Everything you need to know about shipping in online business.

The unique characteristic of online business is the lack of direct contact between customers, products, and sellers. This creates many difficulties for businesses, one of which is shipping. Poor shipping policies can significantly impact revenue and store reputation. In an article on shopify.com, the author provides detailed guidance on everything from calculating prices, packaging, and branding to choosing service providers and considering insurance and refund policies for shipping products to customers. To better serve our readers, we have translated this guide, hoping it will be helpful for your business. Because the guide is very detailed, it is divided into several sections with smaller chapters; please pay close attention.

Chapter 1: The Importance of Shipping in Online Business

Compared to traditional businesses, online businesses rely more heavily on shipping services. Therefore, a well-planned shipping strategy and policy are crucial for optimizing profits and enhancing brand reputation. If done correctly, you’ll create a positive impression on customers, increasing the likelihood of repeat purchases and even referrals due to excellent shipping services. However, a single mistake can cost you a significant amount of money and, more importantly, alienate customers.

Most people don’t realize the importance and complexity of a transportation strategy. Such a strategic plan is considered a valuable asset to a business, as it’s crucial for establishing and implementing it.

This detailed guide covers all aspects of shipping, from deciding on pricing methods and packaging to branding, choosing the best service provider, and selecting the right insurance plan.

Chapter 2: Shipping Methods in Online Business

The reason why transportation is considered a crucial process for business owners is because it is complex and subject to many unforeseen events. A perfect transportation strategy must combine many elements, some of which are as follows:

• Trademark
• Product storage location
• The place where the product is shipped to
• Average Order Value (AOV)
• Profit per product
• Product weight
• Insurance and how to track your shipping order.
• Customers’ transportation habits and preferences
• Product cost
• Restrictions and regulations
• Customs and taxes

That’s quite a lot, right? But don’t worry too much, this detailed guide will share some tips to help you make the best decisions for you and your customers.

1. Some shipping methods you should know about

Self-delivery: pack the products yourself, label them, and then take them to the post office to send to customers.

Hiring a delivery service: You pack the products at home, apply labels in bulk, and then hire a delivery service to ship them to customers.

Shipping from warehouse: Orders will be automatically received and shipped from the corresponding warehouse.

Dropshipping: Orders are shipped directly from a dropshipping partner on behalf of your brand. You’ll never experience inventory issues or incur warehousing costs.

2. Stages of transportation strategy development

As online business grows , your shipping policy will also undergo some changes.

• Initial phase: During this phase, you typically don’t receive many orders, so your shipping strategy doesn’t need to be overly elaborate or complex.
• Stabilization phase: At this point, the number of orders per day has increased significantly, possibly exceeding 20 orders per week. This is when you need to start establishing a more detailed shipping strategy.
• Growth phase: This is the phase where you receive a large number of orders daily and need to manage them constantly. This also requires a significant increase in supporting services like shipping; without prior planning, you can easily become overwhelmed.
• Expansion phase: At this point, you will need your own warehouse or work with a third-party shipping service provider.

Chapter 3: Customer Shipping Fee Options

Customers choose to buy products from your website partly because of the quality and partly because the price is reasonable compared to other websites. But what happens if they’ve added items to their cart, reached the checkout step, and then realize the shipping cost isn’t cheap? They’ll certainly hesitate about whether to proceed to the final step.

This is quite understandable, as the price plus shipping costs will increase significantly. At this point, you’ll need to choose a more affordable shipping method. Here are some possible options:

Option 1: Free shipping

A free shipping policy is a great way to impress customers and increase conversion rates. But of course, nothing is completely free; the cost is often added to the product price. The conditions for free shipping vary depending on your profit margin.

A prime example of this choice is Amazon; clearly, compared to competitors that don’t offer free shipping, customers still prefer Amazon, resulting in significantly improved marketing effectiveness.

Free shipping policies can also be used as a strategy to increase order value. To qualify for this policy, customers are required to spend a certain amount. For example, a customer has purchased several products at prices of $86, $112, $71, $65, and $105, resulting in an average order value (AOV) of $87.90. In this case, you could stipulate that an AOV of $100 or more is required to qualify for free shipping, thus forcing customers to purchase more items if they want to save money.

Kauffman Mercantile, a high-quality home furnishings company, used this method, with their condition being an AOV above $75.

One thing to note is that if you’re selling high-end or handcrafted products, the shipping cost added to the price won’t seem too high to customers. However, if you’re operating in a highly competitive market where price is a crucial factor in attracting customers, even a slight price increase can be problematic. In this case, you should consider alternative options or try to minimize shipping costs as much as possible.

