The Beginner's Guide to Ecommerce Shipping and Fulfillment

You put a lot of effort into making sure your customers have a great experience while purchasing from your store. You approve the images, you tweak your store’s navigation, and you write the emails, all with the goal of leaving your customers happy. 

But when it comes to shipping, it can feel like you’re handing your brand over to a stranger.

With some thought and planning, however, it doesn’t have to feel that way—which is a good thing, because shipping is a key part of your business. It’s the point where a customer finally experiences your product in person, and it can also represent a major expense in your business, depending on your shipping strategy.

That’s why it’s so important to map out a defined shipping strategy. 

Since the world of shipping and fulfillment can seem complex when you’re not familiar with it, we’ve got an overview of everything you’ll need to know to make the best choice for your business.

We’ll go over some of the basics of shipping your products and help demystify this complicated topic. We’ll talk about setting your shipping strategy, packaging, providing resources and links to popular carriers, look at tracking and insurance, balancing shipping costs with profitability, how Shopify can help you streamline your shipping, and apps to help make it all easier.

We'll cover:

Shipping strategy 101

There are some basics that set a foundation for the rest of your shipping. While you can come back and change each of these later on, as you learn more, these are the key decisions and steps that make up your high-level shipping strategy.

  • Your shipping rates and methods. Are you going to pass the full cost of shipping on to your customers, or will you offer free or flat-rate shipping to absorb some or all of the cost? Similarly, also take note of how fast your shipping needs to be - one-day, next-day, two-day, express and so on. 
  • Product weights. To streamline the process, measure and update the weight of each product you sell. Having that information set up will help you get a good sense of your total costs, and pass along accurate prices to your customers.
  • Choose your preferred packaging. While there’s more to be said about what kind of packaging is right for your products, once you’ve selected it, you can add that information to Shopify so you can calculate accurate shipping prices.
  • Source your packaging. You can either outsource the different components of your packaging like the cover, box, fillers, etc or opt for creating a branded one. 

Set your shipping rates and methods

Before you can ship products, you’ll first need to decide your pricing strategy for shipping. There are several common methods, but your choice should always be informed by the underlying financials of your business.

Offer Free Shipping

Offering your customers free shipping is one of the best ways to reduce shopping cart abandonment. However, as you might suspect, shipping is never free. Someone always has to pay. To make free shipping work, you have a few options.

  • Increase product prices to cover costs for shipping (customer pays).
  • You pay the full price of shipping out of your margins (you pay).
  • Increase prices of products slightly to cover partial costs of shipping (you and your customer pays).
  • Offer a discount code to certain customers for free shipping.

Additionally, you can also try offering free shipping on a minimum order amount. This strategy can help offset the costs of shipping by helping to increase your average order size, but you're still the one paying for it out of your margins.

Charge Real-Time Carrier Rates

Another effective shipping strategy is to charge real-time carrier rates for shipping. Ecommerce platforms like Shopify integrate with popular carrier partners as well as logistics aggregators in India. This helps you generate shipping options and live pricing from various carriers, and lets you customers choose and pay for the exact service they want. 

Explore all the fulfillment apps here.  

Charge a Flat Rate

The last popular option is to offer flat rate shipping. The best practice for this option is to try and make sure that you don't drastically undercharge or overcharge your customers. 

Flat rate shipping works best when you have a fairly standard product line of items that have similar sizes and weights. Flat rate shipping tends to become complicated and less effective if you sell a wide variety of products with different sizes and weights.

Calculating shipping costs

All shipping couriers base shipping rates on a variety of factors including:

  • Package size
  • Package weight
  • Origin country/ pincode 
  • Destination country/ pincode 

Plus additional shipping options like tracking and insurance, based on the products you sell online. 

It can be difficult to compare services exactly as they all offer slightly different options, and every business will have their own unique variables.

Below we have compiled a list of shipping calculators to some of the largest and most popular shipping couriers so that you can begin comparing pricing and options. 

Most of the logistics service providers typically have their charges clearly defined on the website to make it simpler. 

Consider your margins

To be successful at ecommerce, you always need to keep an eye on your profit margins. Because shipping represents a significant expense for ecommerce merchants, if you don’t do your research, you could end up losing money on shipping.

