Which Shipping Method Is Right for Your Ecommerce Business?
Updated on
May 14, 2024
by
Jennifer Collins
The global logistics and shipping industry is experiencing a significant surge, with a staggering compound annual growth rate (CAGR) of 17.8%. According to McKinsey research, over 75% of US customers now shop both online and in physical stores. This figure and customer expectations are expected to continue rising in 2024.
Selling a product involves convincing customers to make a purchase. However, product delivery also plays a crucial role. This guide will help you select the best e-commerce solution from a variety of options available.
Selling an item requires creating enough demand, implementing a good marketing strategy, and ensuring a smooth checkout process. All of this can be accomplished without having the actual product physically available.
Shipping, on the other hand, requires careful planning of your inventory, maintaining sufficient stock, and establishing partnerships with shipping carriers if you decide to outsource.
Alternatively, you may choose to handle the entire last-mile logistics yourself if you opt for self-shipping. Furthermore, it's important to manage customer expectations regarding shipping rates and the types of delivery services you can offer.
This may seem overwhelming, but navigating the eCommerce shipping landscape becomes easier when you understand the various shipping solutions available to you.
We've put together a guide to help you navigate the shipping landscape and find the perfect shipping method for your business. Take a deep dive into the details to finally resolve any shipping-related concerns.
Shipping method by cost
Customers would love to have free delivery all the time, but shipping comes with costs. It's important to understand how you or your shipping partner will calculate shipping costs when choosing your preferred shipping method.
Do you base your charges on the distance, size, and weight of the package or the time it takes to fulfill the order?
Let's look at the types of shipping methods in terms of cost calculation based on all the different factors.
Flat rate shipping
Flat rate shipping is a delivery method that considers a flat rate regardless of the shipping zone.
The total cost of shipping will be calculated based on the number of items to be shipped.
Flat rate shipping is easy to calculate both for the shipper and the end buyer. As long as the package fits the size standard, every unit to be delivered and treated the same.
Naturally, there will be several size standards to benchmark your packages against. UPS, for example, will charge anywhere from $9.45+ (Extra Small) to $24.30+ (Extra Large) for a package that fits the dimensions prescribed for its different size categories.
Table rate shipping
Table rate shipping is a little more complex.
Depending on what kind of shipping scenario you're dealing with, you can offer customers different rates for shipping similar packages.
Think of all the variables in a shipping scenario.
Weight & size.
Shipping zone.
Distance.
Product category.
Carrier & priority.
Number of items.
Delivery dates.
When you opt for table rate shipping, you can consider all of these variables and charge according to each scenario. While it may be harder to calculate, you can treat your customers more fairly, e.g. charge less for local delivery as opposed to interstate shipping.
Per product shipping
Per product shipping method is similar to table rate shipping in a way that they both consider multiple criteria such as product category and the final destination.
The most common use case for per-product shipping is the delivery of large items such as single-piece furniture or equipment that requires additional components shipped together with it.
Because of the bulkiness of the order, you can't fit it into same-sized standardized boxes. Not to mention loading, unloading, and handling fees that pile up on top of the shipping cost.
With WooCommerce's per product shipping, for example, the customer will see a total shipping cost at checkout, with all fees calculated together.
Time-sensitive shipping
Time-sensitive shipping covers all the delivery services customers love so much.
Same-day delivery, overnight delivery, priority mail, on-demand delivery - every shipping option where delivery time determines the cost of the shipping service.
If you choose to outsource shipping to a 3PL, you might want to look into each carrier's cut off time, i.e. the latest you can hand in a package for delivery on any given day.
As far as local deliveries go, your safest bet with time-sensitive shipments is self shipping with priority routing solutions. Then you can guarantee on-demand delivery at a flat rate the way Uber Eats works.
Free shipping
Free (or at least discounted) shipping is every customer's dream scenario.
Free delivery is an industry standard brought in by huge corporations but expected of all eCommerce shippers regardless of the size.
Some retailers offer free shipping above a certain amount of money spent. Some provide free shipping with the costs charged through hidden fees. Some only use it as an incentive to reward customer loyalty.
How can you provide free shipping? Two steps.
Claim all shipping costs.
Optimize continuously.
It's true that not all eCommerce retailers will be able to provide free shipping.
However, as a self shipping operation, when you scale and things like load planning and fuel management become standard practice, you can gradually reduce your shipping costs and incentivize customers with free delivery.
Shipping method by carrier
Outsourcing deliveries is something most businesses have resorted to. Even with an in-house fleet of vehicles and full-time drivers on board, some deliveries are simply outside of the business' capacity.
Many local delivery operations choose to outsource a part of orders, especially interstate orders, to shipping companies while handling local deliveries in-house.
Choosing a shipping partner is no easy feat. You need to do your research and see all shipping options and rates associated with them.
Let's look at what the most popular carriers have to offer.
USPS
Domestically, USPS delivers 7 days a week, 365 days a year. You can choose between standard and express shipping services depending on whether you need the cheapest or fastest option.
The fastest shipping method is Priority Mail Express (starting from $26.95). With it, USPS guarantees next-day delivery across the United States.
USPS tracking is available with most shipping services but you can purchase insurance additionally. When calculating shipping costs, you can choose between flat rate envelopes, flat rate boxes, or shape&size.
DHL
DHL offers parcel and freight shipping both domesticaly and internationally. There's weight, size, and length limitations applicable to shipments and they're mostly the same across countries and regions such as the EU, with different rates applied to Canada.