Option 2: Provide an accurate shipping price list.

On many websites, when customers add products to their cart, they are immediately connected to a shipping quote from your partner (UPS, FedEx, USPS, etc.). This quote is calculated based on the quantity, size, and weight of all products in the cart, and customers can refer to it directly. After finalizing the order, buyers can choose their preferred shipping service provider.

Simple Sugars, a website featured on Shark Tank, has adopted this method; here’s an illustration:

Using a real-time calculation tool will build customer trust, as it serves as proof that you’re not inflating shipping costs or raising prices excessively. This method is suitable for large shipments or products.

Option 3: Flat rate shipping

The third option is to use a uniform price for each package or based on weight range and total order quantity. To apply this method, you need to find the average cost of shipping each package. In reality, the shipping cost might be slightly lower or higher than this price, but that’s okay; you’ll be able to balance it out.

J.Crew Canada, a clothing brand, set a discount of $9.95 on all orders and created a prominent banner on its website to announce it.

Chapter 4: Packaging

Packaging is a crucial part of the shipping process; it protects your product from damage and prevents negative impacts on the transaction that could displease customers. Delivering a product in perfect condition creates a positive impression, building trust in your service quality. This chapter will explore product packaging methods, available packaging options, and the necessary resources.

1. Types of packaging

After choosing your shipping method and how you will charge customers, the next step is to decide how to package your products. This may seem like a small detail, but it’s actually very important, as it can increase shipping costs and directly affect your pre-planned shipping strategy. Below are two types of packaging commonly used in online businesses.

• Utility packaging: Nothing special, simply a large document bag or brown cardboard boxes with a dozen foam inserts and newspaper inside.
• Branded packaging: Uniquely designed according to your brand identity, impressing customers with its meticulous attention to detail and special features. This is not only a way to please customers but also plays a marketing role, which we will discuss in detail below.

2. Product packaging methods

Regardless, the primary purpose of packaging is to protect the product during transportation, so packaging that minimizes impact is crucial. Unless the product is extremely small or highly durable, you should use a sufficiently large cardboard box or envelope with added padding such as cotton, foam, newspaper, etc. Below are some common packaging methods:

At ULINE, you can buy many different types of boxes in various sizes and styles, along with affordable shock-absorbing padding.

3. The importance of packaging size

Because most shipping methods charge based on the size and weight of the package, you should try to keep the packaging as small as possible. This will save you a significant amount of money, and sometimes even yield a small profit.

Depending on the product you’re selling, you can choose the appropriate packaging size, from small to medium to large. But of course, a small box that can still hold the product is best.

4. Use packaging to increase brand recognition.

For online businesses, packaging is the most direct point of contact with customers, and if utilized effectively, it can become a highly effective marketing channel. You can print your brand name on the packaging to help customers remember you for longer. Some stores even use packaging as discount coupons or to print promotional information, which is very convenient. Furthermore, packaging is also an effective affiliate advertising channel; you can sell a small section of the packaging to partners who will print their logo on it.

5. So how can brand packaging become unique?

Although you can print anything on the packaging, surely no one wants their packaging to look like a bunch of advertising posters scattered all over the streets, right? This is where you should have a special packaging design that truly makes an impression on customers.

Look at how TrunkClub does with their packaging; instead of opting for a simple box, they add designs that make it look like a suitcase.

And when you open it, you’ll find the products neatly arranged along with a handwritten card. If you’re a customer, you’ll surely appreciate this design; it feels like someone is giving you a gift.

6. And what do branded packaging offer you?

A uniquely designed, creative, and eye-catching branded packaging will undoubtedly bring you many benefits, firstly by satisfying customers, secondly by increasing brand recognition, and finally, as an excellent marketing channel. According to a survey by Dotcom Distribution, 52% of consumers are more likely to return to purchase from websites with premium packaging. The same study also indicated that 4 out of 10 customers are willing to share images of the packaging on social media with their friends. Those are amazing numbers, aren’t they? But how surprising is it when you consider that in 2014, Google recorded over 1.3 million unboxing videos generating 10.3 billion views? More importantly, 62% of those viewers had a genuine need to purchase the product.

7. How to create unique brand packaging?

Creativity is essential if you want your packaging to stand out. Bold ideas and unique designs are sure to delight customers. Here are some factors you should pay attention to.

Box

This is the first factor you should consider. There are many different types of boxes, with white or tan cardboard boxes being the most commonly used because they are inexpensive, sturdy, and can withstand moderate impacts. Of course, if you want a unique packaging box like TrunkClub’s, you’ll have to order a custom design. Some stores choose brightly colored boxes to impress customers.

