How Does Online Shipping Work in eCommerce

Exploring Core Concept of Online Shipping

Online shopping has simplified the buying experience for home users to such an extent, that these days you can go online and browse from your favorite products, and within a few days, or sometimes even the same day, the ordered item is at your doorstep. 

But despite looking as hassle-free as snapping your fingers from the outside, online shopping’s ground reality is quite the opposite. What may seem effortless, is instead a well-established process, with several crucial steps that have been refined over the years. eCommerce shipping is one of those steps. 

As a business owner, it is your choice as to how you wish to streamline your shipping process. From receiving an order to packing and shipping it, eCommerce shipping is a critical step in the supply chain, which can directly influence customer experience. 

But before you go ahead and make important decisions regarding your business’ shipping needs, it is imperative for you to gain a deep understanding of how exactly eCommerce shipping works, what are some of the most popular strategies to use with respect to it, and what are the top shipping APIs that can help you set up things within clicks. 

To begin with let’s look at the concept of eCommerce shipping. 

What is eCommerce Shipping?

eCommerce shipping includes all the steps required to deliver products from the retailer to the customer. It is essential for eCommerce businesses to have the right shipping partner so that their logistics operations can be optimized for fast, efficient and affordable deliveries.

Now let’s take a closer look at what the eCommerce shipping process entails. 

What does the shipping process entail?

The shipping process for an eCommerce business includes everything from the time the customer places an order to the time it is delivered to their doorstep. The entire process is split into three main stages. 

• Order receiving: to ensure products are in stock to fulfill orders. 
• Order processing: to verify the data of the order and ensuring customer details are accurate. 
• Order fulfillment: to generate a list after which the order is picked, packed, labeled, and shipped. 

Popular eCommerce shipping strategies and methods

In the eCommerce shipping industry, there is no one size fits all strategy. The perfect shipping strategies for your business depend on your business’s budget, audience, product, margins, and several other factors.

Regardless of exactly which shipping strategies you use, offering a combination of affordable and fast ones will assist you in increasing conversions and reducing the abandonment of shopping carts. 

Here are the shipping methods you could consider including in your business’s eCommerce strategy: 

1) 2-day shipping

Multinationals like Amazon have popularized 2-day shipping for orders they receive through their website and app, making it one of the most demanded shipping solutions. Although this method of shipping comes easiest with larger eCommerce companies, there are still ways for all types of businesses to adopt it. 

2) Same day delivery

With same-day delivery, the vendor promises to fulfill the order within the same day that the purchase has been made. Statistics show that 61% of consumers are willing to go the extra mile and pay a higher rate to get their order delivered the same day.

But you should also keep in mind that executing same-day delivery requires much better organized operations, courier services, technology, and resources. 

3) Overnight shipping 

With same-day shipping and 2-day shipping becoming the norm, it has become increasingly difficult for brands  to stand out in the eCommerce industry. As a measure of last resort, many organizations are adopting the overnight shipping strategy.

This shipping method guarantees that the order item will be delivered to the customer by the next business day. Different shipping carriers offer this facility of overnight shipping at varying prices, and surveys show that this helps them achieve their sales target much faster.

4) International shipping 

Regardless of whether you’re an overseas business looking to deliver in the US or an existing business based in the US looking to expand globally, international shipping can be quite challenging.

Each country has its own set of rules and regulations when it comes to tariffs, taxes, and other requirements. Thus, you must select a reliable shipping partner who has experience with international shipping and can help you navigate through international waters at an affordable price. 

5) Freight shipping 

Freight shipping refers to the transportation of cargo via land, sea, or air to any global location. Businesses generally use freight shipping to receive inventory from the manufacturer and send the product to their distributor or the fulfillment center. 

Now that we’ve had a look at some popular shipping strategies, let’s take a look at eCommerce shipping costs to get even better clarity. 

What are eCommerce Shipping costs?