The duty and tax calculator is also available for figuring out the final shipping costs. Transit times will differ depending on the destination country.
In total, DHL covers 220 countries and territories and ships to 160 million addresses in the US.
FedEx
FedEx offers all the most popular shipping services: from overnight shipping and same-day delivery to international shipping and freight shipping.
Flat rate shipping applies to packages under 50 lbs. Shipping over 150lbs., meanwhile, makes you a freight shipper. Domestially, LTL freight with FedEx doesn't require a paper Bill of Lading.
As a regular shipper through FedEx, you can create an account and schedule a pickup whenever you don't have time to drop your packages off for shipping.
UPS
UPS offers three types of shipping rates for package delivery.
Daily rates - when you have a UPS contract or a scheduled pickup.
Retail rates - when you ship from a UPS location or with one-time shipments.
Domestic flat rate shipping - when the costs vary only by time sensitivity.
For large shipments, UPS provides air freight services like pickup, collection, delivery, and customs clearance.
Sendle
Sendle offers tailored shipping solutions especially for small to medium-sized eCommerce businesses. It provides two main types of services: Sendle Standard and Sendle Premium.
Sendle Standard is accessible to all users without a required subscription or volume commitment. It offers competitive rates starting at around $4.75 for a small package under 1 lb, shipped locally.
Sendle Premium offers slightly lower rates for those who ship more frequently. To qualify, a business must send at least 20 parcels per week. Premium rates can start as low as $4.50 for similar small, local shipments.
Self shipping
Self shipping refers to scenarios where businesses choose to fulfill their orders using their own resources.
The resources in question include staff (warehouse managers, dispatchers, drivers), a fleet of commercial vehicles, and tools such as warehouse management systems (WMS) and last mile delivery software.
How to choose the right self-shipping solution for your ecommerce business?
To know which ecommerce shipping companies to collaborate with, here are some factors to consider. You can also check out this blog to learn about the 5 best shopify shipping apps for ecommerce.
First of all, before jumping into solution, you should know your product, do competitive analysis and analyze your customer base. Then let's jump into software features
Know Your Product
Evaluate the characteristics of your products, including size, weight, market value and demand. Consider the volume of weekly shipments, profit margins, and the average value of the order.
Competitive Analysis
Study the sustainable shipping methods employed by your competitors and their respective strengths and weaknesses. Gain experience by placing orders with competitors to identify areas where you can improve and differentiate your shipping offerings.
Customer Base
Assess the geographical distribution of your customer base, know their preferences and expectations regarding shipping times, shipping costs and options available.
Features that software should deliver when choosing self-shipping:
Live tracking
An option of live tracking must be given to the customers. Customers can easily see where agents are by using the live tracking feature.
Custom notifications - feature
Updated custom notifications and estimated arrival times are important because they tell customers about their product's current status and when it will be delivered.
CMS API integrations
Integrating APIs with Content Management System (CMS) lets owners handle site content and orders across their e-commerce platform.
Optimizing self-shipping logistics and routes
For self-shipping, timely deliveries must be ensured by having an optimal number of drivers. Watching how many packages are sent each week and month helps plan better. Make sure that you have enough drivers and schedules to handle busy times, so deliveries go smoothly without any delays.
Driver’s app
Use of the driver's app makes talking, tracking, and updating deliveries easier. This helps things run smoother and makes customers satisfied.
Proof of delivery
Proof of deliveries helps keep a check that orders are correct and timely. This keeps things safe while also making sure orders are sent out correctly and on time.
Self shipping pros and cons
The biggest advantages of self shipping are full transparency and control over the fulfillment process.
With features like SMS and email delivery notifications, live tracking, and paperless Proof of Delivery, you get to build a smooth customer experience.
Some delivery software solutions such as Track-POD allow you to print shipping labels, scan all packages before departure with no additional hardware, and achieve on-time delivery every time.
The biggest challenges that come with self shipping are cost fluctuations (gas prices especially) and driver shortages.
Luckily, delivery software is built to both cut mileage via smart route planning and EV routing solutions and instant onboarding for contract drivers.
Self shipping costs
How much does self shipping costs?
There are many factors to consider: the volume of orders you fulfill daily, your staff's salaries, gas prices, total mileage, service time, cost of delivery software, and many other things.
The good news is that delivery software can be very affordable and easy to implement. Once in place, it serves the purpose of minimizing your resource consumption and overall costs.
Delivery management systems like Track-POD even offer shipping reports on cost savings over time and route rates that can be used to estimate costs at the stage of route optimization.
Plus, as you get more and more orders through on time delivery and high customer satisfaction, you can start paying per order as opposed to per driver.
Then, the cost of live tracking & ETA, contactless delivery, load and delivery confirmation with a free barcode scanner app, and historical performance insights can be as low as $0.12 per order.
Check out the video below to see on Track-POD's shipping integrations:
Wrapping up
Shipping methods are many and they don't work the same for all shipments. Therefore, it's the business' job to assess risks and benefits, forecast demand, analyze customer requirements, and settle on the shipping method that makes the most sense.
Of course, you don't have to settle on one shipping method for all of your shipments. A lot of companies use a combination of third-party and self shipping and offer different delivery services depending on the order. To read more about finding the right ecommerce delivery management solution, which features to look for in the ecommerce delivery management software, check this ecommerce delivery management guide.
I hope this guide gives you sufficient insight into shipping methods for eCommerce. If you'd like to see Track-POD self shipping solutions in action, get started for free today.
