Ecommerce Shipping: Creating a Shipping and Fulfillment Strategy

Ryan Baum
Ryan Baum
Last updated on 
June 7, 2022
June 7, 2022
Ecommerce Shipping: Creating a Shipping and Fulfillment Strategy

As a leader at an ecommerce business, you know that shipping and fulfillment are a significant component of your business, and you’re here reading this because you want to craft a stronger shipping and fulfillment strategy.

We’ll get to that soon enough, but first, take a minute to think like a consumer. Take off your business-leader hat and put on your internet-shopper hat.

How did you approach your last purchase? Did you purchase from the absolute cheapest source, some obscure company you’ve never heard of? Or did you stick to brands and platforms you already know — ones you know you can trust to deliver?

If you’re like most ecommerce customers, you picked something reliable. Because we all know that price is important — but getting what we need when we need it is even more important.

And that’s exactly why it’s crucial for your business to create an ecommerce shipping and fulfillment strategy that works well for you and your customers after they check out.

What is ecommerce shipping?

Ecommerce shipping is the process of getting products purchased through an ecommerce storefront or platform from wherever they are to the customer’s specified delivery address. It is a multifaceted, complex process with many touchpoints, dependencies, and moving parts, and its core goal is a crucial one: getting the items people bought delivered to them accurately and on time.

Because of the myriad complexities involved in ecommerce shipping, many companies rely on external partners for some or all of their shipping and fulfillment needs. And all companies, once they reach a certain point of growth, rely on some combination of software and apps to keep shipping, fulfillment, and inventory running smoothly.

How your shipping strategy impacts your bottom line

To the uninitiated, shipping seems like a commodity good, something to spend as little focus and resources on as possible so that teams can stay focused on the real work of the business.

But experience and real-world statistics say otherwise.

A cohesive and realistic shipping strategy is highly valuable to any company that ships products to people because it is part and parcel with your brand image. ShipStation’s second annual national consumer study found that 84% of ecommerce shoppers identified package delivery as the touchpoint that “stands out most in the e-commerce customer experience.”

In other words, get people the stuff they bought quickly, accurately, and with good communication, and you’re telling them something about your brand and company health. Fail to do so, and you’re still sending them strong messages — just not the messages you want them to receive.

While your brand image matters, shipping strategy affects your bottom line more directly too. An even higher percentage of consumers in that same study — 92% — declared that they decide between vendors based on whether they can know their order will arrive when expected.

If you’re regularly failing to deliver when promised, customers will take their business elsewhere.

How your shipping process ties into the rest of your business

Your shipping process isn’t a self-contained unit. It has the potential to affect numerous other aspects of your business. Not only that, the reverse is also true: Other departments and facets of your operations can also affect your ability to ship well.

Here’s just a partial list of the sorts of departments and functions that tie into most businesses’ shipping processes:

  • Inventory management and stock: Stockouts and misplaced items affect shipping ability
  • Customer service interactions: Can CS agents see shipping status? Can your shipping strategy reliably achieve what they promise?
  • Refund and return policies (and the teams that execute those policies)
  • Partnering with shipping fulfillment companies or third-party logistics (3PL): Do they reliably meet expectations? Can you get the data you need from them?

Shipping methods that online stores are offering customers

There are multiple shipping methods and policies in broad use today, and not every option is right for every business. It’s a good idea to evaluate the shipping methods available for your business’s products and settle in on the methods that make the most sense given your audience, products, margins, and current logistics abilities.

That said, most consumers expect fast, transparent, and often free shipping on most goods. As many as 77% have abandoned a shopping cart completely because they didn’t find the available shipping options to be satisfactory.

Here are five popular shipping methods in ecommerce that you might consider implementing for your business.

Two-day shipping

Thanks to Amazon Prime, two-day shipping is the gold standard within ecommerce. If you don’t offer it and a competitor (even Amazon itself) sells something similar with two-day shipping available, you could miss out on sales.

Pro: Can be a driver of sales and is widely available through 3PL and shipping fulfillment vendors

Con: Can be too resource-intensive for smaller ecommerce businesses

Same-day delivery

Same-day delivery puts packages on doorsteps the same day that customers click “buy.” It’s a truly premium offering and a great way to differentiate from the competition, but it usually requires significant scale and investment to pull off.

B2B ecommerce companies especially may need to offer same-day service in certain industries, especially if they’re dealing in mission-critical parts or components.

