eCommerce shipping guide

eCommerce sales accounted for 18% of all retail sales worldwide in 2020, and this figure is forecasted to keep rising, reaching 21.8% by 2024. In Australia, eCommerce retail contributed to the largest increase within digital activity in 2020-21, accounting for a 41.5% increase.

As online sales continue to form an increasingly large share of the overall retail industry, major online businesses like Amazon and eBay are growing in popularity too. As they become the default one-stop shop for customers, it’s difficult for small-to-midsized businesses (SMB) to compete.

These major eCommerce companies are continuing to expand their offerings with competitive pricing and eCommerce shipping strategies that provide flexible return policies and lightning-fast delivery options. Globally, consumers are starting to see free shipping with short turnarounds, such as same-day delivery or two-day shipping, as the standard.

If you’re an SMB looking to compete in the eCommerce space, you’ve come to the right place. Getting your shipping strategy right is an important step towards starting and growing your eCommerce business. Our in-depth guide can help you develop a solid eCommerce shipping strategy so you can gain a competitive advantage against larger online retailers. 

In this article, you will learn:

• What is eCommerce shipping? 
• What does the eCommerce shipping process look like?
• Developing an eCommerce shipping strategy
• Three important considerations for eCommerce shipping
• Calculating eCommerce shipping rates
• How to include the cost of eCommerce shipping in your prices
• Set your eCommerce shipping rates
• eCommerce shipping best practices for SMBs 
• eCommerce shipping simplified with QuickBooks

What is eCommerce shipping?

eCommerce shipping includes every step that takes place from online order to delivery, that is necessary to transport items from your online shop to the customer who made a purchase. We’ll explore the eCommerce shipping process below to help you see the steps involved.

What does the eCommerce shipping process look like?

The shipping process is one of the most important processes to get right when launching an ecommerce business. Creating an efficient eCommerce shipping process ultimately allows your products to reach the customer safely and on time, creating a positive customer experience. The eCommerce shipping process involves:

• Receiving an online order: when a customer places an order with your online shop, you’ll receive a notification on your eCommerce platform letting you know what items were purchased. Make sure you stock enough inventory to complete the order and have a system in place to update stock every time a new order comes through. A cloud-based inventory management system can make it easier to keep track of your stock.
• Processing: once you’ve reached the processing stage, you’ll verify the order information to guarantee its delivery to the correct person and address.
• Fulfilment: in this step, you’ll pack the order, ensuring the right items are selected, and prepare it for shipping.
• Shipping: eCommerce businesses usually partner with third party couriers such as Australia Post to deliver their packed orders to their customers. Most couriers allow you to schedule a pickup for bulk orders helping you save time.

Developing an eCommerce shipping strategy

While the eCommerce shipping process seems straightforward, various bottlenecks can cause delays, leading to unsatisfied customers and potential monetary losses. Creating a strong eCommerce shipping strategy is a fundamental part of your eCommerce business and ensuring your customers have a great experience.

Historically, many SMBs have been able to remain competitive with larger brands by offering similar shipping rates and a high level of customer service. However, as customers become more demanding and automation becomes more prevalent, it’s important for businesses to keep innovating their eCommerce shipping strategies to stay on equal footing.

By using smarter, more optimised processes to meet consumer expectations of shorter shipping windows, SMBs have an extraordinary opportunity. SMBs can use their flexibility and unique place in the market to take advantage of successful shipping strategies to speed up the process, such as choosing the right shipping partner or software.

Before you start researching eCommerce shipping companies or commit to an eCommerce shipping software, it’s essential to first understand what type of shipping will best benefit your business. This means looking at a number of factors that will determine your eCommerce shipping strategy.

All major shipping companies use dimensional (DIM) weight, or volumetric weight, to calculate the cost of shipping. DIM weight uses the length, width and height of a package to estimate its weight and issue shipping fees or surcharges. However, your end price is based on whether the actual weight or DIM weight of the package is greater. 

