Shipping impacts the bottom line of an e-commerce business because customers expect multiple shipping options, free shipping, free returns, and on-time delivery.
According to a 2019 study by the Baymard Institute, 55% of would-be buyers abandon their carts when they see that shipping is more expensive than they expect. In North America alone, half of these consumers abandon their cart if shipping isn’t free. On the flip side, more than 80% of customers are willing to wait a few more days for delivery as long as the shipping is free.
As the last (but not the least) step in closing the sale, free or fast shipping also attracts repeat customers aside from just having the best prices around.
With this information in mind, it’s more critical nowadays to streamline the “last mile” segment of your delivery process. Through this article, you’ll learn how to minimize the most common shipping and fulfillment mistakes so you can lower costs and increase customer satisfaction.
Whether you’re just starting out or you’ve been in the e-commerce space for more than 10 years already, planning for the anticipated demand of your product is the first step in avoiding shipping and fulfillment problems down the line. Because the more people who’ll buy from your store, the more likely you’ll encounter challenges in your supply chain.
But if you don’t have a plan on how to meet the demand, your first customers will probably not buy from you again. There will be more delays in delivering the product and it will cost you more time and money if you’re reactive to the constantly changing demand of the market.
Solution: Track your sales trends
Forecast the gross sales from your marketing campaign by referring to industry benchmarks and by looking at your previous performance. You can also expect surges during holiday seasons like Thanksgiving and Christmas where people are spending more.
By having an idea of how much product you can sell given your timeline, it will be easier to pick a third-party logistics partner that can handle your inventory volume requirements and have better systems for limiting damaged or mispacked goods. You can also inform your suppliers ahead of time, helping them get your products to you as soon as possible.
A warehouse that’s poorly organized makes it unnecessarily difficult to get your products out the door as soon as possible. Items are out of stock already without you knowing or it takes longer to locate an item and package it.
A major issue you should also be aware of are damaged goods in your inventory. Sending your customers deteriorating items or even just those that look unappealing will surely discourage them from buying from you again. Not to mention that you just lost money on them.
Communicating with your suppliers is also part of managing your inventory. If you don’t receive inventory from your suppliers by a certain date, you would only disappoint your eager customers. Poor communication between you and your supplier can lead to problems like shipment delays, quality control issues, and unattained sales goals.
Solution: Create an inventory management strategy
Store your inventory safely and hire warehouse employees you can trust. The faster your warehouse can process orders and get them shipped, the faster you’ll also make money as well.
You also need to maintain real-time data that also updates your online storefront so your customers know when they can expect new inventory availability. Behind this is good communication with a supplier who can answer most, if not all, of your questions and also updates you of any changes.
But if you don’t have your own warehouse, an end-to-end fulfillment solution or third party logistics (3PL) can help keep track of available items and can also place orders to replenish inventory. These services can better manage your inventory through their years of experience in the business.
Incorrect packaging is one of the main causes of damaged shipments and reduces the level of protection for the item inside.
This problem is more common for less-than-truckload (LTL) and parcel/shipping because packages are usually transferred from one terminal to another. Boxes can be damaged because these often bump into different things while being handled by workers.
For LTL shipping, there are also strict packaging guidelines to follow and failure to comply with them can lead to damaged freight, delays, and additional costs.
Subpar packaging materials and inadequate packaging — no matter how cheap they are — will always cost you more in the long run.
Solution: Use the right packaging materials and pack your shipments properly
Ideally, you should be using new cartons because the cardboard material is at its strongest. You should also use adequate cushioning materials (packaging peanuts, bubble wrap, styrofoam, etc) and packing tape to help prevent the item/s inside from being damaged further.
If you’re sending out large or multiple boxes, these should be placed on wood or plastic pallets that make them easier and safer to transport. Avoid stacking them beyond the pallet’s edge and place the heavier boxes on the bottom. Then, wrap them with stretch wrap to prevent the whole pallet from shifting around.
Some items are best packaged in a sturdy wooden crate that can be placed on a pallet for ease of movement.
Packaging is crucial because customers expect their order to arrive in pristine condition. If you don’t meet that expectation consistently, they’re more likely to look for another online store no matter how good your product is.
There are many factors that contribute to how much the total cost for shipping your freight safely.