Pro: Most of the time, consumers love receiving their order the same day. It’s new and rare enough to feel truly special.

Con: Same-day delivery tends to be limited to select major cities, and the infrastructure and resource costs can be significant.

Overnight or expedited shipping

Overnight or expedited shipping has gone by numerous names: Next-day air and one-day shipping are two of the most prominent. It’s faster than two-day but slower than same-day, and it usually comes with a (sometimes hefty) surcharge.

Some companies (and carriers) use the term “expedited shipping” to refer to something faster than standard shipping but not as fast as express or overnight. If two-day (or faster) isn’t possible or isn’t the norm for your industry, you can differentiate yourself by offering a premium service, such as expedited shipping or overnight shipping (or both).

Pro: Gives consumers more control over delivery timeframes and allows sellers to pass the additional costs on to the buyer

Con: Can add complexity and ambiguity (How fast is “expedited?”) to your ecommerce shipping strategy, and when customers pay more, their expectations shoot up dramatically.

International shipping

International shipping is a requirement if you’re a U.S. ecommerce firm that wants to ship directly to non-US customers. The same is true if you’re located on another continent and want to start shipping to overseas (including US) customers.

Pro: International shipping is the only way to reach international customers if you don’t have globally distributed warehouses.

Con: Can add an immense level of complexity and cost, leading most to rely on a global fulfillment partner

Eco-friendly shipping

Eco-friendly shipping refers primarily to the packaging elements a company uses both to package and ship their products. Instead of plastic and foam, ecommerce businesses can choose biodegradable and compostable materials to fill boxes and to package products.

As far as the shipping itself, there isn’t a clear eco-friendly choice. All shipping has a carbon footprint, though carbon offsets are available for companies committed to leaving the smallest possible footprint.

Pro: Eco-friendly choices care for the planet and signal to eco-conscious customers that a brand is deeply committed to protecting natural resources.

Con: Eco-friendly packing materials carry a cost premium, and a major eco-friendly carrier does not exist.

How to calculate the true cost of shipping

One challenge ecommerce stores face is understanding the real cost of shipping their products, as well as the true cost implications of shifting service offerings by moving to a faster shipping speed.

This is especially an issue for SMBs because the calculations and factors at play are numerous and complex.

Make sure you consider these four factors as you calculate shipping costs on an item.

Dimensional weight

Dimensional weight is a calculation that determines shipping cost based on the physical dimensions of a parcel rather than its actual weight. Trucks and cargo planes have a finite amount of cubic yardage, so dimensional size (or package size) is often as or more important than actual pounds or kilograms.

Many carriers consider both dimensional weight and actual weight of items and charge your business for whichever is greater.

Dimensional weight concerns are one reason to be as efficient as possible in terms of box size. Using the smallest box possible to ship an item safely is one way to minimize shipping costs.

Shipping carrier

Consumers tend to think of last-mile carriers like FedEx and UPS as generally interchangeable, but businesses know that this isn’t always the case. Costs vary depending on what and where you’re shipping.

Additionally, certain industries with unique needs may need to consider specialized or niche carriers. While these may be able to deliver a higher level of service or a specific service the big guys don’t offer, costs will generally be higher.

It’s a good practice to evaluate from time to time the available carriers for your shipping needs to make sure you’re still getting the best possible service and rates.

Shipping distance

Shipping distance is another element that consumers don’t tend to realize (at least until they sell something on eBay or Etsy). Most major carriers divide the country (or the globe) into various shipping zones. The farther the distance between the origin and destination, the more you’ll generally pay.

Product handling and loading

Handling is an area that’s easy for smaller businesses to overlook when calculating costs. This factor refers to the resource costs of physically finding a product in the warehouse and then picking and packing that product. Businesses face time and labor costs for this work, and this operating expense must be considered as a part of ecommerce fulfillment.

Structuring your shipping rates: 3 options

Your business’s shipping costs are inconsistent and variable. If nothing else, your true cost varies based on how far an item has to travel. So how do you decide how to handle shipping with your customers?

These three basic solutions cover the range of options, and each has its own strengths and weaknesses.

Charge a flat rate

First up is flat-rate shipping. In this model, you charge all domestic customers a set flat rate for shipping the same goods. The rate might scale based on the order value or some other metric, but customers in San Diego and Pittsburgh will pay the same rate — no matter what the true cost is to your business.