2. Shipping locations

Are you shipping your products domestically or internationally? Shipping varies from country to country and you may want to consider the following:

• Longer shipping windows
• Customs authorities that may be involved
• A country’s shipping restrictions.
• Some eCommerce shipping companies also only ship domestically, which means you may have to choose a different supplier for international shipping. This may result in you paying more. Despite this challenge, it’s a good option if you wish to create a global brand.

3. Shipping options and partners

SMBs have to consider various shipping options to make sure they’re providing the best possible shipping methods with affordable rates for customers to remain competitive. To do that, you need to partner with a shipping carrier that won’t break the bank. Otherwise, you risk losing money on every order instead of increasing your bottom line. Here are a few shipping services that you should be familiar with so you can find the right eCommerce shipping provider for your business:

• Australia Post
• Sendle
• StarTrack
• DHL
• Allied Express
• BHF Courier
• Aramex

To learn more about choosing the right shipping courier for your small business read our small business shipping guide.

Shipping options, such as LTL (less-than-truckload) freight carriers or in-store pickup, are also cost-effective alternatives to help cut down on shipping costs and provide the best shipping experience for customers.

Calculating eCommerce shipping rates

Shipping couriers base their shipping rates on a number of factors including:

• Package size
• Package weight
• Origin address
• Destination address
• Tracking options
• Insurance  

To accurately forecast your shipping costs, many shipping companies like Australia Post provide an eCommerce shipping calculator. Business owners can input the dimensions of their product, the location they’re shipping to and the delivery times to gauge how much customers will pay for delivery. Australia Post’s eCommerce shipping calculator can help your small business estimate postage costs and compare domestic parcel services.

eCommerce shipping rates in Australia

Domestic shipping rates in Australia are calculated based on size and weight guidelines from Australia Post. Below is a summary of domestic shipping rates from Australia Post including flat-rates that you can use to help calculate your eCommerce shipping rates.

Please note that Australia Post may update their domestic shipping services and rates from time to time.

International shipping rates for eCommerce

Shipping couriers often calculate girth for international parcels. For example, Australia post uses the below formula to work out the girth of your overseas eCommerce parcel:

• (width + height) x 2 = girth

To learn more about shipping internationally from Australia in our international shipping guide. 

In this example, your business profits $14.40. To help you determine your profit margin, use a gross profit margin calculator tool.

Set your eCommerce shipping rates

Before you can start shipping out eCommerce orders, you will need to implement a pricing strategy and set your shipping rates. To determine the shipping rate you will charge your customers, you will need to consider the shipping rates, delivery services and shipping zones set by your courier to ensure you are making a profit.

Offer free shipping

Another way for SMBs to compete with large online retailers, or any competitor that charges for shipping, is to offer free shipping. Customers often abandon shopping carts at checkout when confronted with additional shipping costs. In fact, 41% of consumers have abandoned their carts because shipping costs were too high. Reduce cart abandonment with free shipping to entice customers to purchase products by wrapping all charges into a single price. 

Your eCommerce store can also offer a discount code for free shipping by using different promotional strategies to provide certain customers with free shipping. For example, your eCommerce store can offer free shipping on the customer’s first order or free shipping on a minimum spend.

Charge a flat rate for shipping

If you’re looking to improve your business shipping strategies, another option is to offer flat-rate shipping. With flat-rate shipping, SMBs can avoid overcharging or undercharging customers and have predictable costs and profits no matter what’s purchased.

Using flat-rate shipping, SMBs don’t need to spend time and effort adjusting shipping rates. Plus, by being up front with customers, you’re offering a more transparent and improved customer experience. However, flat-rate shipping doesn’t work for all businesses; it’s most effective for companies offering products of a similar size and weight.

Offer free click and collect or local pick-up

Offering free click and collect or local pick-up can help your eCommerce store reduce costs by saving money on packaging and shipping rates. It also reduces the delivery time and potential delays as local customers can pick up their order as soon as it’s ready for collection. 

Offer local delivery

Your eCommerce store can also offer local delivery for free or at a flat-rate for local customers. You can set your local delivery option to a limited radius on your eCommerce platform to ensure efficient logistics. Local delivery offers a fast and reliable service to local customers and can form an important part of your eCommerce shipping process, particularly if your small business operates on a local scale. 

