In 2020, e-commerce sales accounted for 18% of all retail sales worldwide, and this figure is forecasted to keep rising, reaching 21.8% by 2024. As online sales continue to form an increasingly large share of the overall retail industry, major online businesses like Amazon and Walmart are growing in popularity too. As they become the default one-stop shop for customers, it’s difficult for small-to-midsize businesses (SMB) to compete.
Last year Statista reported 38.7% of e-commerce sales came from Amazon, and nearly 50% of the market share in the U.S. stems from three companies. This figure includes Amazon, Walmart, and eBay. These companies are continuing to expand their offerings with competitive pricing, flexible return policies, and lightning-fast delivery options. Globally, consumers are starting to see free delivery 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 e-commerce space, you’ve come to the right place. Getting your e-commerce shipping strategy right is an important step in starting an e-commerce business. Our in-depth guide can help you develop a solid shipping strategy, so you can gain a competitive advantage against larger companies.
Keep reading to learn everything you need to know about e-commerce shipping, how to choose a shipping partner for e-commerce, and e-commerce shipping best practices. You can also use the links below to jump ahead to the sections that are most relevant to you:
- What is e-commerce shipping?
- What does the e-commerce shipping process look like?
- Three important considerations for e-commerce shipping
- E-commerce shipping best practices for SMBs
- E-commerce shipping simplified with QuickBooks Commerce
What is e-commerce shipping?
To kick off our guide, let’s take a look at what e-commerce shipping is. In short, it’s every step that takes place to transport items from your shop to the customer who made a purchase.
We’ll explore the shipping process below to help you see the steps involved.
What does the e-commerce shipping process look like?
The shipping process is one of the most important processes to get right when launching an e-commerce business. This ultimately allows your products to successfully reach the customer who made the purchase. The steps include:
- Receiving: When a customer places an order at your shop, you’ll receive a notification letting you know what items were purchased. Make sure there’s enough inventory to complete the order and 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.
- Fulfillment: At this step, you’ll pack the order, ensuring the right items are selected, and prepare it for shipping.
While this process seems straightforward, various bottlenecks can cause delays, leading to unsatisfied customers and potentially monetary losses. However, there are a few things you can do to speed up the shipping process, such as choosing the right shipping partner or software.
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 more prevalent, it’s important for businesses to keep innovating their e-commerce shipping strategies to stay on equal footing.
By using smarter, more optimized 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 e-commerce business shipping strategies.
Three important considerations for e-commerce shipping
Before you start researching e-commerce shipping companies or commit to an e-commerce shipping software, it’s essential to first understand what type of shipping will best benefit your business. This means looking at:
1. Product dimensions and weight
Shipping costs and processes can become complicated when shipping products of multiple sizes and weights. It’s important to be aware of the differences in the size and weight of each of your products, from your largest to smallest. Doing so will help you find the right packaging and shipping company to suit these needs.
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 e-commerce 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 postal services that you should be familiar with, so you can find the right e-commerce shipping provider for your business:
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.
To accurately forecast your shipping costs, many shipping companies provide an e-commerce 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.
E-commerce shipping best practices for SMBs
Building your e-commerce 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:
Reduce manual labor through automated order processing
SMBs don’t often have the luxury of dedicated shipping teams and departments; however, automation tools allow small businesses to remain competitive with larger brands. SMBs can create straightforward rules for their e-commerce shipping software to effectively automate shipping and fulfillment tasks, reducing the number of back-office processes and minimizing 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 e-commerce platforms like QuickBooks Commerce to simplify, automate, and increase operational efficiency.
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.
Though it’s much easier for major e-commerce retailers to offer free shipping, there are several ways that SMBs can account for shipping costs.
- Increase product prices so that they cover shipping costs. In this example, the customer ends up paying for shipping, but it’s not an “extra” cost on top of the product’s price.
- Cover the shipping costs in your margins. This keeps the customers from paying for shipping, but it also limits the amount of profit you make. As an SMB operating on already tight profit margins, this option may be risky. As such, it’s better for more expensive items with higher margins and more wiggle room.
- Increase the price slightly on your product and add a minimal cost for shipping. This way, shipping costs are paid by both you and the customer.
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 upfront 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.
Use the right shipping technologies
Today, customers expect to track details of every stage of the delivery process in real time. With e-commerce 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 e-commerce 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 m-commerce, 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 fulfill orders across online stores, marketplaces, and social commerce to offer customers a seamless online shopping experience.
E-commerce shipping simplified with QuickBooks Commerce
Whether you’re looking to revamp your e-commerce shipping strategy or automate your existing processes, QuickBooks Commerce’s powerful platform can help. With QuickBooks Commerce, you can track every stage of the order, inventory, shipping, and fulfillment process.
Plus, QuickBooks Commerce integrates with popular shipping software, such as Shippo, ShipBob, and ShipStation, allowing SMBs to scale their shipping needs as business expands. This also helps you find the best carrier to ship a product based on the item’s size and the customer’s location, and easily create shipping labels. Get started today to see how much easier it can make e-commerce shipping for your business.
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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