Businesses with relatively small items or whose catalog entries are all roughly similar in size tend to choose this method. Coffee and tea ecommerce vendors are a great use case: Consumer orders are almost always relatively small, so internal shipping rates are a bit more stable.

Pro: Calculating rates is simple, and repeat customers appreciate transparent, predictable shipping charges.

Con: Flat-rate gets too complicated if your product catalog is large or varied, and you’ll likely lose money some of the time.

Charge a variable rate based on the market

Variable rate shipping calculates the real shipping cost of a specific order (real-time carrier rates) and then passes that cost along to the customer. Some ecommerce platforms include this functionality: It’s a part of Shopify’s Advanced plan, for example.

Note that variable rate shipping doesn’t tend to account for your own handling costs.

Numerous Shopify vendors use this method to cover their shipping costs, as do most B2B sellers and wholesalers that charge for shipping.

Pro: This method is the most “fair” to your business since you’re directly passing along real costs to your customers.

Con: Especially on the consumer front, customers don’t like being surprised by shipping costs — and they aren’t accustomed to seeing the real cost. When you pass along higher shipping costs, you can fail to live up to customer expectations and risk increasing cart abandonments.

Offer free shipping

Free shipping is one more option you should consider. Of course, anyone in ecommerce already knows that “free shipping” isn’t really free, yet it’s what customers in many industries are looking for.

Free shipping doesn’t have to be across the board. You can set an order minimum for free shipping, as Amazon and countless clothing retailers have done (Jos. A. Bank and GAP are two examples).

When you choose free shipping, you still have to determine how to account for those costs. You have three options here:

  • Build shipping costs into retail prices (customer pays)
  • Eat shipping costs using your profit margin (you pay)
  • Build only part of shipping cost into retail prices (both pay)

Pro: Free shipping drives sales, increases customer satisfaction, and incentivizes customers to stick with you (even when they’re still secretly paying the cost via higher retail price).

Con: Usually requires raising selling price or cuts into a business’s margins

Choosing a shipping carrier

Choosing the right shipping carrier for your business requires evaluating what each of the available carriers offers you, along with how your product catalog lands in terms of how they calculate shipping charges.

Each carrier uses its own unique fee structure, and all will offer you a shipping cost calculator to help you understand what your costs would be.

While factors can vary considerably based on the parameters of your products, here are a few general considerations for the big four:

USPS: Often the cheapest for ground shipping but not usually the fastest, the United States Postal Service already has an immense last-mile delivery architecture in place.

DHL: With a specialization in international shipping, DHL is the preferred choice for many businesses that ship primarily overseas.

FedEx: A carrier that excels at both national and international shipping, FedEx offers a range of shipping services. Small businesses should look into the FedEx Small Business program for offers and incentives.

UPS: The iconic brown trucks get the job done as well, both nationally and internationally, with a range of competitive delivery options. Like FedEx, UPS offers a range of services for startups and small businesses, including integrations with ecommerce platforms.

Choosing packaging materials for your ecommerce product

Choosing the right packaging materials for your ecommerce product has numerous effects on your company’s bottom line. The packaging itself costs money, and your choice in packaging can affect carrier rates as well. Consider these factors as you choose packaging materials:

  • Protection: Can the item be damaged in transit? Is it sufficiently cushioned or otherwise protected to prevent this? What materials will you use to protect fragile products?
  • Material: Cardboard, Styrofoam, plastics, and more eco-friendly materials are all available. What’s the right balance of durability, sustainability, and cost for your business?
  • Size: Most shipping costs are based either on size or weight, so choose packaging that’s as compact as possible (while still providing the necessary protection).
  • Branding: Should your product stand out through custom, branded packaging? Is the boost to buzz and customer loyalty worth the added expense?

Ecommerce businesses tend to make two very similar mistakes in packaging: choosing too large or too small of a box. Go too large, and you incur higher shipping costs due to dimensional weight. But go too small, and there isn’t enough room to cushion or protect your products.

Providing shipping security for you and your customers

Shipping security is one more area to consider in your overall shipping strategy. Strategic work here can protect your business and allay your customers’ fears.

Provide tracking visibility for customers’ shipments

In today’s ecommerce environment, customers want to be able to track where their shipment is and know exactly when it will be arriving. Basic tracking information is usually available through your carrier partner, but you can take order tracking even further with proactive and branded shipping notifications using some of the integrations we’ll show you in the next section.

