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magento & ecommerce

A Full Guide to E-Commerce Shipping and Fulfilment

You’ve created a brand identity, the perfect product, a marketing strategy, and designed a beautiful online store. The next steps are less exciting, as you must set up operational processes. Order shipping is an essential part of any e-commerce business. However, finding a shipping strategy that’s beneficial both for you and the customer isn’t a simple task.

In this guide to e-commerce shipping and fulfillment, we’ll define the importance of these operational processes. We’ll also discuss the main points to consider and describe the most common shipping methods in detail. Read on to make your store functional and profitable by utilizing the right shipping strategy.

What Is Shipping and Fulfillment and Why Is It Important?

Before we dive into the topic, we must first differentiate between fulfillment and shipping and understand why a strategy for these processes is important.

Despite a common misconception, shipping involves more processes than packing and delivery. Order shipping is the complete path of operations leading from the warehouse to the end customer. It includes warehousing, order processing, packing, labeling, shipping, and processing the payment. Order fulfillment is a type of shipping strategy typically used in e-commerce where all the processes are conducted by an external company. Sometimes, the term fulfillment is used instead of shipping, which may be confusing. However, in this guide, we’ll refer to fulfillment as a shipping method.

Statistics show that 65% of cart abandonments are associated with overly high shipping prices. Free shipping, on the other hand, persuades nearly 80% of US shoppers to purchase from an online store instead of an offline retail outlet. However, only 15% are satisfied with the delivery speeds provided by e-commerce businesses. In other words, while consumers place great importance on shipping in their decision-making, many companies fail to meet their needs.

It All Starts With a Strategy

Before we get into detail, you should determine which shipping strategy best suits your business. E-commerce shipping can be divided into two large categories: outsourced and internal.

With an internal or in-house strategy, businesses organize all shipping processes on their own. Internal shipping is best suited to enterprise-level companies that need their own warehouses, individual delivery trucks, and require full control over every step of the process. While the internal shipping strategy provides independence, it also requires more material resources and labor from the business’ end.

Outsource shipping is also known as drop shipping or order fulfillment and is provided by external companies. This shipping method has emerged relatively recently and is rapidly gaining popularity. The reason for this is reduced costs, scalability, and convenience. Furthermore, all processes in companies providing outsource shipping are organized by industry professionals. Small and mid-level online businesses utilize outsource shipping fully or partially by renting warehouses and using third-party logistic companies.

An important factor to keep in mind when choosing a third-party shipping provider is return processing. You can’t avoid them with e-commerce, so the ease of this process plays a crucial role in customer experience. Potential shoppers may decide not to purchase from a store that requires them to pay for the return or that has lengthy refund processing times. Ensure the third-party warehouse puts returns back on the shelf within few days and evaluates product condition beforehand.

Shipping Rates and Methods

After determining your shipping strategy, it’s time to set your shipping rates and methods. Your choice should be based on the product size and weight, availability of delivery methods in your area, legal requirements, and customer expectations.

As most customers are attracted by free shipping, some e-commerce businesses decide to absorb the shipping costs. However, businesses choosing this model face two challenges. Firstly, to balance assets, such companies include the shipping costs in the product price. This may be unnoticeable in the case of a unique product. But if other stores are offering the same item for a lower price, that’s not the best strategy. Secondly, it’s hard to integrate the shipping costs into the product price in a way that benefits both the company and the customer. Store shoppers don’t all reside in the same area, so businesses must find an accurate average shipping cost.

While free shipping is attractive, shoppers also like to be given multiple shipping options, such as standard, express, and next-day delivery. These options typically differ in price. For instance, some businesses only offer free shipping for standard times or set different free shipping thresholds. International companies also often divide the shipping prices by countries or zones. The trick here is not to overcomplicate the final product price estimation for the customer. Shoppers prefer to know in advance how much they will have to pay for the delivery. Ideally, the shipping price information must be clearly stated on the site rather than be calculated individually at the checkout.

The shipping method depends on whether you offer only domestic or international services, and what are the desired delivery times and product quantities. You may opt for sea, air, or land transport, deliver orders on multiple pallets, or one by one in an envelope. Some businesses use post or local courier services, others enterprise-level services such as DHL or UPS.

Packaging

Packaging is what your customer sees first when receiving their order. It also protects the order during shipping. Thus, packaging may both establish your brand identity and build consumer trust or ruin the experience. Your package choices should be based not only on cost and product size but also on design and social considerations.

While branded packaging is pricier than regular cardboard boxes, it’s worth the investment. Unique packaging with a convenient way of unpacking enhances customer experience and boosts brand recognition. Some exclusions apply, though. If you sell sensitive products, such as adult toys, you should use discreet packaging to avoid embarrassing the consumer. A great way to go about it is to provide the shopper with a choice between branded and discreet packaging at the checkout. Gift wrap is also a great idea as many people now shop for presents online and send them directly to the recipient’s address.

Sustainability is on the rise, and it’s no longer reserved for unique brands. Today, excessive and environmentally harmful packaging is considered unacceptable by many consumers. Thus, ensure you use packaging wisely and that it can be recycled.

Packaging

Shipment Tracking

Insurance and shipment tracking may be a great bonus or a necessity depending on the value of your goods. Most carriers offer relatively inexpensive order tracking and insurance, providing both you and the customer with peace of mind. Tracking ensures the order gets delivered on time and helps to resolve customer service queries related to late delivery. If something happens along the way with an insured order, you won’t get in trouble and the consumer will get their money back, so don’t neglect this point.

Customs Declarations and Additional Taxes

This point is especially relevant for international and US-based companies. You can either include the tax calculation at the checkout or pass it on to your customer.

Naturally, the former is cheaper and easier for the business. There’s no need to purchase site extensions for personal tax calculation and fill in customs forms. However, this means extra work for the customer, which leads to a drop in satisfaction and retention. Tax-calculating tools are a smart long-term investment that improves customer experience and ensures tax is paid according to legislation.

You should also be aware of international regulations related to specific product types. What’s legal in your country may cause legal issues to a customer residing somewhere else. It’s better to check the legislation in advance and restrict access to prohibited products than to let the customer buy them and resolve complaints later.

Best Magento Shipping Extensions

If you own a Magento-2 online store, we suggest considering some of the best shipping extensions to minimize costs and improve customer experience. And if you don’t, our list may provide you with an idea of what’s possible with a Magento-2 store.

1. Mageworx Shipping Suite Ultimate

This extension provides a set of tools for complete control over all shipping processes in your store. It enables you to set diverse and accurate shipping rates specified by regions, times, carriers, product or customer group, and other factors. Furthermore, you can assign specific shipping rules to products and define rule priority.

2. Mageworx Store Locator & In-Store Pickup

This extension is a lifesaver for businesses running both online and offline retail outlets. Utilizing Google Maps, this extension lets the customer review and pick up the chosen product from one of the available offline stores. The tool adds a pick-up option as a new shipping method at the checkout and offers advanced customization capabilities.

3. Webkul Dropship Extension

If your business follows a drop shipping model, this extension may be the right fit. The tool enables you to import products from AliExpress into your stores or warehouses and customize product information. You have full control over the marketing and sales while the extension handles all the shipping processes including inventory management, delivery, and tracking.

Delivering Success

Hopefully, our guide has made the e-commerce shipping clearer and provided you with points for consideration. The secret to minimizing operating costs and maximizing customer satisfaction is through research and a professional approach. Our team can help you find the most suitable shipping management extensions and optimize the processes for efficient performance. Contact us for a consultation or to request a quote.

By interactivated • on November 20, 2021

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