The weight of your shipment heavily influences the rate you’ll be charged by your carrier. Shippers should invest in a quality scale so that there weights, and expected freight charges will be in alignment. If you don’t have a scale and are estimating your weights and the carrier weighs your shipment and it’s far off from what you declared, they will charge you a reweigh fee.
The National Motor Freight Classification (NMFC) code — also known as the freight class — of your shipment also contributes a lot to shipping costs. Generally, a freight class with a higher number is more expensive to ship and many shippers intentionally lower the freight class to save on costs. Shippers may get away with this from time to time, but the cost of a reclass is expensive. If the carrier inspects the freight and discovers the discrepancy they will often charge a reclassification fee.
Some kinds of products also need special permits or licenses when transporting them. These are more expensive to ship because the equipment and drivers who can transport these goods are less available in the marketplace. If you don’t disclose this requirement immediately to your carrier or broker, your shipment will be inevitably delayed.
Accessorials, which are the additional services needed to complete a pickup or delivery, are also additional yet necessary costs. Without special arrangements like “residential delivery” and “lift gate”, there can be delays in delivering the package to your customer’s doorstep and will also accrue additional redelivery fees.
Third party insurance for your shipment is also another cost because carriers are notorious for taking a long time to process your claim. Plus, many of them will make getting a full payout challenging. If you’re shipping expensive, rare, or fragile items and you lose or damage them during transit, it’s very difficult to receive compensation without any third party insurance.
Ultimately, the challenge for shipping costs is transporting the package safely while charging your customer reasonable shipping fees.
Solution: Optimize your shipping costs to maintain profitability while still being able to satisfy your customers
If you have no clue yet on how much you’ll pay for shipping, look into different carriers as well as freight brokers who can negotiate lower prices for you. And if you’re shipping your products internationally, it would be best to work with a third-party logistics (3PL) company that has an established network of major carriers.
Also understand the difference between “dead weight” and “dimensional weight” of your shipment. Dead weight refers to the actual weight while dimensional weight is based on the amount of space it takes up in a truck or plane. Small parcel carriers base their charges on which figure is higher.
And to avoid adding unnecessary costs like reweigh, reclassification, and redelivery fees, there are a couple of things you can do:
- Invest in a scale where you can weigh shipments (including the pallet) even before these are sent out of the warehouse.
- Also don’t forget to include the NMFC code (assuming it’s the right one) in the bill of lading (BOL) because carriers are less likely to inspect shipments with a NMFC code.
- If you’re unsure about additional costs like accessorials and special handling or shipping requirements, ask your broker and find out why it’s much better to include it.
If you’re shipping high value or fragile items, get third party insurance from insurance companies. They serve as liaisons between you and the carrier in case your freight is damaged or lost in transit.
Now as you pass on the shipping costs to your customers, determine whether you would charge according to weight or price. They somehow know they have to pay more for shipping when their order is heavier (either it’s one heavy product or several items combined). Also be aware however that most customers expect free shipping (or lower shipping fees) when they buy a lot from your store.
Shipping notifications and transit times
After customers have paid for their order, they want to be notified when it is shipped. They check the status of their package regularly — whether it’s through an app or website — and count how many days are left until it arrives.
And as the store owner, it’s imperative to inform them that the number of days only refers to business days and doesn’t include weekends or holidays. The shipping industry as a whole is at the mercy of the weather and traffic and it’s common practice to give estimates for transit times. Unless you’re using expedited shipping, guaranteeing the date of arrival is a bigger risk to take.
Another sticking point would be the tracking number of the package. A wrong tracking number will — at the very least — confuse your customer. It can also be the cause of their disappointment when they find out they have the wrong package.
It may seem like a small thing but if they it they’re not sure their order is on its way, you can expect phone calls from frustrated and angry customers that can be hard to deal with.
Related: Why so many freight delays?
Solution: Let them know as soon as possible
Implement a messaging system that notifies them that their order is on its way. If you have their e-mail, most e-mail service providers allow you to automate this process where your customer immediately receives a text message or email after paying for their order.
If you’re using WordPress for your e-commerce store, you can also install order tracking plugins that allow them to check the status of their package.
And don’t forget to make sure that tracking numbers or codes from your carrier are accurate. It doesn’t matter if it takes longer to provide your customer the tracking number as long as you get it right.