Understand the role of shipping insurance

When you opt for shipping insurance, you’ll be reimbursed for items that get lost, stolen, or damaged during the shipping process. Shipping insurance can provide your business with a sense of security especially if you’re shipping high-value items or items that can break easily.

Of course, shipping insurance can add significant cost. It also doesn’t directly affect your customers’ experience (they will expect a replacement product whether you’re reimbursed or not).

Most businesses opt for shipping insurance only when shipping expensive, fragile, or easily stolen items.

Create a returns program and handle returns logistics

Not every ecommerce sale is going to work out. Customers may simply not like what they got. And defects and product failures happen to every company, no matter how tight your quality control.

For these reasons, you need a clear plan for how you’ll handle returns. If you don’t put a plan in place, you can expect a whole lot more customer service tickets (and angry customers).

Here are a few pitfalls to avoid as you craft your returns policies:

  • Unclear or buried return policy
  • Manual internal system for processing returns
  • Offering free returns without accounting for cost or volume

Not sure where to start with returns? Here’s our list of 10 best practices for ecommerce returns.

Our recommended ecommerce shipping integrations, apps, and tools

Ecommerce shipping can be complex, but the right set of integrations, apps, and tools, can greatly simplify the process — and it can expand your capabilities and service offerings too.

Below, we’ll show you some of the best shipping integrations we’ve found for the Big Three ecommerce platforms: Shopify, BigCommerce, and Magento 2. And while you’re at it, check out Gorgias’ own collection of shipping and fulfillment apps for the Gorgias platform.

One quick note before we dive in: Some of these recommendations will repeat, and that’s intentional. If a world-class tool is available on multiple ecommerce platforms and works well on each one, we want you to know about it!

Shipping integrations for Shopify stores

Below, we’ll cover three of the best shipping-specific integrations for Shopify stores. Some of these also showed up in our broader Best Magento Extensions article. Feel free to give that a read if you’re looking for more apps, integrations, and functions beyond just shipping and fulfillment.

ShipBob

ShipBob is a global logistics platform or third-party logistics (3PL) provider catering to the order fulfillment needs of direct-to-consumer (D2C) brands. If you’re looking for an end-to-end ecommerce shipping solution, ShipBob is a contender.

ShipBob maintains its own network of warehouses in strategic locations and is known for its reliable fulfillment services. The company empowers D2C brands to offer same-day shipping and two-day delivery. It also allows brands to customize their shipping presentation with custom inserts and packaging.

If you’re a D2C brand selling through Shopify and you’re looking for a 3PL partner, ShipBob is worth serious consideration.

In addition to being one of the best Shopify apps, this app is also one of the best on BigCommerce, and it’s a Gorgias preferred partner.

ShipStation

ShipStation is a cloud-based order management and shipping software solution that helps ecommerce businesses power their own logistics efforts. Order processing, inventory management, shipping label creation, and customer communication are all part of ShipStation.

ShipStation connects online businesses with carriers, marketplaces, and channels in powerful ways, and it can give you access to preferred pricing with numerous carriers.

The app’s Shopify integration helps you automate aspects of the shipping and label creation process and simplify international shipping.

If your goal is to keep logistics in house (rather than use a 3PL partner), ShipStation is ideal software to help you control costs and increase efficiency.

In addition to being one of the best Shopify apps, this app is also one of the best on BigCommerce and Magento 2. Unfortunately, ShipStation doesn’t offer a Gorgias app at this time.

Order Printer

Order Printer is a Shopify exclusive that allows businesses to create invoices, receipts, refunds, and packing slips all from a simple one-screen interface. These reports and invoices are rendered as PDFs, which can be automatically sent out to customers via email.

With Order Printer, you can process multiple orders or print requests in bulk and automate attaching those PDFs to emails. It works with the Shopify POS so your sales agents can send off these documents while working in person with customers.

Order Printer is a Shopify exclusive not available on BigCommerce or Magento 2. It doesn’t offer an integration with Gorgias either.

Shipping integrations for BigCommerce stores

These are our top three shipping-specific integrations in the BigCommerce app store.

ShipBob

ShipBob is a global logistics platform or third-party logistics (3PL) firm catering to the order fulfillment needs of direct-to-consumer (D2C) brands.

