Shipping for e-commerce: A complete guide for online retailers
Finding the right shipping solution is often a major challenge for online retailers. To keep ahead of your competitors, it’s important to offer your customers fast, affordable shipping. But the right solution also has to be cheap and easy enough to avoid cutting into your profit margins. In this article, we’ll tell you everything you need to know about choosing the right shipping solution and which shipping options are most attractive to your customers.
Why is choosing the right shipping solution so important to online retailers?
The shipping options you offer in your online shop can have a considerable influence on your customer’s decision to buy from you. Most online shoppers are now used to receiving free shipping, including return shipping. Since competition in e-commerce is at an all-time high, retailers are under serious pressure to offer customer-friendly shipping. On the one hand, you want to meet your customers’ expectations for quality and service by offering cheap or even free delivery. At the same time, your shipping solution needs to be profitable for you too.
If you don’t offer attractive shipping options, you could lose many customers to cart abandonment. That would lead to a drop in your conversion rate during checkout. The most common causes for cart abandonment include:
- Hidden shipping costs.
- Shipping costs that are higher than expected.
- Shipping costs that are only revealed during the last step of the ordering process.
- Requiring customers to pay for return shipping themselves.
To avoid a high cart abandonment rate due to shipping costs, it’s important to carefully select the right shipping options when you are setting up your online shop.
Choosing the right shipping solution for your online shop: What to look for
Every shipping carrier offers its own range of delivery options. Your challenge is to find the service that can fulfil your online shop’s specific requirements. Before choosing a carrier, ask yourself the following questions:
- What will you be shipping? For example, do you ship fragile products that require special transport?
- How much do your parcels weigh?
- What are the dimensions of your parcels?
- How many parcels will you be shipping?
Shipping costs always depend on the weight, dimensions and volume of your parcels. If you are shipping parcels with unusual dimensions, you can probably expect to pay additional fees. The same applies when shipping parcels internationally, which involves export documentation and perhaps additional customs fees. Here are some other things to keep in mind when looking for the right shipping solution for your online shop.
Business account: Yes or no?
When setting up your online shop, consider whether it is worthwhile to open a business account with your shipping partner. This can have many advantages, including:
- Lower shipping rates
- Fixed prices
- Convenient parcel pick-up service
However, if you want to become a business account holder, most shipping carriers require that you ship a minimum volume of parcels. Hermes, for example, requires its business customers to ship at least 300 parcels per year in order to use their business customer portal. With Royal Mail, the minimum for an Online Business Account (OBA) is as high as 1,000 parcels per year. If you’re unable to accurately predict how many parcels you’ll be shipping, it might be difficult for you to commit to a business account.
But that doesn’t mean you should just load up all your parcels and drop them off at the nearest parcel collection point. A ‘freestyle’ shipping approach like that is not only a lot of extra work, but it can also cause you to miss out on tax advantages.
One alternative is to use the broker version of your partner’s online shipping portal, which is an option that many shipping carriers now offer. The broker version often gives you access to better prices and easier processing, even if you are shipping in lower volumes.
One carrier or more?
Combining multiple shipping carriers provides advantages for you and your customers:
|Advantages for online stores||Shipping terms and conditions vary from one carrier to the next. If you sell a wide range of products, then working with multiple shipping carriers enables you to always find the cheapest offer .|
|Advantages for online stores||Plus, working with multiple carriers lets you guarantee that your parcels will always be delivered to your customers on time, even during peak periods like the holiday season or when there are problems on the carrier’s side (such as a shortage of delivery drivers due to illness).|
|Advantages for your customers||Your customer’s personal experience with the delivery driver often has a big influence on how satisfied they are with their order in general. Even if you are using the same carrier throughout the entire country (such as DHL or Hermes), local delivery drivers may be less reliable in one region than they are in another. If your customers feel that the driver did a poor job, they might send you a complaint or leave a negative review of your shop. To prevent that, it’s best to let your shoppers choose which carrier they would prefer to deliver their order.|
Shipping software: Yes or no?