While shopping online, most users expect fast deliveries at affordable prices. But that’s not always possible. Nevertheless, as a business owner who wishes to create a loyal customer base, you need to make sure that the shipping rates you offer are affordable while also being within your budget. 

Logistics and eCommerce costs can be quite complex the first time around. Here’s a small guide to walk you through this process:

1) Calculating shipping costs

Shipping costs are influenced by several factors including the weight and dimensions of your package, the destination of the order, the shipping carrier used, and the price of the product. The best way to find a cost-effective shipping strategy for your business is by reading and understanding how eCommerce shipping works. 

2) Dimensional weight 

Dimensional weight is taken into consideration while determining the total shipping cost. This metric is considered by most shipping carriers, including companies like FedEx, USPS, and UPS. Shipping costs are based on the dimensional weight, as well as the weight of the product; whichever is higher, is considered while calculating them. 

3) Reducing shipping expenses

For growing businesses, it is crucial to have lower shipping costs and partner with 3PL providers that meet business requirements. Outsourcing shipping to a 3PL can help businesses take advantage of shipping discounts and focus on other aspects of the business. 

As mentioned above, there is no one size fits all approach in eCommerce. Every business makes use of a different rate structure to charge their customers for their orders. 

What are some popular shipping rate categories?

Here are popular rate categories offered to customers for eCommerce shipping: 

1) Flat rate

This refers to the “it fits, it ships” concept. The package needs to be in a certain box or envelope that already has a pre-assigned rate at which it will be shipped. 

2) Real-time rates

The real-time rate refers to the exact shipping rate at the time of checkout. This rate is based on the customer’s delivery preferences and location. With this strategy, you can charge the customer the exact shipping cost. 

3) Free shipping 

Free shipping is certain to increase customer loyalty and conversions, while reducing abandonment of shopping carts. Although it may not seem profitable to offer free shipping, here are a few things you can adopt to offer free shipping and still make a profit:

• Include the cost of shipping with the price of the product. 
• Keep a certain threshold at which customers can benefit from5 free shipping. 
• Start a loyalty program with a recurring fee in exchange for free shipping. 

Top 3 Shipping Carriers

To build and better your shipping strategy, it is essential to familiarize yourself with the top shipping carriers and what they have got to offer. 

1) USPS 

The United States Postal Service (USPS) was established in 1971. This service of delivering postal services across the country is managed by the US government. Their API gives customers quick access to shipping information and services within and outside the United States.

USPS offers a wide range of features including a shipping price calculator to calculate the shipping rates for domestic and international shipping, tracking of packages, scheduled package pickup in case of returns, and address verification. 

2) FedEx

FedEx is popular for its overnight delivery services, which are supported by an effective system that can track packages and provide real-time position updates. The API is simple to use and the information required to integrate a third-party application is available along with relevant samples.

FedEx provides APIs for integrating its many services, such as FedEx Express, FedEx Ground, and FedEx Freight, with any eCommerce site, retail site, or order management system. It comes with a slew of features at a reasonable price.

3) UPS

United Parcel Services, or UPS, was founded in 1907 in Seattle, Washington, and is now one of the country's major shipping companies. Along with its basic position as a package delivery and logistics service provider, UPS also provides supply chain management services.

Ecommerce Packaging 

The packaging you use for your products has a direct influence on customer experience and the cost of shipping. It is the first interaction the customers have with the brand. Listed below are a few tips to provide a worthy first impression. 

1) Selecting packaging 

From paper to wood, cardboard to plastic, the options for packaging are endless. To make the best packaging decision, answer these questions first:

• What is the shape of your product?
• What is the weight of your product? 
• What are the dimensions of your product? 
• Is your product fragile or durable? 
• Do you wish to have branded packaging for your product or keep it simple? 

2) Custom packaging 

eCommerce is a competitive industry, and custom packaging helps businesses stand out. This type of packaging is more than just a cover for your product, it can greatly influence and better customer experience. With branded packaging, you can generate a buzz amongst your customers, build loyalty and make a memorable first impression. 