Before you finalize your pricing and strategy for your ecommerce store, you should use a chart like the one below to map out all costs associated with getting your products into your customers’ hands. Many ecommerce entrepreneurs are shocked by how quickly the little charges add up. Don’t get caught in the same trap.

Here's a quick example of how you could calculate your total price to include the cost of shipping.

Cost of product

INR 1000

Packaging 

INR 10

Shipping costs 

INR 15

Payment method fee (if applicable)

INR 2 

Profit margin

20%

Total price 

INR 1232 

    Packaging and marketing

    As the world of ecommerce develops so do the expectations of customers who buy online. Years ago, packaging and shipping was simply a way to receive a product purchased online, but more and more people are looking for shipping, packaging and presentation as part of the ecommerce experience.

    This expectation means that for many businesses, outside of selling commodities, competing effectively means going above and beyond to impress customers and exceed their expectations by delivering an experience, not just a product.

    Your packaging and presentation can be an effective way to set yourself apart. 

    For example, Vahdam Teas, which sells assorted tea bags and tea leaves, has focused a lot on packaging experiences. As you can sell below, their packaging is focused on ease of unboxing as well as keeping their tea safe during shipping. 

    Their packaging for different types of teas and boxes have garnered a lot of love on social media as well, with customers happily sharing their purchases. So make sure you include it in your marketing plan as well.  

    In a world where sealed factory bags and a black-and-white order receipt are considered standard, it’s the small details like this that go a long way in making an exceptional impression on customers.

    Today, some of the most successful and interesting brands are those using packaging to deliver an unboxing experience that goes beyond the product.

    Consider how you can provide a better customer experience through your packaging, and how you can use packaging as an extension of your brand.

     

    Free Guide: Shipping and Fulfillment 101

    From deciding what to charge your customers, to figuring out insurance and tracking, this comprehensive guide will walk you step-by-step through the entire process

    Packaging options

    Before you can ship your products, you’ll need to package them for safe transport. So what options do you have? There are a few common options for packaging including boxes or envelopes (padded or unpadded). 

    For many businesses and products, you'll have a box as well as some other packaging materials to safely ship your products.

    You may also want to try thinking outside of the box (no pun intended) and look at other packaging options. For example, poly mailers can be a great way to mail products that don’t need a lot of structure or cushioning, like clothing.

    Poly mailers offer multiple benefits. They’re lightweight, which reduces your shipping costs, and they can adjust to different volumes and weights depending on what’s included in the order. For example, the same size of poly mailer could accommodate one pair of socks, or five, and you wouldn’t be overpaying on packaging weight or dimensions for the single pair.

    Keep it light and small

    Because the cost of most shipping options is based on size and/or weight, do your best to keep your packaging as small as possible. This will not only help you save on your shipping costs and what your customer paid for shipping, but will also keep packaging costs from eating away your profit margin.

    Depending on your business and product line, you may want to consider carrying a variety of package sizes and packaging materials.

    Some people would consider this excessive packaging for an ecommerce package

    Most people would consider the packaging for the product above to be excessive. This is exactly what you’re trying to avoid as it inflates shipping costs dramatically. 

    The good thing is that consumers are becoming more aware of zero-waste packaging, and recycled packaging. So you need not worry so much about the frills in your packaging. 

    Insurance and tracking

    Depending on what you’re selling and its value, shipping insurance and tracking can offer a great deal of security. 

    With most carriers, insurance and tracking is relatively inexpensive and provides you recourse should one of your packages get lost or damaged. But it’s always a good idea to check with them on the details for the same. 

    For example, some may state that shipment insurance does not cover any indirect loss or damage, or loss or damages caused on account of any delays in delivery of shipments. 

    Consider purchasing insurance on big-ticket items so that, in the rare cases when a package does get lost, you'll be covered. Keep in mind that some shipping services have insurance already built into the price, so consider this when you are comparing various courier prices.

    Customs declaration and forms

    If you're shipping outside of your own country, you’ll need to include the proper customs documentation. These are available online through Shopify or at your local post office or shipping retail location. These forms tell the customs officers at the country of import what is in the package, how much it costs, and whether it is a gift or merchandise.

    Check with your country’s postal service to find out exactly which forms you’ll need to attach to your package. These forms should be completed honestly and clearly to prevent your package from getting held up in Customs.

