[Definitive Guide] Top 5 types of Shipping and ways to overcome their challenges for SMEs
As a seller, you put in a lot of hard work and endeavors in tailoring a fantastic inventory of products for your customers. Right from making decisions encompassing the top selling items to sorting your business for maximizing customer satisfaction, business commitment is a quotidian task.
And just like every other crucial business element, shipping is one of the prime factors that contribute to the triumph of your business. If you’re the decision maker, there are strong chances that you’re continually juggling between different types of shipping and confronting each of their issues.
Exhausting, isn’t it?
E-commerce shipping doesn’t have to be this way. The motive of e-commerce shipping is to let your products reach your customer’s doorstep and provide with the satisfactory experience of your products, which is what it must correctly do. For this purpose, it is mandatory that you’re well versed with different kinds of e-commerce shipping and the ways you can sail smoothly along each.
We’ll talk about the types of shipping you can have for your business and some fantastic ways through which you can combat their individual challenges-
International Shipping
Selling internationally can be one of the most significant advantages for your business. It can be a giant leap towards a vast customer base, unprecedented profits and scaling your business.
If this doesn’t make up your mind, I’m sure the following statistic will.
A recent study states that global retail e-commerce sales will skyrocket to $4.8 trillion by the year 2021. Put differently, this cumulates to 246.15% of an increase in worldwide e-commerce sales.
Shoppers from all over the world are increasingly becoming savvy, which is encouraging them to purchase from other countries.
In yet another study by eMarketer, it was found that as many as 40% of shoppers have made an online purchase from a seller from a different country. Thus, such a buying trend is increasingly paving ways for sellers to start shipping internationally and scale their business to fresh heights.
Advantages
Shipping internationally has several advantages for a different pool of sellers. On the one hand, entering international markets and shipping your products to various countries can help you expand your business, on the other side, it enables you to reach out to a broader audience on the global level.
Reducing seasonal slowdowns: International shipping can also promote your business overseas and help in lowering seasonal slowdowns. It is a common phenomenon observed in the market where the sale of specific products is hampered by the change in the season.
For example, the deal of winter garments is jeopardized as summer heads to a start. This is a natural trend taking place with most of the businesses. Furthermore, it also negatively impacts the cash flow of small business owners, due to their inadequacy to adopt appropriate measures. International shipping is one gem that can help in overcoming such seasonal barriers.
A wide range of products: As you begin to expand to new markets, you meet different customers bases having a plethora of product requirements. Based on these, you can reinvent your business plan and incorporate such products for international shipping. Moreover, it provides an opportunity for businesses to cater to a need of the broad audience and reach large markets.
Tip: If you’re confused about whether to step into the international market or not, consider monitoring traffic for your website through Google analytics. It will help you see the people from different regions of the world who are visiting your online store.
Issues and solutions
As engrossing as international shipping sounds, it is equally packed with challenges that require consideration for a hassle-free experience. Significant exigent demands of international shipping are:
Right carriers
Shipping internationally begins with choosing the right carriers for your products. Carriers can have a significant impact on building your brand globally and delivering your products safely to the customers. There are three different modes of carriers that you can opt for shipping your products internationally. These are:
Aggregators: Shipping aggregators are companies that have partnered with popular couriers and offer cheap rates to ship your products. All you need to do is to sign up on these aggregators and opt for customized choices to deliver your products. Shipping aggregators such as ShipRocket have no upfront fee and charge you based on the weight and dimensions of your package.
Individual couriers: Another way to ship internationally is to directly sign up via individual courier partners such as FedEx, DHL etc. The shipping rates in this case might be slightly higher than the aggregators, but it is entirely up to where you want to put your trust while shipping internationally.
Tip: It is advised to buy insurance while shipping internationally so that you can recover the loss of your misplaced packages in cases where your customer files a credit card chargeback or claims a refund.
Postal carrier: Postal carriers are also a cheaper option when it comes to shipping internationally. In this case, your package is delivered to the postal authority of the destination country from where it is taken to the customer’s doorstep. Postal carriers such as USPS are reputed for their reliable delivery. However, in postal shipping, the tracking of your package is only available till the time it reaches the local post office of the destination country.
Payments
International shipping also incorporates payment from foreign sources such as cards or wallets. Furthermore, you must be aware of these and expand your payment options depending upon the country that you’re targeting.
For example, if you’re shipping to the US, you must expand your payment options to Visa Cards, Credit cards and electronic wallets such as PayPal.
In yet another case, e-wallets such as AliPay and UnionPay are common in China.
Returns
Handling international returns is a strategic task that requires immediate considerations. Undoubtedly, they are more expensive than domestic returns due to the processing and return policies of different countries. For this reason, it is advised to perform thorough market research on the country before you start shipping your products.
