Choosing the right shipping strategy for your ecommerce business depends on balancing cost, speed, reliability, and geographical coverage. Consider local delivery, national and international options, and advanced tactics like zone skipping or dropshipping to optimize both costs and customer satisfaction.
Key Takeaways:
Cost vs. Speed: Balance affordable delivery options with faster shipping methods.
Local vs. Global: Tailor shipping strategies based on your market reach.
Advanced Tactics: Use strategies like zone skipping and dropshipping for efficiency.
Customer Experience: Reliable and transparent shipping builds trust and loyalty.
Running an ecommerce business taught me firsthand how frustrating shipping can be. I still remember the headaches from damaged products, angry customers, and logistics costs eating away my margins. If only I knew then what I know now!
Over the years, I’ve discovered several shipping strategies critical for providing quality customer experiences while protecting profitability. I want to share the lessons that would’ve saved me countless hours and dollars earlier on.
Whether you’re just starting out or looking to strengthen existing operations, this guide is for you. I’ll walk through the various delivery, tracking, packaging, and sustainability methods, from local to global, that set top retailers apart. My goal is to help you avoid common pitfalls that hampered my own success in the beginning.
By learning these strategic best practices, you’ll be equipped to handle every shipping scenario smoothly, delight customers, and scale confidently. So let’s get started!
Table of Contents
Understanding Shipping Strategies
Shipping strategies refer to the methods used for transporting, storing, and delivering orders to customers. They affect everything from inventory management and order processing to packaging, returns, and customer service.
Choosing the right strategies depends on factors like:
Cost – Balancing expedited shipping with affordable delivery options.
Speed – Providing fast fulfillment without excessive expenses.
Reliability – Consistently meeting delivery estimates and minimizing errors.
Geographical Coverage – Reaching customers locally, nationally, and internationally.
Optimizing these factors enhances profitability while pleasing customers. Failing to do so results in disappointed clients and slimmer margins.
This article explores tactics that balance these considerations through diverse shipping solutions catering to all business needs and scales. Let’s dive in!
Core Shipping Strategies
Local Delivery Solutions
Delivering locally allows providing customized services not always available through major carriers. Same-day delivery increases convenience for customers willing to pay a premium.
Same-Day Delivery
Same-day delivery offers unmatched immediacy. UPS found that nearly 3 in 5 online shoppers consider same-day delivery important. Strategies include:
- Using an in-house delivery team for complete control and quality assurance.
- Outsourcing to a same-day courier service like DoorDash or Instacart.
- Offering same-day only for local orders or high-value purchases.
- Charging an additional fee ($5-$20 per order) to offset expenses.
The costs of same-day shipping can be high though. Businesses must determine if benefits like higher customer lifetime value offset the expenses.
In-House Delivery vs. Outsourcing
While owning the entire delivery process allows for greater quality control, building an in-house team requires significant upfront and fixed costs. These include hiring drivers, purchasing vehicles, fuel expenditures, licensing, insurance, and maintenance.
Outsourcing to third-parties like Uber and Shipt avoids many of these costs in exchange for split delivery fees. However, brand reputation partially depends on another company’s performance.
Hybrid approaches are also possible, such as outsourcing overflow same-day orders while handling the majority in-house to optimize costs and service levels.
National and International Shipping Options
Accessing customers anywhere requires partnering with reliable carriers. Major players include:
FedEx: Best for time-sensitive package delivery with strong package tracking.
UPS: Known for dependability and ease of rate integration.
USPS: Most affordable rates with wide geographical reach but slower.
DHL: Leading international provider focused on e-commerce.
The best approach depends on order characteristics like size, weight, destination, and delivery timeframe.
For example, FedEx Priority Overnight works for urgent packages under 150 lbs while FedEx Freight Economy is better for heavy shipments exceeding 150 lbs. Integrating multiple carrier options lets customers choose based on their needs and budget. Rates should be clearly displayed at checkout.
Be sure to negotiate custom contracts with significant discounts once order volumes meet carrier thresholds (usually around 150+ packages daily). This hybrid utilization increases flexibility for customers while optimizing costs.