Go a step further and offer next-day local delivery during the holiday period to ensure your local customers receive their holiday shopping in time for Christmas. Read our international shipping guide to find out about Christmas shipping cut off dates in Australia.

eCommerce shipping best practices for SMBs

Building your eCommerce shipping strategy requires you to implement best practices so your team can work more efficiently and keep customers happy. Here are a few shipping best practices to keep in mind:

Packaging your eCommerce products for shipping

Before you can ship your eCommerce products you need to make sure they are packaged correctly so that they can arrive safely to your customers door. Common eCommerce packaging materials include: 

• Boxes
• Mailer bags
• Satchels
• Packaging peanuts
• Void fill
• Tissue paper
• Bubble wrap
• Hex wrap
• Foam 
• Tape and tape dispensers
• Shipping labels
• Fragile stickers

You can buy eCommerce packaging supplies and materials in bulk to save money from suppliers and wholesalers in Australia such as eBPak, Stanley Packaging and Hero Packaging or find local suppliers in your area. 

Labelling your eCommerce packages for shipping

When labelling your eCommerce parcels for shipping, there are a few things to keep in mind to ensure your parcel is labelled correctly so that your customers receive their order intact and have a good experience:

• If your parcel contains fragile goods that are prone to breakage make sure you label the parcel with a fragile sticker so that fulfilment staff and couriers take extra care handling the parcel
• If the contents of your parcel contain perishables like food or items that have a short shelf life or are prone to melting like candles, make sure you label your parcel with a “keep away from heat” sticker

Labelling your eCommerce packages is easier than ever with the rise of digital eCommerce shipping solutions. In many cases, you can print your shipping labels directly from your eCommerce platform or integrate an eCommerce shipping solution such as QuickBooks Shipping Manager which allows you to print FedEx, UPS and USPS shipping labels from within the QuickBooks platform. Our Shipping Manager pre-fills the shipping labels with your customers address information from QuickBooks Invoice or Sales Receipt forms. Our Shipping Manager even allows you to schedule pickups and track your packages within your QuickBooks account.

Automate your eCommerce shipping processing

SMBs don’t often have the luxury of dedicated shipping teams and departments; however, eCommerce shipping solutions such as automation tools allow small businesses to remain competitive with larger brands. SMBs can integrate eCommerce shipping software with their eCommerce platform to effectively automate shipping and fulfilment tasks, reducing the number of back-office processes and minimising errors.

Shipping technology can easily level the playing field for small businesses looking to compete with larger online retailers. Rather than completing these processes manually or building software, small businesses can use eCommerce platforms like QuickBooks to simplify, automate and increase operational efficiency.

Use the right shipping technologies

Today, customers expect to track the details of every stage of the delivery process in real time. With eCommerce shipping solutions, small businesses can provide transparency across every part of the buyer’s journey. This increased visibility isn’t just beneficial for the customer but beneficial for businesses as well. Shipping technologies and analytics have made it much easier for businesses, regardless of size, to monitor and streamline shipping at every stage. Your team can also be more accountable and react quickly to delays, errors or damages that occur during the shipping process.

Multi-carrier shipping is also key for SMBs looking to compete with major eCommerce retailers. By offering shipping services from multiple shipping companies, SMBs have the flexibility to offer the best rates and provide fast shipping, competing with large online retailers. 

Finally, as eCommerce, or mobile commerce, continues to accelerate, omnichannel strategies are essential for SMBs looking to compete with major retailers, particularly when it comes to shipping. SMBs have to accurately track and fulfil orders across online shops, marketplaces and social commerce to offer customers a seamless online shopping experience.

eCommerce shipping simplified with QuickBooks

Whether you’re looking to revamp your eCommerce shipping strategy or automate your existing processes, QuickBooks’ powerful platform can help. With QuickBooks Inventory Management Software, you can track every stage of the order, inventory, shipping and fulfilment process.

If you’re planning on outsourcing this aspect of your business, take a look at our 3PL guide to help you handle packing and shipping.

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