Shipping software can help you manage your multi-carrier strategy by letting you centrally control your shipping and process shipping requests more efficiently. Here are some of the advantages of using shipping software:
- It makes it easier to integrate multiple shipping carriers into your shop.
- It provides a platform for quickly and securely transferring shipping information between your shop system and your various shipping partners.
- It lowers your shipping costs by automatically selecting the cheapest shipping carrier based on the parcel’s weight, dimensions and destination.
With advantages like these, you can see that it makes sense to consider using shipping software, even if you are operating a small online shop.
E-commerce shipping: What do customers expect?
Online retail is booming. In recent years, the number of parcels shipped has continued to rise sharply. According to Statista, 3.8 billion e-commerce orders were delivered in the UK in 2019 alone! The COVID-19 pandemic has also accelerated the increase in online retail shipping. A 2020 eCommerce study by Sendcloud found that online retailers reported a 90% increase in shipping volumes.
The results of a 2019 European study by PwC show what online shoppers really care about when it comes to shipping options. At the top of the list:
- Free return shipping (74%)
- Fastest possible delivery, within 24 hours (70%)
- Knowing the exact delivery date when placing an order (70%)
- Being able to track the shipping status using the carrier’s tracking system (60%)
Additionally, around 25% of customers surveyed said that they expect free shipping. And among customers who are willing to pay for shipping, 25% say that they expect same-day or next-day delivery.
Sustainability is also an increasingly relevant topic for many online shoppers. According to Sendcloud, 57% of UK online shoppers say they are concerned about the amount of waste generated by parcel packaging.
Which shipping carriers are most popular among customers and shop operators?
When choosing the right shipping partners, it’s important to think about more than their prices: also think about what your customers prefer. According to the Sendcloud eCommerce Delivery Compass, around 78% of European shoppers say that a shop’s choice of shipping carrier has an influence on their decision about whether to make a purchase. That’s why it’s no surprise that most online shops stick to the carriers that are most popular in their country or region.
Royal Mail is by far the most popular shipping option among e-commerce shoppers in the UK, outranking all other carriers combined. However, despite that popularity among consumers, many top online retailers prefer to use the second-most popular carrier in the UK, Hermes.
|Carriers used by top UK retailers||Carriers used by top UK retailers||Carriers preferred by UK consumers||Carriers preferred by UK consumers|
According to these statistics, Royal Mail, Hermes and DPD are the most popular shipping carriers among retailers and consumers in the UK.
Consumers have various reasons for preferring certain shipping carriers. These include:
- Positive previous experiences
- Lower prices
- Fast delivery
Comparing the most popular shipping carriers: Royal Mail, Hermes and DPD at a glance
As mentioned before, the quality of service that customers receive from a carrier may vary from one region to the next. This is why offering a selection of carriers during checkout is just as important as offering a wide range of payment options for customers to choose from. That lets your customers decide for themselves.
If you choose to work with only one shipping carrier, at least take a close look at which services they offer. Here are the most important topics to keep in mind:
Most carriers offer a detailed price list for domestic and international shipping if you fill out a request form on their website. Carriers use these price lists as the basis for quoting an individualised offer to their business customers.
How has the COVID-19 pandemic affected e-commerce shipping?
When brick-and-mortar shops were forced to close during the COVID-19 pandemic, there was a resulting increase in online shopping. For many online retailers, it soon became challenging to find the right shipping solutions. According to Sendcloud, the following situations were particularly challenging for e-commerce retailers due to shortages and interruptions in the supply chain:
- Drop-shipping: Drop-shipping is an e-commerce model in which you sell products that you do not keep in stock in your own warehouse. Instead, the product ships directly from the manufacturer to the customer. If a manufacturer was forced to temporarily shut down operations during the pandemic, it became impossible to sell products from that manufacturer.
- Overseas production: The extremely high volumes of parcel shipments and occasional border closings meant that cross-border shipments were prone to lengthy delays during the pandemic.