3) Sustainable packaging 

According to the EPA (Environmental Protection Agency), a third of housing waste comprises packaging. As the eCommerce industry continues to grow, so will the amount of waste produced. Businesses can prevent this wastage by selecting sustainable shipping options that are good for the environment as well as your business. 

Shipping Labels and Insurance 

Shipping labels and Shipping insurance aren't the most glamorous parts of eCommerce shipping, nevertheless, they’re a crucial element while providing an exceptional customer experience. They are often ignored, causing businesses to miss out on the great opportunity for providing a good customer experience.

Here’s what you need to know about them before shipping your order.

1) Shipping labels 

As the name suggests, shipping labels are labels that carry information about the destination and origin of the package. Without proper shipping labels, packages tend to get lost, mishandled, or delayed. This can create a not-so-pleasant experience for the customer and cause damage to the brand, eventually leading to a lack of sales.  

Most often along with information about the origin and destination of the package, shipping labels also include the tracking number, shipping class, weight of the package, and the return address. 

2) Shipping insurance 

Shipping insurance refers to a feature where reimbursement is provided to the seller in case the package is damaged, lost, or stolen. This is usually done while shipping fragile or expensive items, for otherwise, it could increase your overall shipping cost. 

The shipping process does not end just yet. Ensuring customers can track and return their orders seamlessly is a critical element in the process. Listed in the next section are a few pointers to keep in mind during order management and returns. 

3) Track Shipments and Returns

It is a common misconception that the shipping process ends once the delivery has been made. The reality is that businesses need to continue to offer customer experience during and after the product’s order journey. This includes sharing the tracking code with customers and providing a seamless return process. 

4) Order management 

This refers to the process of receiving, fulfilling, and tracking customers’ orders. It is crucial to have the correct strategy for order management, along with shipping software that will reduce the number of back-ordered products.

The main purpose of order management software is to streamline the fulfillment process by centralizing your data and assisting you in making informed decisions. 

4) Tracking orders

Regardless of whether the order is shipped in-house or via a 3PL, ensure to share the tracking number with the customer as well. With an order management system, you and your customer can track your package at every stage. 

5) Managing returns

Returns can be a great inconvenience and disadvantage for businesses if not done correctly. Statistics show that 95% of customers who are unhappy with the business’s return process are three times more likely to never purchase from the same business again. 

And now let’s move to a more technical aspect of the entire ecosystem - shipping APIs. 

Top 3 Shipping APIs

Your eCommerce tech stack has a great influence on the shipping strategies of your business, right from the software used for shopping carts to the API used for shipping. It is crucial to ensure that these systems seamlessly integrate. 

Here are three of the best shipping APIs that will seamlessly integrate with your business.

1) Shopify 

Shopify is an online platform used to create and develop eCommerce stores. With it,  you can sell your products online as well as offline. The features of this platform are accessible by everyone from beginners to specialists.

Shopify offers a 14-day free trial for you to get a feel before committing to one of its licensing packages. During the free trial, you may create an online eCommerce store and try out other Shopify applications for free.

2) WooCommerce 

Similar to Shopify, eCommerce businesses use WooCommerce shipping API to get a variety of options for shipping and partnering with 3PL companies. Your eCommerce store can easily be integrated with this platform, after which you can automate your shipping, track orders, and ship orders from big cities in the US. 

3) Wix shipping 

Similar to both the platforms mentioned above, Wix provides a wide range of apps and integrations to improve your eCommerce store and create the best end-end eCommerce solution. By integrating your Wix store with a 3PL, retail fulfillment can be streamlined, including automated order processing. 

Conclusion 

Shipping is a key component for every eCommerce business. It is essential to understand the exact requirements of your company before selecting a shipping partner that can help you grow and achieve maximum profit from order fulfillment. 

We hope that this post has helped you gain a better understanding of eCommerce shipping and that now you will be able to choose the best shipping strategy for your company.