When you’re proactive about letting your customer know about their order’s status, it’s easier to fix issues should these arise along the way.
As simple as this sounds, small yet inaccurate details in the billing information found on the BOL can cause huge frustrations.
One particular problem is when the shipment is delivered to the wrong location — making a bad impression especially to your customer. It’s even worse if there’s a deadline because precious time is wasted. Not to mention that your carrier will charge you to deliver it to the right address.
The BOL also includes other details like the weight, freight class, description, payor of the transit of the freight, accessorials, etc. And since it is often hand-written and doesn’t have a standard format, mistakes can happen more easily if your warehouse manager doesn’t know the correct billing party.
In the end, it will cost you more time and money if these mistakes aren’t corrected as soon as possible.
Solution: Check the details more than once
First and foremost, confirm with your consignee their address and contact details. Use Google Maps if you have to. And after writing it down on the BOL, double or even triple check these details and even have it checked by another person for accuracy.
But if issues happen, you don’t have to panic. Ask for your broker’s help in reaching out to your carrier directly. Usually you will need a letter of authorization to switch the billing and if successfully done, the issue can be resolved in a matter of days.
Even the smallest details can have the biggest impacts. When you take care of these, you can maintain good relationships with your suppliers, distributors, and customers.
The advantage of an online store is that it reaches customers outside of the United States.
However, shipping internationally often involves unfamiliar or new carriers, taxes, duties, and required paperwork and permits. You may encounter some problems like prohibitively high taxes and duties or “lost” items that are simply stuck in customs.
The transit time also ranges between a week and several months depending on the mode of transport. Due to how long it usually takes, international customers may still change their minds and look for faster options.
The shipment is also more likely to be lost or damaged because it goes through more terminals, more trucks, and more hands. And your customer would only be disappointed when their package arrives in a poor condition.
Sending cargo overseas can be a whole new challenge by itself and it can cost you more than you should only pay for if you’re not prepared.
Solution: Develop expertise on how to ship to different countries with the least amount of problems as possible
Provide a wide range of shipping options and have a reliable return policy for your international customers. You might be surprised that a good portion of them are willing to pay more to get their package as soon as possible. And since international returns take a long time to process without an express courier, being prepared to address them also encourages your customer to stick with your store.
Once you’ve shipped their order, regularly inform them of the status of their package. Update them of any changes in the schedule or pickup location. Most of them actually appreciate it and are willing to wait as long as you keep them in the loop.
And if you’re shipping products in bulk, it would be best to negotiate bulk orders to help save on costs. Working with experienced freight brokers helps a lot because they can make deals with international carriers and shipping companies. These guys make it easier to ship your products outside the borders of your own country.
International shipping doesn’t have to be a problem as long as you know how to do it and you work with the best partners.
Damaged or lost packages
Once your shipment goes out of your warehouse door, it can be lost along the way or even misplaced in another truck. The box could be nicked, scratched or worse — be ripped apart even before it arrives at your customer’s doorstep. And these could happen to just about any shipper sending any size and any kind of package.
It’s frustrating to see how some workers just don’t care as much as you do about your package. You spent time, money, and energy all the way from marketing to your prospect up to wrapping their order properly so it can survive the journey to their doorstep.
Your customer will be disappointed to receive a broken product or may not receive their order at all. They might also want to return their order and get their money back.
However, despite the broken or lost package, how you handle this situation will dictate whether they’ll still be your customer or not anymore.
Solution: Get insurance and let your customer know you have them covered
Assuming that you’ve packed your shipment properly, having it insured allows you to not lose money in case it is lost or damaged. Major carriers usually offer insurance as an inexpensive add-on and you also have the option to go with third party insurance companies. Knowing that you’re covered gives you peace of mind and saves you time and money as well.
A clear return policy is also important because you set the tone for the transaction beforehand. You also prevent unwanted liabilities that will only cost you time, money, and precious warehouse space.
But should the unfortunate happen, hopefully, your customer service is able to deal with frustrated customers. It’s very crucial to respond immediately and replace their item as soon as possible. Also avoid charging them for the return shipping and you can even offer them an exclusive discount.
When running an e-commerce business, lost or damaged shipments are simply inevitable. But when you correctly deal with the situation, you hardly lose any money and you also maintain the trust you built with your customer.