For example, the return rate in the USA is 10 percent as compared to the total sales, which is much higher in countries such as Germany.
A recent study states that 92 percent of the customers would shop again, if they find more comfortable return options, while 61 percent of international customers view the returns policy of a company. For this reason, returns can turn into a big customer issue if not handled wisely.
Another critical thing to note is the region-specific legislature of a particular country that offers mandatory policies for international returns. For example, some countries have cool off periods during which customers can easily cancel their orders online.
Owing to complicated returns, sellers often own a no return policy on international shipments. If you’re still confused whether to own a return policy or not, here are a few reasons on why you should:
- Return policy builds trust among customers as they feel confident in purchasing from you.
- Cart abandonment is reduced owing to more straightforward return policies.
- Return policies are a great way to build a loyal customer base and win them online.
Rules and regulations
When shipping internationally, it is mandatory to know the policies of specific countries that you’re targeting. These include all sorts of product information, a list of particular ingredients (if you’re shipping food items), any allergens, hazardous material description etc.
Different countries also have their specific rules for declaring manufacturing information, expiry dates as well as preparation guidelines particular to the type of product that you’re shipping. If you’re unsure about these, you can consult an international shipping aggregator like ShipRocket to familiarise you with such guidelines and ship products internationally.
Drop Shipping
One of the easiest ways to start selling online is to drop ship your products. Drop shipping is a shipping strategy where you cater to your customer’s needs without actually owning an inventory. If you’re planning to get your e-commerce store running within a week- drop shipping is the answer to all your questions.
Those who are less familiar with the term, drop shipping a process of retail fulfilment where the store does not directly keep the product that it wants to sell. Instead it sends the order request to a third party such as distributor who then packs it and delivers it to the customer. So, even though you’re selling the product as a drop shipper, you never really get to handle it directly.
Did you know?
The average profit for a manufacturer who drops ships their product is nearly 18.33% higher than the one who uses traditional channels.
Advantages of Drop Shipping
Drop shipping provides an upper hand for sellers who are planning to make a quick mark for themselves among the customers. Some of its benefits include:
Easy to start: Drop shipping is effortless to start because you don’t have physical products in your inventory. Furthermore, you don’t have to worry about
Warehousing
Packing your products
Tracking inventory
Handling returns
Inbound shipments
Returns etc.
Less capital: With no inventory in-hand, sellers are in an advantageous situation with no upfront costs in setting up their business. Traditionally, sellers had to invest a lot of capital in inventory management.
Easy to scale: Drop shipping enables you to easily mount your business without having to worry about manually expanding your resources. Traditional enterprises require three times more work when they receive three times as many orders. Drop shipping offers increased flexibility in businesses.
A wide range of products: With drop shipping, you don’t have to pre-purchase your items, which means you can partner with the third party and offer an unlimited range of product to the customer. All you need to do is list that item on your website.
Flexible location: Drop shipping provides the flexibility of location, which means that you can sell from anywhere through an internet connection. As long as you can communicate effectively with your buyers and sellers, there is no limit to your business.
Issues and solutions
Managing Expenses:
One of the more significant issues in drop shipping is managing expenses. The flexibility and ease of business from drop shipping also comes at increased costs in the business.
First, when you don’t own an inventory of your own you will have to pay higher prices to the third party such as a distributor to ship the products for you. Metaphorically, consider the third party as a parasite, who will eat into your profits now and then.
Undeniably your distributors are still in the business because they are charging higher than wholesale bulk suppliers, contrary to which they would have run out of money a long time ago.
The way out of it?
For e-commerce store owners who want to drop ship, there are two things that they can do-
- Stay content with whatever margins your third-party suppliers are charging and continue your drop shipping business.
- Differentiate your brand in the market which will help you get away will slightly higher prices for your products. This will help in accommodating your margins.
White Labeling
Building a brand while drop shipping your products might seem a challenging task. Owing to the fact that you are not directly handling your products, gives you much less control over essential factors such as product packaging and various other factors.
So, the question is, how to build your brand as you drop ship your products?
Because if you don’t you’re merely a reseller of your products.
White labeling is a smart solution in such cases. Find a supplier who is ready to white label your products, which means they will put up the address of your business on the package and facilitate some custom packaging for a more personalized experience.
Did you know?
22–33% of online retailers have adopted drop shipping as their primary method of order fulfillment.
Multiple suppliers and customer service
Another one of the everyday occurrences in the drop shipping business is shipping products via multiple suppliers. Drop shipping allows you the flexibility to list a plethora of products on your e-commerce store, but considering its diversity, you may not find just one supplier who has all these products in their inventory.