Expedited Shipping
Expedited shipping guarantees extremely fast delivery, usually within 24-48 hours domestically and 3-5 days internationally. It carries a high premium though, up to 40% above base rates. Reasons for offering expedited delivery include:
- Allowing customers to receive high-priority orders ASAP.
- Hitting dropshipping deadlines to avoid marketplace penalties.
- Delivering products needing special handling like perishables.
The additional revenue generated from expediting must outweigh added expenses. Companies like ShipBob simplify expedited ordering through automated rate calculations and shipping label generations across major carriers.
Cost-Effective Shipping Methods
Ballooning shipping expenses hurt profitability. Strategies for affordable, transparent delivery pricing include:
Flat Rate Shipping
Flat rate shipping charges a fixed amount regardless of package weight/destination. This simplifies pricing forecasting for businesses and comprehension for customers.
Potential configurations include:
- Single flat rate for all orders
- Tiered flat rates by weight class
- Bundled flat rates (e.g. free ground shipping + $15 for air)
Downsides are that light, nearby packages effectively subsidize heavier, distant ones. Be sure to thoroughly analyze costs when setting single flat rates.
Tiered flat rate shipping resolves this by segmenting flat fees based on weight thresholds. Setting 3-5 graduated tiers optimizes flexibility and cost transparency.
Free Shipping Offers
Free shipping powerfully attracts and retains customers. In fact, 91% of online consumers make purchases from sites offering it. However, the costs must be absorbed elsewhere. Tactics include:
Minimum Purchase Requirements
Offer free ground shipping on orders over set amounts, such as $50+. This incentive gets customers increasing cart sizes.
Limited-Time Promotions
Temporary free shipping promotions incentivize buying during sales periods. Set clear start/end dates like holidays or new product launches.
Baked-In Pricing
Increase product costs slightly and bake “free” shipping price into expenses across the board. This avoids complex rules frustrating customers. However, it reduces pricing flexibility.
Customer Tiers
Provide free shipping automatically once shoppers reach annual purchase milestones qualifying them for membership levels with extra perks. This nurtures loyalty.
Bulk and Freight Shipping
Leveraging bulk discounts optimizes costs for large, heavy orders. Consider:
Less Than Truckload (LTL)
Smaller shipments from 150-15,000 lbs consolidated across businesses to fill a semi-truck cost effectively.
Full Truckload (FTL)
Loads large enough (over 15,000 lbs) to occupy an entire truck. Faster transit times than LTL but more costly under full capacity.
Regional freight brokers like uShip simplify comparing LTL and FTL rates across leading carriers like Saia while automating transport.
Multiweight Pricing and Discounts
As order sizes grow, carriers provide stepped discounts incentivizing additional volume. Consider a tiered pricing structure across 4-5 weight thresholds from 0-150 lbs. Integrate discounted USPS cubic pricing on shipments exceeding 5,000 cubic inches.
Large accounts qualify for high-volume price reductions and bonus incentives during contract negotiation. Maintaining strong carrier relationships and aggregating multi-client freight helps unlock the best bulk pricing.
Advanced Shipping Tactics
Zone Skipping
Zone skipping allows shipping orders from one zone to another directly rather than incrementally. This bypasses the longest transit legs to reduce costs and delivery times.
For example, a package from Los Angeles to Boston would typically route through intermediate zones (LA > Dallas > New York > Boston). Zone skipping ships directly LA > Boston cutting days in transit.
Experts estimate zone skipping reduces delivery times by up to 33%. The downside is slightly limited visibility and tracking. However, major carriers like DHL and FedEx increasingly support this tactic.
Dropshipping
Dropshipping relies on suppliers rather than maintaining excess inventory. Orders ship directly from vendors to customers. This greatly simplifies shipping logistics while adding product breadth.
However, suppliers dictate cost, quality, and delivery timelines. Poor performance damages credibility so careful vetting is essential before establishing partnerships.
Be sure to leverage multi-channel listing management tools like SolidCommerce or ChannelAdvisor providing the visibility and control needed across suppliers and sales channels when dropshipping.