    Tariffs, taxes and duties

    If there are any additional customs fees due when a package reaches its destination, your customer will be responsible for them at the time of delivery. It’s always a good idea to make sure to include this information in your shipping policy page so customers aren’t surprised by unexpected fees. 

    Here's an example of how one store prominently displays information regarding additional charges on their shipping policy page to ensure customers are aware of possible charges:

    An example of ecommerce policies about shipping and tariffs

    Customs declaration information

    All courier service providers that offer international shipping services usually have a detailed page stating all the information you need around customs. 

     

     

    Here’s an example of the same from Bluedart’s international courier services page: 

      Business accounts

      Once you have decided on the carriers you want to use, consider setting up business accounts. 

      Business accounts offer a variety of services including discounts, better expense tracking, and a whole host of online tools to more efficiently manage the shipping aspects of your business. But again, signing up for an account is entirely up to you and the scale at which your business is currently operating. 

        Labelling your packages

         

        Once you have figured out your presentation, packaging, carrier, and costs, you’ll need to determine how you want to label your packages. 

        Many new ecommerce entrepreneurs start off by writing the ship-to and return addresses on the package by hand. Although this can be a great way to start, it tends to be time consuming, tedious, and not scalable as your business grows. 

        You can invest in a thermal printer to print directly on self-stick labels, or print out the order details from your Shopify orders section and paste them onto the packaging. 

        The only thing you need to keep in mind is that these details should not get torn or damaged during shipping, as it might hamper the order’s deliverability.  

        Using a fulfillment warehouse

        A fulfillment warehouse can help automate and handle the shipping for you. When you choose to work with a fulfillment warehouse, you will store your inventory at one of their warehouses. 

         


        Depending on their level of integration with your shopping cart, when an order comes in your fulfillment partner will automatically be forwarded the order to pick, pack, and ship the purchase order on your behalf.

        There are a number of advantages to using a fulfillment warehouse including:

        • Cheaper shipping rates. Because fulfillment warehouses ship such large quantities for multiple vendors, they receive cheaper shipping rates. They're also integrated (usually) with all of the major shipping logistics companies, giving you easier access to the widest range of shipping options.
        • Shorter shipping times. Strategically choosing your fulfillment partner and the warehouse to store your inventory means you can store your inventory closer to the bulk of your customers.

        Fulfillment warehouses aren’t for everyone, though. There are several disadvantages as well that you need to consider.

        • Branding experience. Generally, if you use your packaging presentation as part of your branding experience, like Vahdam Teas, you’ll be hard pressed to find a fulfillment warehouse that will work with that level of dedication and customization for your brand.
        • Additional costs. Although you will likely receive better shipping rates working with a fulfillment partner, there are other rates that need to be paid including what are commonly referred to as ‘pick and pack fees’ as well as warehouse storage fees. 

        Shipping is a fundamental part of your ecommerce business

        Shipping is definitely a challenging aspect for any ecommerce business. Every business will have their own unique challenges they need to work through and overcome to develop the best and most efficient shipping strategy. 

        Like many aspects of building your new ecommerce site, it will take time and tweaking to determine what works best.

        Understanding all the variables and evolving your shipping strategy with your growing business is vital to its long term health and success. 

        So once you think you have it figured out, don’t let it go stale. 

        Reevaluate every six months to make sure you're delivering the absolute best possible service and experience for the best possible price to your customers. 

        Looking for a good shipping partner or logistics aggregator services to get the best prices? 

        Explore all Shopify shipping apps for India here

        Frequently asked questions about shipping and fulfillment

        What is eCommerce fulfillment?

        eCommerce fulfillment is the part of your business operations that delivers your products to the customers. Think of it as the part in which the picking, packing and taking the order to your customer is included.

        What is eCommerce shipping?

        eCommerce shipping refers to all the services that are required to transport the products purchased online from a retailer to a customer's delivery destination.

        What are fulfillment costs?

        Fulfillment costs include the sum of all the expenses involved in the course of handling a product from the point of receipt to distribution. These costs include receiving, segregating and storing a product or in simpler terms, picking, packing and shipping it to your customers. Your fulfillment costs will always vary from partner to partner.

        How is shipping cost calculated?

        To calculate the cost per order, you need to identify the total cost of a marketing campaign first, as well as the number of orders generated through that campaign. Divide these two numbers to get a cost per order.

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