One of the key components and biggest costs for many online retailers and e-commerce sites is shipping and fulfillment. Selling the merchandise and getting it out to the customer in a timely, cost-effective manner will be crucial for success. Poor fulfillment and slow deliveries can really you’re your customers unhappy and diminish the prospect of getting repeat business. So, making sure you can execute and get your products delivered in a timely fashion should be a key element of your marketing strategy.
It might seem like you’d have limited options for managing your shipping and fulfillment but there are more options available to you than you might think. Start by thoroughly researching your options. Different shipping carriers and fulfillment houses, including the US Postal Service, have rates and service levels that will vary widely.
Compare Carriers and Fulfillment Options
The recent gyrations in fuel prices putting a squeeze on Internet retailers of late has made comparing carriers and fulfillment options more important than ever. Since many online merchants rely so heavily on parcel shipping, when fuel prices rise, shipping costs go up, and profits can be deeply affected. Carriers such as DHL, FedEx, UPS and the US Postal Service pass along those fuel price increases in the form of fuel surcharges to their customers. Fuel surcharges can vary dramatically with carriers’ pricing calculations fluctuating monthly or even weekly at times.
Many e-commerce companies offer free delivery on orders made over a certain sales threshold – “Free Shipping on All Orders Over $50”, for example. With transportation costs so uncertain, many online retailers will need to rethink their shipping and promotional strategies. Deliveries to outlying rural areas can incur particularly high surcharge costs as well.
With fuel prices fluctuating so greatly, will it be too risky to keep offering free shipping as an incentive?
It’s no secret that shipping and handling charges have been profit centers for many e-commerce companies for years. Padding the shipping and handling charge has modestly improved the profit per order for many online retailers, but rising shipping costs can cut into this profit source significantly.
Bottom Line: You have to compare carriers and fulfillment options carefully and be savvier than ever when it comes to monitoring your shipping and fulfillment costs. Now, more than ever, e-tailers have to make sure that higher transportation costs don’t carve too deeply into their bottom line.
Rate Shopping
Many of the largest e-commerce merchants have partnerships with multiple carriers, allowing them to quickly rate shop between shippers. They set up guidelines and use software to optimize the cost of each individual delivery and quickly choose a carrier, based on the service level required, destination and weight. Smaller online retailers will simply have to compare rates the old fashioned way.
No matter what the size of your online retailing operation, all merchants have to keep a close eye on their shipping costs. Smaller merchants get too overwhelmed to track and reconcile their shipping costs regularly for each so they just end up paying the bill, without ever looking closer.
Use The Free Calculators/Estimators
For starters, many of the major carriers provide calculators that will easily calculate shipping and postage costs giving e-commerce site owners a clearer view of the costs associated with each carrier. You can go right to the individual websites and enter the package dimensions, address information, and other package details to pull up price estimates.
Here’s a list of calculators from the most widely recognized shipping, fulfillment and delivery companies:
- FedEx – Rates and Transit Times
- USPS – Shipping Tools
- UPS – Shipping Time and Costs
- DHL – Shipping Management
Visit each site and create a spreadsheet that you can use to compare price and service. This will save you a lot of time when calculating what your best options for shipping and the required service level.
Don’t Forget the Fees
When establishing your shipping rates, don’t forget to include the cost of fees for shipping extras. Carriers charge additional fees for services such as Delivery Surcharges, Residential Delivery Surcharges, Delivery Confirmation, and Insurance Fees. Keep these extras in mind when calculating what kind of merchandise you are shipping and where the customer you are shipping to lives.
Outsourcing Your Fulfillment
A more suitable option for small to medium sized online retailers is the option of outsourcing your shipping and fulfillment. Companies like Amazon, Webgistix and Shipwire are specialty fulfillment houses that cater to start-ups and small to medium-sized businesses.
These fulfillment houses typically price their services on the volume of products that you ship on a monthly basis. There are a variety of fulfillment houses to choose from:
- Shipwire
- Amazon.com
- WeFulfillIt.com
- eFulfillment.com
- Webgistix
- National Fulfillment Services
- ProLogLogistics
- 3PL Worldwide
- Innotrac
Amazon has one of the largest warehouse and distribution systems in the entire world. There Fulfillment by Amazon (FBA) program is priced very competitively and their ability to execute is hands down the very best in the industry. The downside, however, is that for most small business owners, you’ll be a very small fish in a very big pond.
Don’t expect to get personalized service with Amazon and for that very reason, I would not recommend using Amazon’s FBA program for small businesses and home-based start-ups. Amazon is better-suited to rapidly growing small and medium –sized businesses that don’t necessarily require personalized service that so many small business owners are looking for.
Shipwire is one of the better fulfillment houses for small businesses because of their flexibility and ability to cater even to the very smallest home-based business. For example, Shipwire has 3 different pricing tiers (the first starts at only $29.95 per month), with warehouses in Chicago, Los Angeles, Toronto, Vancouver, Nevada and the United Kingdom. They have a customizable option that allows businesses to scale for rapid growth quickly as well.
Shipwire also offers “shipping optimization” with all of their service plans. Shipping optimization involves analyzing your orders and comparing your shipping options from each available warehouse and fulfilling the order with the least expensive shipping order available.
Shipwire’s shipping service includes these additional features below at no additional cost:
- Shipping Price Comparison Tools
- Custom Shopping Cart Integration
- Inbound Freight Services
- Discount Shipping Insurance
- Lick ‘n Stick™ Pre-Sealed Item Shipments
Shipwire even offers a free trial to test out the service. You simply send them 6 items to any warehouse of your choosing and they’ll ship the items anywhere.
We highly recommend Shipwire for your fulfillment services. Outsourcing this part of your business just might be one of the smartest things that you do in building your business.
Shipwire’s flexibility, customizable service plans and personalized service makes it our service provider of choice in fulfillment.
For most small businesses, we highly recommend outsourcing your fulfillment in the early stages of your company’s development, which can free up valuable time for you and your employees to spend on much more important things like sales, marketing, product development, hiring, payroll, etc. Most small companies will be well served to partner with an outsourced fulfillment company.
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you should have a”print article button” to prevent unwanted printing of extra pages. Printing extra unwanted pages is not ecofriendly. I am surprised that you do not have this option.
Emerson-
We do have a print button actually, but it’s a little difficult to find on the page. The print button is located on each individual blog post underneath the sub-header “Share and Enjoy” — it’s the 3rd button in from the right. There’s also a PDF button next to that one as well.
We’re considering making those buttons a bit more prominent to deal with issues like this. Thanks for pointing this out.
I just approved your post in my blog carnival. Thanks for the submission!
Thanks for providing this important information to the readers of The Work at Home Family Carnival.
As a seller I’ve used EFS (efulfillmentservices) and I also used (shipwire), I explored prolog and the contract was abusive so never tried them. EFS was excellent but dealing with many people became confusing at times, shipwire is expensive but they seem to provide a good service, specially abroad. Finally I decided to stick with allpackfulfillment.com, they offer a great service, their prices are excellent and the technology is superb. I included the link instead of my name.
Bjorn Aselvek