You have created your e-commerce, loaded the products and chosen the types of payments accepted, but there is one last thing missing: setting up the shipping methods In order to do it, you must first decide how to manage the shipping of products, by choosing one or more couriers and package delivery services and identify the type of packaging to use. Let’s review together how to navigate the shipping world.
We know how important it is for an e-commerce to optimize and reduce to a minimum logistics and shipping costs, especially for small businesses.
Relying on the wrong partner, however, could make your clients unhappy of the service, running the risk of complaints, negative reviews and reduced sales.
How much does shipping cost?
Shipping represents a significant expense for anyone owning an online store: underestimating the costs in the long run leads to financial losses. This is true for those who sell goods remotely; on the other hand, those who sell services or software can breathe easily!
Before finalizing the prices and the strategy of your business, it is helpful to create a table that identifies all the shipping-related costs for your product. Those who have just started up often do not take into consideration all the variables that make up the total shipping cost, which can be significant… avoid this risk!
Therefore, it is possible to simplify the various elements that lead to define the price for the end client of an e-commerce website:
- Cost of goods sold
- Courier rate
- Flat fee for disadvantaged areas
- Payment system fees (fixed cost and/or percentage cost)
- Flat fee for the e-commerce management costs
- Profit margin
How to setup the shipping in your e-commerce shop
In this article we will talk about packaging, how to choose the shipping company and how to calculate the flat fee for the shipping.
However, let’s start with a few general considerations about shipping.
1. Choosing whether to ship in Italy only or also abroad
Typically, it is usual to subdivide the world in macro-areas: Italy, Europe EU, Europe non-EU, Africa, Asia etc. The shipping areas and the cost of service vary depending on the courier.
Therefore, it will be up to the e-commerce owner to establish the limit areas of one’s shipping, which can be changed and configurable also subsequently, if one wishes to open another market later on.
2. Contacting the main couriers and requesting quotes
It is recommended to visit the websites of the various couriers to form a general idea of their services then contact them for a quote (to do so, it is necessary to know approximately the number of shipments that one expects to do and the type of packages that will be shipped).
Each courier offers to businesses flat rate solutions based on the number or type of shipments. While in the past it was the client who could choose the courier to use, now the courier is usually established in advance. Then it will be up to the owner of the website to contact the courier with which an agreement has been reached.
3. Testing the various shipping methods
Experience, as everyone knows, is acquired over time. Testing allows going past the standard online price lists, understanding from time to time which are the pros and cons of each shipping company.
All couriers base their rates on a variety of factors, such as: package dimensions, package weight, volume, and so on.
Therefore, the rates for a store selling shirts will be different from a store shipping, for example, treadmills.
4. Design the type of packaging
Personalizing one’s packaging is deemed a courtesy towards the clients.
It becomes of fundamental importance to offer a Customer Experience above the expectations.
In order to find the right method to make one’s packages original and yet ideal to ship the goods, it is necessary to find the right supplier.
Bubble wrap, packaging paper and Styrofoam, padded envelopes of all sizes: there are many options on the market, for all budgets.
A word of caution, though: do not overdo it for extra packaging weight can increase shipping costs!
Shipping in Italy
Couriers operating in our country are ever increasing and it is difficult to keep track of all the low cost shipping companies entering the market.
The main Italian couriers
However, we can list the main couriers performing shipping in Italy:
Ranking which one is best and which one is worst is impossible. Each courier specializes in something and this something may be exactly what your company needs, or not.
Shipping in disadvantaged areas
Disadvantaged areas are locations particularly difficult for couriers to reach; for this reason parcels that depart or arrive in these areas have a shipping surcharge, which changes courier by courier.
The disadvantaged areas are often mountain areas, islands, and in some cases also central areas that couriers find difficult to reach due to logistics and internal organization reasons.
Each courier has its surcharge locations; therefore, it is a good idea to request a full list.
In order to amortize the extra costs for these difficult to reach locations, it is possible to calculate a flat fee between the base shipping rate and the surcharge so as to assign this flat fee to all shipping costs. This avoids losses when shipping to disadvantages areas and at the same time it does not affect the cost of the final product too much.
Billing address vs. Shipping address
Often, the billing address of a client is not the same as the shipping address where the client wishes the package to be delivered.
How to calculate shipping costs in these cases? If the recipient is an extra-European company, it may be necessary to calculate the shipping rate based on the billing address. In the majority of the cases, however, the shipping costs are calculated on the basis of the shipping address
Tracking, monitoring and insurance
Tracking of shipments is by now considered a must for clients. Some payment system providers, such as PayPal, require a tracking number in order to provide insurance protection.
Providing a tracking number builds consumer trust and promotes sales. Thus, the client will have a chance to monitor the status of the shipping every step of the way, and be updated in real time.
Depending on the type of goods shipped, it may be necessary to include also a shipping insurance. Many couriers include already this insurance in their flat rate, a detail to keep into account when comparing the various prices.
Cash on delivery shipping
A note on cash on delivery: this is a method of payment that impacts shipping as well.
In fact, cash on delivery as a method of payment calls for the collection at time of delivery of the amount due for the goods purchased. At delivery of the shipment, the recipient will have to pay the amount listed on the Way Bill, that is the shipping document, depending on the method of payment selected (a check addressed to the shipper, or a check addressed to the courier or cash).
Basically, the client makes the purchase online, chooses cash on delivery as a payment method and pays the goods to the courier when the goods are delivered.
Ready to start?
Shipping is a matter that at times is a bit complex. In order to simplify the work of e-commerce websites, and consequently offer to clients easy to use and transparent services, it is necessary to have available the right tools and Right CMS
Finally, each e-commerce owner online must assess, before starting his or her business, all the variables applicable to the sector, in order to develop the best shipping strategy and delivery of orders. As per any other aspect of a new business activity, it will take a little bit of time to identify the best and most cost-effective approaches.