Shipment Handling: Ultimate 2024 Updated Guide for eCommerce

Introduction

Not sure how the basics of shipping and handling work? From order management to last-mile logistics, there’s only so much you, as an eCommerce store owner can afford to remember. 

Here’s your official guide to shipment handling that breaks down each process clearly and helps you understand its importance.

We’ll also cover how you can minimize costs and provide the best shipping options to customers worldwide. Let’s dive in!    

The Definition of Shipping and Handling 

Shipping and handling are two completely different processes that are dependent on each other. 

Handling is extraction of an item from your inventory storage and packaging for delivery. This process generally requires extensive labor to ensure that all items picked meet the quality standards of your business. 

Conversely, shipping refers to the transportation of goods from your warehouse to the customer.

Using three main steps: First, middle, and last-mile delivery, shipping ensures that a parcel is delivered to a customer safely, and most importantly, on time. 

The Main Processes of Shipment Handling 

There’s more to shipping and handling than just grabbing items from the warehouse and sending them off on a journey. Here’s a complete breakdown of each process involved to help you understand things more easily. 

1) Order processing 

The first part of your logistics is order processing. This begins from the moment your customer buys a product on your eCommerce store. Here, an order is evaluated and only starts processing upon confirmation that you have enough inventory to ship. 

Your checkout page can even include multiple payment gateways for customers to ensure that every transaction is secured. When a payment is complete, your warehouse gets to work. 

2) Pick and pack 

As the name suggests pick and pack refers to two processes where your warehouse workers first pick an inventory corresponding to an order. They must ensure that every item in the package has the correct amount of items or details as requested by your customer.

Many warehouses today use inventory management software to help employees find out the exact location of an item or its availability.  After an order has been picked from storage, it’s sent for packaging. 

If you have a customized packaging system in place, then workers have to keep all designs intact while following the current ESG (environmental, social, governance) practices. 

3) Labeling

Your shipping labels hold key information about parcels. Right from the customer’s (and origin) address details and name to the AWB (airway bill) number and carrier, it includes almost everything the carrier needs to deliver a product. 

Many 3PL platforms today help businesses automate this process and print shipping labels in bulk. This saves them a significant amount of time and manual effort needed to ensure all information displayed is accurate.

For international orders, shipping labels can include the country of origin and destination along with the nature of the content being shipped. 

4) Sending goods to a carrier 

The last step in warehousing is organizing every batch of shipment or pallet for your carrier to pick up. You should ideally keep all documentation ready to keep the customs clearance process smooth. 

Also, choose from the most trusted carrier names that don’t treat your pallets harshly and enable real-time tracking for all orders. 

5) Final mile delivery 

One of the most important (if not the most important) parts of fulfilling an order is last-mile logistics. Once all your products reach a fulfillment center, they’re scanned before being placed in delivery trucks to update the customer about the order’s status.

Here, picking the most efficient path becomes necessary. Online stores need to pick routes that allow trucks to reach customers’ locations at the earliest. This helps them save on fuel and vehicle maintenance costs.

Once you confirm the quickest and traffic-free roads, drivers with the most experience can be assigned high-priority deliveries. 

6) Return delivery 

This is a rather situational process in shipping and only applies when there’s a manufacturing defect or when your team makes an error in delivery. This includes sending the wrong size, color, or type of a product. 

In any case, return orders are one of the biggest loss makers for every eCommerce business. Customers generally expect free returns, meaning, you have to bear the cost of shipping twice while also delivering a new fresh product. 

Why eCommerce Businesses Should Constantly Improve their Shipping and Handling 

Shipping and handling need constant innovation for all warehouses. There isn’t a streamlined solution that can help businesses keep the two efficient forever. As time moves on, customers change their preferences. This can also change depending on the industry. 

For instance, a luxury brand customer may prioritize having branded packaging more than getting their product in one or two days. On the other hand, an online grocery consumer will prefer receiving their package within the same/next day. 

Catering to a wide range of specific audiences requires different shipping and handling techniques in each warehouse.

When you keep employing the latest technology and best practices, you ensure that your business is able to fulfill each order on time and maintain a high customer satisfaction rating. 

Expenses Involved in Shipping and Handling  

There are three main expenses that are involved in shipping and handling. Let’s quickly explore what they are. 