This is where you start dealing with multiple suppliers for different category of products. Furthermore, it can also turn into a logistical nightmare. Consider a situation where the customer order four products from your ecommerce store. Being from different categories, supplier 1 has product 1, supplier two has product 2, supplier 3 has the product 3 and 4.
Different suppliers will ship the products at their own pace and thus, it will reach the customer accordingly. So, while the customer may receive product 1 within two days of placing an order, they may also receive product 3 and 4 two weeks later.
Whatever occurs from the suppliers’ end, ultimately, it is your brand name on the stake.
The solution?
The best way to handle these tricky situations is to invest time in your customer service. Keep the buyer well informed about different product delivery timelines and send them frequent updates about the status of their package.
Educating the customer is a smart option that will also provide value to your customer service.
Free Shipping
Free shipping is one of the most enticing options to offer to a customer. It works wonderfully and helps you attract a lot of customers.
According to recent market research, 9 out of 10 customers in the market said that free shipping is one of the most significant incentives to shop online. As enticing as free shipping sounds, it is equally packed with challenges for the e-commerce store owner.
With growing competition in the market, offering free shipping to the customers is a significant advantage to the store owners.
In yet another statistic, 73% of the online buyers find free shipping as an essential factor that helps them in making a purchasing decision online.
Did you know?
44 percent of the online buyers abandon their carts entirely due to high shipping costs.
Now that gives even more reasons to offer free shipping.
Advantages
Short term sales boost: Free shipping is a beautiful tool for boosting short-term sales online. Because the results of free shipping are observed immediately, it is a great way to boost sales and revenue on your website.
Long-term customer base: If you’re also planning to develop a long-term customer base for your e-commerce store, free shipping can be one of the most significant assets in your pool. Many immediate customers who are fancied by your free shipping offer, will return to shop from you again.
Upper edge in competition: Offering free shipping keeps you up in the market competition, no matter what you’re selling. It provides you with an edge with other similar business in the market. It levels the playing field and catches the customer’s eye instantly.
Issues and solutions
Profit margins
When offering free shipping, it becomes quite difficult to balance one’s profits and other relevant costs. In a broader note, free shipping a boon for businesses as long as two crucial things are reasonably sufficient.
Average Order value: Make sure that your average order value is sufficient for your business to accommodate the free shipping. You can maintain your average order value by setting minimum order value higher than it.
Increase in sales: Free shipping draws immediate sales and that’s a fact. Most of your margins in free shipping are bound to be covered by your increase in sales.
But there’s only one way to have a check of these for your business. And that’s A/B testing.
To A/B test your free shipping campaigns, the best way is to perform a split URL test, which will help in calculating your net profits much efficiently. Set your baselines such as conversions, average order value, net margin and find results for your campaign.
For example, ComScore did a similar A/B campaign and found that their Free Shipping Day increased sales by 16%.
Similarly, RedDoor found a 90% increase in their orders by setting a free shipping threshold.
Let’s understand what does it mean for a business to set a free shipping threshold.
Setting threshold
Setting thresholds is one of the most obvious ways of saving your margins. But it is a tiresome task to decide how much should you put your threshold.
A recent study advises setting your threshold order value at least 10 to 15 times higher than your average order value.
Setting a threshold forces the customer to spend more to reach a minimum value for availing free shipping.
For example, if you’re charging for shipping on every order on your store, you can initiate a campaign by offering free shipping on orders above $100. The best way to find out for your store is to perform an A/B split experiment.
Another way of driving your free shipping campaigns is to restrict your shipping to limited products. This is called restricted shipping, and you can perform it for the products that you know have comparatively low costs to ship.
Enticing offers
One of the significant mistakes that small sellers commit while offering free shipping is splurging into the pool throughout the year, in the hope of getting at least some sales. Going from nothing free shipping to everything free shipping all year round is a bad idea for businesses.
Free shipping isn’t magic that you can turn on and start making sales. Instead, offering it for a limited period will entice the customers to buy and boost your profits.
The way to get out of the pool where you’re taken for granted even after offering free shipping is to tell the customer exactly how much they are saving.
Matt Silvers, CEO of seo4anyone.com, a Miami based company, says,
Once you’ve made free shipping a part of your strategy, be sure to let the customers realize this fact. It’s a validation for the customer to buy.
Tip: Mention your shipping costs directly on your checkout page and then deduct them as exclusive discounts from the order value, to let the customer know that you’re helping them save the shipping costs.
Domestic Shipping
Domestic shipping, put together, is shipping to your customers in the region of your business. You can local ship your products through surface or air, depending on the urgency and product requirements.
Domestic shipping is the primary form of shipping that is a part of every businesses’ strategy. Even if you’re shipping internationally, you wouldn’t want to leave your regional customer’s behind.
Advantages
Local reach: Domestic shipping helps you reach out to customers on a domestic level. For example, if you’re a business based in India, shipping domestic consignments can help you develop a base of customers in your local region.