Dynamic Routing
Using real-time tracking data and predictive analytics, packages can be dynamically routed around current or anticipated shipment disruptions. This prevents delays and improves delivery time reliability. Solutions like Shipwell and ClearMetal leverage AI algorithms to continuously optimize routing.
Volume-Based Discounts
Renegotiating custom contracts with major carriers as soon as order volumes increase, even mid-contract, gives retailers tremendous leverage to demand greater discounts exceeding those in standard pricing. Be ready to renegotiate for superior terms once establishing a strong shipment history.
Alternative Delivery Locations
Enabling customers to select alternative package delivery locations like corner stores, pharmacies or grocery stores with parcel lockers brings convenience while giving recipients more control. Particularly beneficial for customers frequently away from home. Compliant locations can be discovered through platforms like AxleHire.
Hyperlocal Warehouses
Establishing a distributed network of small, localized warehouses enables faster fulfillment and cheaper last-mile delivery compared to one central facility. This strategy hinges on advanced inventory management integrating shipment data across locations to satisfy orders from nearest sites first.
Crowdsourced Deliveries
Tapping networks of vetted, crowd-sourced drivers for same-day deliveries cost-effectively scales capacity beyond dedicated fleets. Major providers like Deliv and Roadie offer screening and background checks. However, some inconsistencies arise from non-professional couriers.
Comparison Table
| Tactic | Cost | Ease of Setup | Customer Service Impact | Shipping Time Impact | Other Key Considerations |
| Zone Skipping | Lower | Easy | Minimal | Improves Speed | Limited Visibility |
| Dropshipping | Lower | Moderate | High Risk of Errors | Variable by Supplier | Less Control Over Suppliers |
| Dynamic Routing | Neutral | Difficult | More Reliable ETAs | Prevents Delays | Requires Advanced Analytics & Systems Integration |
| Volume Discounts | Lower | Easy | Neutral | Neutral | Requires Renegotiation Despite Existing Contracts |
| Alternative Delivery Locations | Lower | Moderate | Highly Convenient | Slightly Slower | Requires Customer Education & New Carrier Agreements |
| Hyperlocal Warehouses | Lower | Difficult | Faster for Some Customers | Majority Faster | Significant Upfront Investment & Complex Coordination |
| Crowdsourced Deliveries | Much Lower | Easy | Adequate | Much Faster | Potential Inconsistencies with Non-Professional Couriers |
Leveraging Technology in Shipping
Investing in software, automation, and data enhances transparency while optimizing processes.
Shipping Process Automation
Automating manual tasks like printing labels and tracking packages frees up staff for higher-level work. Solutions include:
- Shippo: Automates shipping across hundreds of carriers globally.
- HiveTech: Manages inventory, purchasing, and shipping from one platform.
- Shopify: Built-in Shipping Solutions from basic rates to custom automation.
Real-Time Tracking and Updates
Order visibility reassures customers and optimizes warehouse workflows. Solutions like ShipStation integrate advanced tracking with push notifications across all major carriers.
Customers receive email and text updates through initial label creation to out for delivery alerts and more. Historical tracking data aids in predictive analytics around shipment ETAs and strategic carrier usage optimization.
Sustainable Shipping Practices
Consumers increasingly support eco-conscious businesses. Methods for reducing environmental impact include:
- Eco-friendly packaging – Using recycled, non-toxic materials for boxes and fillers cuts waste.
- Efficient routes – Route optimization reduces mileage and emissions.
- Consolidated shipments – Bundling orders cuts individual trips for large-scale reductions.
- Carrier selection – Compare transport emissions across modes and providers. Favor rail over air when possible.
Small changes make a collective difference while appealing to values-aligned shoppers. In fact, 87% of consumers actively consider sustainability when making purchases.
Regulatory Compliance and International Shipping
Expanding globally requires navigating diverse regulations, documentation rules, duties, taxes, and restrictions by country. Simplify compliance through:
- HS Codes – Classifying goods using universal Harmonized System Codes streamlining customs clearance.
- EDI Integration – Electronic Data Interchange automates documentation like customs invoices.
