelling your Packages

Shipping labels is another area to consider. While they might seem insignificant,
they are crucial to your store’s success. Your shipping labels share vital data with
those in your supply chain, and they make it easy for the technology and the
people you deal with to be clear about the destination and origin of your shipment.

If your shipping labels aren’t clear, you could find your orders being mishandled
or even lost. In turn, this could impact your customer experience, and potentially
result in lost sales.
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 W H A T M A K E S A G O O D S H I P P I N G L A B E L?
Essentially, your shipping label will differ from one carrier to the next, but they all
contain essential data, such as: the origin and destination address, the weight of
the package, shipping class, tracking number, and the shipping barcode.

For the most part, having good shipping software will take care of this all for you.

Creating Shipping Labels

Creating labels should be a simple and seamless part of your fulfillment process.
If you are fulfilling your own orders, there are plenty of apps and websites that will
do this for you. For instance, UPS and USPS offer the ability to pay and print labels
directly on their site (be warned: these are retail rates and are significantly higher
than what you would get with a business account).

There are also a range of platforms that will automate the process for you.
Similarly, the platform you use for your e-commerce store might also provide label
generation as an additional option.

Some popular shipping software includes:

- Shipstation
- ShipKey Pro
- ShippingEasy
- Pirateship

Shipping labels are usually free to print, but you need to make sure the postage is
paid for before you can actually ship your goods.

All you need to get a shipping label

printed are the dimensions, weight,
shipping class, and address details for
the destination.

Keep in mind that there are a number

of considerations when evaluating
shipping software.

Want help finding the right one?

Check out this resource.

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 ECOMMERCE SHIPPING
BEST PRACTICES SUMMARY

As you well know there are a lot of moving parts to developing an ecommerce
shipping strategy. Using the best practices covered in this guide is essential if you
want to get a comprehensive, cost-effective, customer-centric shipping strategy
that supports your business, your customers, and allows you to scale.

O U R T O P F I V E TA K E AWAY S
• Make sure you work through all the grueling calculations to
establish healthy thresholds for free shipping.

• Always give customers clear options for shipping choices,

offering more than one choice wherever possible.

• Develop a return policy that is transparent and fair – and make

sure it can be easily found by customers.

•Use technology to automate as much of your shipping process as

possible.

• Always include shipping inserts to maximize your repeat

business and marketing opportunities.

Be prepared to experiment, fine-tune, and change your policies, carriers, and

processes as your business grows.

www.essentialhub.com
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