Points Not to be Missed while Making Shipping Strategy
In ecommerce or any business, the ultimate task is to provide the services to the customers. In online selling, the product delivery is the crucial responsibility of all retailers. On seeing a catchy website, an online store filled with the needful and popular products, the customers would come to you, but, the response they want from you is to receive a reliable experience during the delivery of products and services they buy.
When you are new to ecommerce then shipping any product might look an easier task to you, as initially, you don’t have bulk orders. Here you can easily manage the product’s delivery even you make your easy hands-on manual process of shipping. But this would be easy no more when more customers would get familiar with your brands and products and you start getting a flood of orders. This creates a need for an effective shipping strategy else customers would pick another service provider or seller. Surely, you can’t afford to see your customer’s leaving. This is for one marketplace but if you own seller accounts on multiple marketplaces and more terrifically on omnichannel then imagine how much rush you are going to handle and think how would you!
What do you need?
For retaining the customers to your store, you must work with a clear strategy. From preparing the inventory to managing it for taking orders in quantity; from Dropshipping to self-shipment service or from the third party Logistics (3PL), you should have a clear mindset for- which process does your business need for shipping services.
Know your Business
Before indulging yourself into any shipment service, you should comprehensively go through your business, business needs, products you are selling, customers, the area you cover (local or international), shipping facilities and services. Then make shipping price strategy (Flat Rates, Shipping charges), packaging and labelling, inventory management and delivery of products.
Let’s go through the Fulfillment options you can opt…
The online sellers have multiple options for shipping service. Either they can manually handle the shipping and delivery of their own or outsource the services to the third party Logistics company like putting the inventory at the warehouse of the platform on which you are selling (as Amazon offers FBA). Alternatively, the best shipping option that nowadays the sellers are adopting is Dropshipping.
Here are the details.
Fulfillment by Self: Being the owner, some sellers feel that they themselves can and should handle all the process. Therefore they take the responsibility of shipping too. They manage their warehouse, keep the inventory and take the orders and at last fulfil them on their own. This saves the money that has to be paid to the 3PL or the commision to the manufacturers in dropshipping, though, the online experts suggest that the sellers should opt either 3Pl or Dropshipping as it eases the workload when the order floods into your store. Managing the orders in bulk and that too from different marketplaces and platforms can be cumbersome.
3PL: In this, the shipping is done through the third party Logistics company. You put your products into the third party fulfilment warehouse. Here the warehouse tracks inventory and fulfils the order. Amazon provides Fulfillment by Amazon(FBA) as third-party logistics service to its sellers and also more features to the sellers who opt for this service.
Dropshipping: Through dropshipping, the sellers can put down all their shipping tension. The shipping service becomes the responsibility of the manufacturer in a dropshipping facility. The sellers neither need to maintain their inventory nor shipping team. They only need to think what to sell and from whom (manufacturer) they can manage the product, rest is manufacturer’s tension. The manufacturer handles the manufacturing, inventory management and shipping of products too.
Think about Packaging…
Obviously, when you ship any product or good, it needs to be packed. The packaging matters while shipping and fulfilment. There exist two different packaging types which you can apply to products while delivering them to the customers.
Utility Packaging: Utility packaging can be taken as a simple packaging of the products for delivery. It contains no visible branding or any personalized graphics.
Brand Packaging: The brand style, personalized images or unique style packaging is allowed in brand packaging. Also, the brand name creates more trust with the customers. When you own a brand and brand registry, it adds more customers. Most of the sellers nowadays understand the impact of brands on customers therefore, moving ahead for branding solutions to get their brand registry done.
Packaging depends on:
- The packaging style depends on the shipment option and the budget you are investing.
- In self-shipment fulfilment method, you can customize packaging as you want to while in dropshipping, sellers are not allowed to customize the packing style. It depends only on the manufacturer as he is shipping the product on behalf of your order taken.
- Branded box entices customers more than the conventional packaging, but it costs more. As per the budget, you should customize your packaging.
- In dropshipping, you can avail profit at small investments, but it depends on the products and quantities you are selling.
How to decide packaging option?
You should make a packaging strategy on the basis of:
- Fulfillment option you are adopting.
- Budget of packaging
- Customer’s experience
- Shipping Carriers
- Shipping costs
Shipping Price Strategy:
Though some sellers offer free shipping services while some incur shipping charges to the customers. Here you might be confused that what should you offer to your customers. Thus it is essential to make the pricing strategy. If you don’t calculate the shipping cost then it would affect your profit margin surely. Before offering any alluring option to your customers, you must calculate the product’s cost, packaging cost, shipping rates and any marketing process that would incur charges to you. Also, calculate the inventory and warehouse charges, 3PL vendor charges and any other that might cost to you.
Sum up all the charges and finalize the price (with profit price) of the products that you are going to sell else you could run out of profit in the business. Here one thing to note that orders above ~$20 expect free shipping and you too should work on it. The free shipping option affects the conversion rates as everyone loves to have something worth free. This also helps in creating a good customer-buyer relationship. But be precise to earn your profit margin too.
With all points said above, make a clear and complete shipping and pricing strategy and implement it to your business. If needed, you can use various pricing strategy tools or hire the third party service providers to work with you. For an ecommerce business, creating an accurate pricing strategy and choosing a right fulfilment option are crucial. It makes the way for achieving the expected profit margin and conversion rates. Think about it...