As consumers, we often underestimate the amount of time and energy that goes into the order fulfillment process when we click the “buy now” button.
It’s usually because we don’t have to think about how shipping works. Every year we see shipping delivery times get faster (from two day shipping with Amazon Prime to two hour shipping with Prime Now), but rarely do we realize how many people are involved with the shipping of each item.
As you consider running an ecommerce shop, your shipping options will be a huge aspect of your business. Creating and developing your product is only the beginning.
While you prepare to offer physical products, it’ll be helpful to understand how you want to deliver your ecommerce product before diving in with both feet.
Rather than be surprised by the added costs and time of selling physical products online, we’ll go through everything you need to know about shipping methods and preparing to outsource your order fulfillment.
Deciding on ecommerce shipping options
Before you explore drop shipment and other order fulfillment methods, let’s take a step back to discuss all of the things you should have nailed down before you look into your available options.
Selling a physical product comes with unique challenges, as opposed to an easily deliverable digital product like an online course or eBook, so it’s important to assess which elements will affect your product delivery method.
Don’t let these extra steps keep you from pursuing an ecommerce business! While it may be a little more involved than digital product business models, there is still so much opportunity in selling physical products.
Not only do physical products often have more perceived value than digital products, they also provide a tangible solution to your customer’s problem. This personal touch goes a long way.
If you are sold on creating an ecommerce business, here are a few decisions to make before you look into product delivery options:
Creating your product packaging
Many times, this comes down to your overall branding strategy. Many ecommerce shops choose to create their own packaging for a cohesive look that prioritizes the customer’s experience. Others choose to use packaging that is already created from Amazon, USPS, UPS, or FedEx.
We recommend creating an unboxing experience that leaves your customers excited about more than just their item. Sometimes they will even show off their product on a video or on social media like people do for VYNL and FabFitFun.
Once you decide what kind of packaging experience you want to create, you can move on to determining the type of packaging options you have. The more you can save on space and weight, the more savings you’ll generate!
Estimate product’s approximate weight
It’s important to update the weight of each physical product you sell so you are always aware of how it will affect your costs. This is especially important when you consider which shipping methods will be your perfect fit. Then you can affordably price your items so that all of your expenses are taken care of while you pass savings on to your customers.
Determining your ecommerce shipping costs
We already talked about knowing the weight of your package, but there are more determining factors that go into measuring your shipping costs. Here are the four elements you need to be aware of:
- Package weight (keep it as light as possible)
- Package size (keep it as small as possible)
- Timing of delivery
- Origin country of package
- Destination country of package
You may be thinking about offering free shipping since it’s become more of a norm among ecommerce shops, but keep in mind that someone always has to pay for shipping. You are delivering a physical product, after all!
Let’s break down what “free shipping” actually looks like:
- Customer pays for the shipping since it is added to the overall sales price of every item in your ecommerce shop
- You pay out of pocket for the shipping when it isn’t added to your product cost but rather written off as a business expense
- You and the customer both pay a percentage rate for the shipping depending on your profit margins and where your price point needs to be for consumers to buy
If offering free shipping is crucial for your target market, consider the bullet points above and look into the numbers to see what will work. Shopify has some extra information about deciding on shipping methods and rates that we highly recommend reading through.
You will also want to keep an eye on any additional package insurance or tracking costs that are associated with your delivery method of choice. Any cost that comes up should be factored into the sales price of your item in some way.
Choosing your best ecommerce shipping options
Now that you have an idea of the elements that go into shipping your product, you can decide which product delivery model is best for you. Many bloggers who transition into ecommerce shop owners realize very quickly that handling every step of the shipping process is a LOT of work.
Think about a digital product. When you are creating a digital product, you may record a few lesson videos, design PowerPoint slides, and upload it to a course hosting website like Teachable, but then can rest easy because it’s automatically delivered to the customer’s email inbox.
This is not the same with delivering physical products. There are quite a few more steps that go into fulfilling a product order after someone clicks the “buy now” button. In order to understand how it works, let’s unpack the different roles behind the product fulfillment process.
- Creator: As the original product ideator, you are considered the creator. Your job is very important: coming up with new and improved product ideas. If you are too entrenched in the shipping process, you may find that your time is taken up by monotonous business tasks rather than having space to come up with new ideas. This is why it can help to outsource your shipping, which we’ll talk about in a bit.
- Retailer: The retailer is anyone who sells your product directly to consumers and often holds your inventory in their physical space. They markup your product price so that they get a cut of your profits, so you should factor this in if you are interested in working with retailers. Retailers can be online or have brick-and-mortar stores. For example, Macy’s and Nordstrom are both retailers.
- Manufacturers: Instead of selling directly to the public like retailers, manufacturers are tasked with building and crafting the products to then sell to retailers or wholesalers (who are kind of the middle man between manufacturers and retailers at times). Buying from the manufacturer will help you get the most affordable price, but then you also have to deal with inventory and fulfillment all on your own. This is why many people work with wholesalers.