Brand value: Domestic shipping also helps in building a strong brand value. Furthermore, word of mouth marketing, which can be instantly developed in a domestic environment can be a contributor towards adding value to your brand and market reputation.
Issues and solutions
Overnight shipping:
When you’re shipping your products in the domestically, one of the prime things you can offer to compete in the market is overnight shipping. Because reaching to domestic areas overnight is not as easy as it seems, businesses must have a fir strategy in place.
We’re talking about overnight shipping in detail in the next section.
Right carriers:
One of the crucial tasks of shipping in a domestic environment is to pick the right carrier for your shipments. Because a significant part of your brand value relies on the quality and speed of your delivery, choosing the right courier and optimizing your business costs becomes mandatory.
Just like we went through in international shipping, you can have various options for shipping your domestic consignments. Either you can ask for individual courier partners, or sign up to a courier aggregator such as ShipRocket, etc. for cheaper delivery options. These courier aggregators partner with individual carriers such as FedEx, DHL, Aramex etc. and sort your shipping process for you.
Expedited/Overnight shipping
Overnight shipping is the latest logistic trend that is sweeping the customers off their feet. Most of the businesses these days are offering overnight shipping, that is usually camouflaged in names such as one-day delivery, expedited delivery etc. And not to forget Amazon’s Prime Delivery is one such popular option adding to the category.
In the race of overnight delivery, while some businesses efficiently cater to customer’s needs and keep up with their business quality while others fall apart. Market research states that almost three quarters of online shoppers want their orders to be shipped the same day.
While there are many considerations required by businesses adopting overnight shipping, there are also smart ways to handle them and offer an unparalleled level of service to the customer.
Advantages
Superior delivery experience: One of the primary benefits of overnight shipping is to offer an unparalleled level of delivery experience to the customer. When the customer is aware of the fact that they will receive guaranteed delivery of their products on the next day, they will naturally be drawn towards your store.
Minimize vehicle expenses: As a small business owner, you can hire courier for overnight shipping, instead of making use of your vehicle multiple times to deliver orders on various days.
Increased productivity: Overnight shipping helps in improving productivity for your business. When you know you have orders to be processed at a lightning fast speed, your business strategy becomes, and your employees become more efficient towards work.
Issues and solutions
Planning process:
One of the significant problems in overnight shipping can be the planning process. Because things rush and you’re getting orders all over the day that have to be delivered overnight, it becomes quite difficult to plan everything.
There is no rigorous process for anticipating orders from the customer in overnight shipping. As a fulfillment owner, you have to get things out a rapid speed, which can be daunting at times.
Fulfilling an order in days is another thing, but when you have to package products of different sizes and options such as clothes and shoes, it is overwhelming.
Coming up with a specific solution out of this is quite tricky. For this reason, it is advised for businesses to start small.
Tip: You can start overnight shipping for limited products at once and partner with the regional carriers for speedy delivery. Also, clearly label the products that are eligible for overnight shipping.
Finding great drivers:
Finding the right drivers for delivering products on time is a significant challenge. This arises especially when you’re sending your vehicles to the customer’s doorstep.
Many companies often consider various applications before hiring a driver. Furthermore, these people are offered enticing options such as health benefits to keep them partnered.
Setting a price for delivery:
When you’re shipping overnight, you might want to ask your customer for a particular shipping charge. Whether deciding on a flat rate or a fee based on their location is entirely up to your business.
Here are the things that you can do:
- If you’re charging a flat rate, you can either do it for every order or a cumulative period such as a month. This practice will also help you build a loyal customer base. The most prominent example of this can be taken from Amazon’s Prime Delivery options.
- However, if you’re planning to charge for overnight shipping based on the customer’s location, add a shipping rate calculator to your checkout page that will keep the customer informed about the ‘how’ and ‘what’ of the shipping amount.
Now that you’ve reached the bottom of this article, you’re almost an expert on combating shipping challenges for your business.
Shipping might seem a tough nut to crack in the e-commerce business, but when you break it down to individual strategies, it is easy to overcome. There is, however, a last piece of advice no matter which type of shipping you’re adopting for your business.
Delivery speed, trackability and reduced shipping rates might not always come together as a package. Focussing on just saving money in the short term might have a negative impact on your services in the long run. Ultimately, whatever decision you make concerning your shipping strategy, it must surround your customer’s expectations.
Use your options wisely and A/B test your campaigns, so that you get a clear picture of what’s best for your business. Also, be prepared for unexpected findings and delivery situations.
The best way to tackle issues can be to keep the customer educated about their shipment because, at the end of the day, you want your image to be reliable and reputed in the eyes of your customer.
Happy Shipping!