1) Handling 

Handling expenses are mainly dedicated to the amount of labor hours. Every warehouse worker who picks, packs, and prepares your pallets for shipments is included in this. 

2) Packaging 

Packaging costs contain the price of paper, tape, bubble wrap, and any other materials needed to safely pack a product. If you offer branded packaging, then you may end up spending more on this process to purchase customized paper or boxes. 

3) Shipping 

The last one on the list is shipping costs. This is determined by your carrier and their usual charges. Depending on your monthly order volume, you can choose between a fixed carrier rate or a pay-per-ship model. 

How can eCommerce Businesses Keep Shipping and Handling Costs at a Minimum? 

Now that you’ve got a good idea of how shipping and handling work in warehouses, let’s check out how you can keep them at a minimum to boost profitability. 

1) Monitor the costs of each process

Analytical data holds more importance than you may think. At the end of each month, create an inquiry and ask your team to monitor and add up all the costs of different processes in shipment handling.

Keep reviewing this data for a couple of months and ensure that you’re not increasing the overall fulfillment costs and keeping it stable at a bare minimum.

Being updated with such information also helps you spot anomalies early on and solve them before they become a larger problem.  

2) Set clear business objectives 

Before you strategize a shipping and handling plan, make your business objectives clear. Do you want to:

1. Provide quicker delivery than competitors? 
2. Focus on branded packaging? 
3. Offer free shipping? 

Depending on your objectives, you can allocate funds and resources effectively to optimize shipping speed or packaging quality. 

3) Stay legally compliant 

There’s only one shortcut to avoiding a large sum of fines and that’s following the rules. Don’t skimp on any custom regulations just because it can help you cut a few short-term costs.

If inspected, you’ll pay a lot more in the long-term via fines and create a bad reputation for your brand in front of customers. 

4) Integrate technology

For any modern-day warehouse, having warehouse management software is essential. This can help you view all inventory statuses instantly and update the customer when it’s picked or packed. 

In fact, other tools such as returns management software can assist in making returns quick and easy for customers. Not using the latest technology gives your competitors a chance to scale and leave you behind in the race. 

5) Claim carrier discounts 

Never take carrier discounts for granted. If anything, get as many of them as possible from your courier partner. There are platforms that help you avail low prices from trusted carriers such as FedEx or UPS.

You can also try contacting your courier directly and negotiating a price if you’re going to sign a contract with them in the long run.  

6) Be smart with product pricing 

When choosing a product, customers tend to lean on stores with free shipping. This means you can include the actual cost of a product along with shipping charges. 

For instance, if a product at your store costs $80, you can price it at $86 to include the shipping rate. A customer who’s ready to pay that amount in the first place won’t notice they're paying a few extra dollars ($6 in this case) if they see that you offer free shipping.

Be careful, however, as this won’t always work on all products, especially if they’re not priced high in the first place. 

Best Shipping Options for eCommerce Businesses 

Now that we’ve gone through everything, it’s time to look at the current best shipping options that eCommerce businesses can provide to their customers. 

1) Same/Next-day delivery:

Same and next-day delivery options have been the hype for a while now. The idea of having your parcel delivered within the same/next business day of ordering excites any customer.

Since you’re moving away from the usual 3-day delivery service, customers will be more inclined to visit and buy from your store to receive quicker deliveries. 

2) Free shipping 

Put yourself in the shoes of an online customer. You’ve just added your favorite pair of shoes to the cart and then you see a $14.99 shipping charge. 

What are the chances you actually proceed to checkout? What are the chances you abandon your cart? 

Free shipping isn’t an entitlement, it allows customers to shop online according to their budget.

If you add heavy shipping prices to the product, you’ll potentially turn off a lot of customers who can get the same product at another website with free shipping. 

3) Flat-rate shipping

If you can’t manage to provide free shipping, the next best option is a flat-rate shipping cost. Whether an item is worth $100 or $15, you only charge $7 for shipping.

However, you can only manage to keep the flat shipping rate low when you use a fixed-monthly subscription carrier plan and know your monthly order volume.  

The Key Takeaway  

Shipping and handling are the initial stages of order fulfillment. They start from your warehouse and end with the last-mile delivery.

Using the strategies mentioned above, you can easily start saving more money on both processes and make your logistics more cost-effective today!