ShipBob maintains its own network of warehouses in strategic locations and is known for its reliable fulfillment services. The company empowers D2C brands to offer same-day shipping and two-day delivery. It also allows brands to customize their shipping presentation with custom inserts and packaging.

If you’re a D2C brand selling via BigCommerce and you’re looking for a 3PL partner, ShipBob is worth serious consideration.

In addition to being one of the best BigCommerce apps, this app is also one of the best on BigCommerce, and it’s a Gorgias preferred partner.

ShipStation

ShipStation is a cloud-based order management and shipping software solution that helps ecommerce businesses power their own logistics efforts. Order processing, inventory management, label creation, and customer communication are all a part of ShipStation.

ShipStation connects businesses with carriers, marketplaces, and channels in powerful ways, and it can give you access to preferred pricing with numerous carriers.

The app’s BigCommerce integration helps you automate aspects of the shipping and label creation process and simplify international shipping.

If your goal is to keep logistics in house (rather than use a 3PL partner), ShipStation is the ideal software to help you control costs and increase efficiency.

In addition to being one of the best BigCommerce apps, this app is also one of the best on Shopify and Magento 2. Unfortunately, ShipStation doesn’t offer a Gorgias app at this time.

AfterShip

As the name suggests, AfterShip takes care of everything that happens after you ship your product. It offers automated shipment tracking, notifications, and branded updates so that you — not your carrier — control the information flow and customer communication.

BigCommerce’s AfterShip app also includes Returns Center, an interactive returns portal.

In addition to being one of the best BigCommerce apps, AfterShip also offers more limited app integrations for both Shopify and Magento 2. Aftership also integrates well with Gorgias.

Shipping integrations for Magento 2 stores

Below, we’ll cover three of the best shipping-specific integrations for Magento 2 stores. Some of these also showed up in our broader Best Shopify Apps article. Feel free to give that a read if you’re looking for more apps, integrations, and functions beyond just shipping and fulfillment.

ShipStation

ShipStation is a cloud-based order management and shipping software solution that helps ecommerce businesses power their own logistics efforts. Order processing, inventory management, label creation, and customer communication are all a part of ShipStation.

ShipStation connects businesses with carriers, marketplaces, and channels in powerful ways, and it can give you access to preferred pricing with numerous carriers.

The app’s Magento 2 integration helps you automate aspects of the shipping and label creation process and simplify international shipping.

If your goal is to keep logistics in house (rather than use a 3PL partner), ShipStation is the ideal software to help you control costs and increase efficiency.

In addition to being one of the best Magento 2 apps, this app is also one of the best on BigCommerce and Shopify. Unfortunately, ShipStation doesn’t offer a Gorgias app at this time.

Easyship

Easyship is a powerful cloud-based shipping platform that’s highly scalable and easy to implement. Customers use it to optimize their shipping efforts and gain access to pre-negotiated shipping rates with hundreds of global couriers.

Easyship is a great tool for giving your customers visibility and choice in shipping, and it’s a simple way for companies to go global.

In addition to being one of the best Magento 2 apps, this app is also one of the best on BigCommerce and Shopify. No Gorgias app is available at this time.

Mageworx Shipping Suite

The Mageworx Shipping Suite Ultimate is a heavyweight Magento 2 extension that covers all aspects of your shipping needs. Configure complex shipping rules, define shipping rates and methods, and customize everything to your heart’s content.

Mageworx is powerful, but not simple to use. It’s best for larger ecommerce businesses with existing in-house resources dedicated to shipping and fulfillment.

The Mageworx Shipping Suite is a Magento 2 exclusive, though Shopify offers a lighter-weight Free shipping & Promo bars integration. Mageworx does not directly integrate with Gorgias.

Manage your ecommerce business’s shipping and customer service with Gorgias

Shipping and fulfillment are complex parts of your business. So is customer service, and the intersection of the two areas is where many customer satisfaction battles are won — or lost.

For the best customer impact, ecommerce businesses need a solution that lets them control customer inquiries like tracking, returns, the status of an order, and more from a single unified interface.

Gorgias is the customer service and support platform built specifically for ecommerce. With Gorgias, you can track and follow through on every customer inquiry in one place, with rich customer history and powerful tools to surface the information you need, when you need it.

Learn more on how Gorgias integrates with the ecommerce platform you’re already using:

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