At the same time, many consumers have become more patient with delivery times as a result of the pandemic. On average, European shoppers say they are willing to wait up to two days longer than usual for delivery when ordering a product online during the pandemic. In some countries, customers shifted more heavily towards buying from local online retailers rather than major international companies like Amazon. This has created new opportunities for many small online businesses.
Organising shipping the right way: 6 tips for e-commerce retailers
Here are six tips to help you boost your conversion rate by offering customer-focused shipping in your online shop.
1. Offer multiple carriers
It’s a good idea to offer your customers multiple shipping options. If you work with only one carrier, you run the risk of bottlenecks in your shipping when:
- the shipping carrier experiences technical problems
- labour shortages occur due to illness or strikes
- delivery delays occur during peak periods, such as the holiday season
These bottlenecks lead to unsatisfied customers. In the worst case, customers may decide not to order from your shop again. Use shipping software to simplify your logistics and integrate multiple carriers into your shop.
2. Offer express delivery
Speedy delivery is extremely popular, especially among younger shoppers. Customers are often even willing to pay higher shipping costs to receive their order as quickly as possible. That means it’s worthwhile to offer an express delivery option in addition to standard shipping.
3. Provide shipment tracking
Your customers want to know when their parcel will arrive. That’s why you should offer detailed tracking information: to keep customers informed of their parcel’s status every step of the way. The best option is to send automatic status updates by email. This not only helps your customers, but it lowers the volume of queries your customer service department will receive. With track & trace options, your customers can be sure that their parcels are on the way. That helps them be more patient, even if the delivery takes several days. If you don’t offer tracking information to your customers, they are more likely to become impatient and contact your customer service department to ask about the status of their parcel.
4. Insure your shipments
You know it’s important to protect your products by packaging your shipments securely. However, items can still be damaged on their way to the customer. When that happens, it’s essential to offer customers a satisfactory solution. Otherwise, the customer may decide not to buy from your shop again.
To protect yourself against damage or loss, consider buying shipping insurance from your carrier. Royal Mail, Hermes and DPD all offer insurance coverage ranging in value from ￡20 to ￡50 as part of their standard shipping service. If you are sending products with a higher value, it’s best to take out additional insurance coverage.
5. Offer simple return shipping
Return shipping is time-consuming and expensive for many online retailers. Yet, it’s important to remember that you can raise your conversion rate simply by offering a hassle-free return process. Customers are more likely to buy products when they know that they can easily return them if necessary. Your return shipping doesn’t necessarily have to be free of charge. You just need to remember:
- … to clearly inform your customer of your return shipping conditions (including any costs) before they complete their order.
- … to enclose a ready-to-use return shipping label with the product.
- … to allow your customers to hand over the return parcel to the carrier of their choice.
6. Offer free shipping above a certain order amount
Free shipping provides a great incentive for customers to place an order. Often, it’s even a bigger incentive than offering a discount code. Not all retailers can afford to offer free shipping (and free return shipping) with every order. Still, if you want to remain competitive, it’s a good idea to at least offer free shipping on orders above a certain amount. This also has a positive effect on your order values because it can entice customers to buy more than they had originally planned. The minimum order price for free shipping depends on the type and price range of your products.
Summary: Shipping for online retailers
The shipping options you offer in your online shop can greatly influence your customers’ buying behaviour. Offering free and fast delivery can be a powerful tactic for boosting your conversion rate. If you have a smaller shop that can’t afford to offer free shipping to everyone, a great alternative is to offer free shipping on orders above a certain value.
Demand is also growing for environmentally friendly shipping options. Customers who value sustainable shipping are also willing to pay more for it. This is a terrific opportunity for smaller online businesses to stand out from their competitors and generate more sales, even when they don’t offer free shipping.
Finally, remember to offer detailed tracking information and to let your customers choose from a selection of carriers. These options are advantageous for both you and your customers. To help you keep full control over your shipping and launch a multiple-carrier strategy, you’ll also want to look for a reliable logistics software solution.