- Wholesalers: Wholesalers buy the most amount of product at one time from the manufacturers and usually have large warehouse spaces that can hold a larger amount of inventory. Some wholesalers sell to the public but most sell the goods to retailers.
All of these roles work within what the ecommerce world calls a supply chain. You can learn more about the ins and outs of this whole supply chain process here, but for now, let’s shift gears and focus on your role in all of this.
Dropshipping as an ecommerce shipping option
As the product ideator and developer, you may want to take a step back from fulfilling orders. If the idea of packaging hundreds of shipping envelopes and dropping packages at the post office a few times every week sounds draining, you may want to look into dropshipping.
Pros of drop shipping
When you decide to work with a dropshipper, it means that you don’t have to worry about printing labels, buying enough stamps, or organizing your orders in a rented warehouse space. Instead, you can take advantage of highly efficient companies who already handle everything behind the shipment of products (and do it really well!).
One of the major benefits of dropshipping is that it can be done by manufacturers or wholesalers. Both of them have the ability to hold large amounts of your inventory and have the systems in place to ship products to your customers. You don’t have to worry about your basement overflowing with product when you work with a drop shipper.
If you want to be hands-off in the shipping process so you can focus on other areas of the business, dropshipping is an option worth looking into. It comes with a smaller amount of risk as the product creator so you can test different product skews and see what sells best.
When looking into dropshipping options, make sure to interview your manufacturer to see if it’s a service they offer and what that looks like for them. They can also help you determine what the overall customer experience looks like from placing an order to getting the product in their hands.
Cons of dropshipping in ecommerce
The main downside of dropshipping is that you may have to compromise on your overall vision for your customer experience. Manufacturers are successful for a reason: they stick to a system that works well for them. You may have to be flexible about what the shipping process looks like when working with another company.
You also have to loosen the reigns and give up control of the shipping process. For solo entrepreneurs, this will take some getting used to. It may be difficult at first to work through some of the customer service kinks and back-and-forth communication with your manufacturer, but you’ll get the hang of it.
The best thing to do is choose your manufacturer wisely so you can stay with them long term. Rather than go with the first manufacturer you meet with, interview a few, and ask about how they operate.
If possible, try to visit their facilities and see if their values and process fits with your own. You can also ask for referrals and see if they have unique experience within your specialized industry. It may take a little while longer to find the right partner but it will be well worth your time investment.
Fulfillment companies as a type of shipping options
Dropshipping isn’t the only way to outsource your shipment process. You can also work with order fulfillment companies that will help you ship products to your customers. The main difference between order fulfillment companies and dropshippers is that they are a stand-alone operation.
This means that order fulfillment companies only focus on one task: fulfilling orders from retailers. Manufacturers are often juggling multiple tasks at a time (like creating, manufacturing, packaging, and shipping the products) so order fulfillment companies may simplify the process.
Order fulfillment companies act as a storage space and shipping liaison between retailers and manufacturers. Because retailers often don’t have enough space to hold inventory but need it readily available for customer demand fluctuations, they depend on order fulfillment companies to help.
Although order fulfillment companies have a lot of warehousing space for holding bulk inventory, it also comes with a much higher price tag. Think about it like renting a storage garage space in your local town, only on a much larger scale.
Collaborating with order fulfillment companies may not be a great idea when you are first starting to offer your product and hoping to test a few different designs before solidifying what your best sellers are. These companies are designed more for product creators who have tried and true products that are in very high demand.
Next steps for choosing ecommerce shipping options
You may already have an idea of what types of shipping options are the best fit for your ecommerce shop, but keep in mind that it might change as your business expands. What is right for you now may be different a few years from today.
Now that you have a good idea of your options, here are a few addition steps you can take this week to help you start researching and moving forward:
- Learn from ecommerce shipping resources: We highly recommend reading through Shopify’s blog since it is chock full of incredible advice around all things shipping. You can also check out 15 of the best podcasts for ecommerce entrepreneurs if you’d rather learn while multitasking.
- Research supply chain options: Start with researching manufacturing companies so you have an idea of who will be developing your physical product. They might also have relationships with retailers, wholesalers, and order fulfillment companies that will help you grow as you start working together. Here are some extra resources on finding a manufacturers with built in shipping options from Martha Stewart and Shopify.
- Find an ecommerce platform: If you haven’t chosen an ecommerce platform yet, now is a great time to do so. Shopify was built specifically for ecommerce brands so it’s the most robust platform out there, but Squarespace also has some ecommerce options available for smaller shops. If you use WordPress, you can add a plugin like WooCommerce to start selling physical products.
What ecommerce shipping challenge are you taking on this week? Let us know in the comments which next step you are tackling this week and we’ll cheer you on!