- Landed Cost Calculators – Account for import/export fees at checkout to avoid billing surprises post-purchase.
- Free Trade Agreements – Certify for FTAs like NAFTA and CAFTA-DR to qualify for duty-free access and reduced tariffs between member nations.
Tools like Globe Trade Navigator centralize compliance, landed cost estimates, and paperwork needed for smooth international transactions.
Future Trends in Shipping Strategies
Autonomous Delivery
Major retailers predict up to 90% of last-mile deliveries will eventually route through autonomous vehicles and drones. Leaders exploring this technology include UPS, Amazon, and FedEx.
Automated bots solve rising labor shortages for couriers while enabling faster, more flexible delivery options. However, mass adoption faces regulatory hurdles and safety concerns needing resolution first.
Artificial Intelligence and Predictive Analytics
Sophisticated data tools increasingly drive supply chain optimization. Analyzing past shipment trajectories, weather patterns, traffic models, and more generates astoundingly accurate ETAs and future volume predictions.
Shippers leverage these insights minimizing delays through shipment re-routing based on risk forecasts while balancing warehouse workloads and inventory holdings. This high-precision visibility reduces costs through AI and analytics.
Wrapping Up: Key Takeaways on Shipping Strategy
With the exponential growth of e-commerce, developing ironclad shipping strategies gives retailers a vital competitive edge. As we have covered, core approaches include:
- Localized same-day and last-mile delivery services
- National and international shipping integrations across leading carriers
- Expedited shipping for urgent packages
- Creative flat rate and free shipping offers
- Bulk shipping discounts and freight consolidations
- Advanced tactics like zone skipping and dropshipping
- Automation, analytics and tracking for efficiency and visibility
- Eco-friendly sustainability initiatives
Rather than choosing a single tactic, leading retailers combine solutions tailored to their capabilities, budgets and customers.
By mastering this diversity of shipping strategies, businesses can rapidly scale while providing 5-star delivery experiences crucial for enduring growth and profitability.
Frequently Asked Questions
What is the best shipping strategy for a small business?
For small businesses, it’s best to start with simple, cost-effective shipping solutions and expand as your business grows. Good options include USPS Priority Mail, FedEx Ground, and basic shipping apps. Focus on providing accurate delivery estimates, good packaging, and excellent customer service.
How to calculate shipping costs for ecommerce?
Add product weight and dimensions into a shipping calculator like Shippo. Enter origin/destination to compare rates across US carriers. Integrate calculated rates into your ecommerce platform. Regularly review contracts for discount opportunities as volumes increase.
What is free shipping and how does it affect profit margins?
Free shipping refers to orders shipped to customers at no explicit cost. Costs are offset by adjustments like higher product prices or minimum order values. It attracts customers but reduces flexibility. Assess its impact on margins and experiment with minimum purchase thresholds to determine optimal approach.
How to choose the right shipping carrier for your business?
Factor order volume, weight, delivery speed, destination, tracking needs, and cost. Pilot multiple carriers while comparing performance metrics. Negotiate custom contracts once volumes meet carrier thresholds. Integrate top 2-3 carriers balancing cost, reliability and geographic reach.
What are the different shipping methods available?
Major options include ground, air, freight, ocean, courier services, same-day delivery, and next day. Ground balances cost and speed for moderate sizes under 150 lbs while air expedites urgent packages. Freight consolidates heavy bulk shipments exceeding 150 lbs and ocean transports international containers. Couriers handle same-day local delivery.
How to reduce shipping costs for online stores?
Leverage USPS cubic pricing, multiweight FedEx discounts, flat rate packaging, zone skipping, bulk LTL freight, and renegotiated contracts. Automate processing to reduce labor. Optimize packaging to avoid overages. Consider outsourcing logistics to a 3PL with greater scale.
What is the difference between flat rate shipping and live rate shipping?
Flat rate shipping charges a fixed fee regardless of weight/destination. Live rate shipping calculates variable charges in real-time based on unique order details like exact weight, dimensions and delivery route. Flat rate shipping simplifies pricing for customers while live shipping increases backend flexibility to minimize costs.