Tissue

Typically, the main product is wrapped in an extra layer of foam or absorbent paper for preservation. Additionally, this layer of paper adds to the suspense of the “unboxing” experience for the customer.

Protective cushion

The product won’t always fit perfectly in the box, so to avoid damage, you need to use additional protective padding. The most common are foam pieces, bubble wrap, or crumpled paper; for a more elaborate solution, you can add an extra tray inside.

Labels

If you don’t want to print directly onto the packaging, labels are a cheap and convenient option that suits you well. In this case, you need to focus on designing the label to make it stand out.

Adhesive tape

To make the packaging box more secure, you should use tape; however, use tape that matches the color of the box and try to apply it neatly and professionally.

Finally, how can packaging be turned into an effective marketing channel?

Chapter 5: Choosing a Transportation Provider

1. Shipping from the Shopify.com app

(Since this article is from shopify.com, a provider of comprehensive online retail solutions, it may be applicable if you use their system.)

Once you’re ready to ship your order, click on “Buy shipping label” and select the box size and shipping method (first class, priority, or priority express). The Shopify app will automatically calculate the shipping cost based on the box size, product weight, and shipping method.

Some benefits of using this method:

Save time: You can start right away without paying upfront or waiting at the post office; simply place your order on Shopify.

Cost savings: While a standard Shopify account typically has a fixed fee, an advanced account offers discounts. Depending on the size, origin, and destination, you can save around 30%.

2. Other forms of transportation

Besides Shopify, you can find many other shipping service providers; here are some typical ones:

• USPS
• Canada Post
• UK Royal Mail
• FedEx
• UPS
• DHL

Fast shipping with Sapo Express

Do you want to ship goods at a low price? And do you prefer fast shipping? Sapo officially launches its Sapo Express shipping service, helping store owners ship goods quickly and efficiently.

Sapo Express is a special shipping service package exclusively for Sapo customers. Accordingly, customers using Sapo POS ,  Sapo GO  , and  Sapo Omnichannel services   can ship goods via Sapo Express starting today, September 23, 2019.

Why you should use Sapo Express shipping service:

• Prices are up to 40% cheaper than those offered by other shipping companies.
• Cash on delivery is free, and redelivery is free for at least 3 attempts.
• We process any arising requests quickly and free of charge.
• Accurate and efficient reconciliation.
• Centralized sales and delivery management.

Attractive Offer: Flat rate of only 16.5K for all inner-city deliveries within 6 hours.  For one month from the launch date, shops using Sapo Express service will receive extremely attractive cost discounts. Specifically, from September 23, 2019 to October 23, 2019 when ordering shipping via Sapo Express:

• Flat rate of only 16.5K/order for delivery within the city  (**)
• Free return service for all orders.

(**) This shipping price applies to Sameday packages shipped by Shippo (weight under 5kg) and Nextday packages shipped by GHN Express (weight under 3kg).

Each shipping company has its own advantages and disadvantages, so you should research carefully before choosing. Don’t worry, we’ll tell you what factors to pay attention to.

2. Shipping costs

Typically, shipping costs will depend on several factors:

• Package size
• Weight
• Delivery starting location
• Delivery location
• Options for tracking your order during shipping.
• Mass
• Discount rate

3. Insurance services

Depending on the products you are selling and their value, shipping insurance will provide a certain level of security for your goods. Simply put, if the package is lost, stolen, swapped, damaged, or overdue during transit, you will be reimbursed accordingly. Shipping insurance is usually provided by postal services, courier companies, shipping companies, or third parties.

It’s important to note that not all insurance companies reimburse the full value of the order, so you should check beforehand to avoid any losses.

Insurance isn’t necessary for every shipment; you might only need it for high-value items. Also, keep in mind that some carriers include insurance costs in their shipping packages, so you should check carefully.

4. Track your shipment.

Shipping tracking is a feature that lets you know where your shipped goods are currently located and how long it will take to reach the customer.

Especially when using insurance, tracking services are essential. You need to know the current status of your goods in order to file a complaint with the supplier and claim fair compensation.

5. Determine the total shipping cost.

Choosing a supplier and shipping company is the final step in the process of delivering products to the buyer. As you can see, the cost of each shipment is not insignificant, right? At this point, you need a summary of all expenses to create a tracking chart and make adjustments accordingly. We will guide you through the process below:

• Determine packaging costs: Use the table below to see how much you will spend on packaging:

• Other additional charges during shipping:

• Finally, look at the overall figures; if they seem too high, you should change some of the options in the previous chapters to minimize costs.

6. Customs duties

If you need to ship goods to customers overseas, there’s another fee to consider: customs duties. Check with your country’s postal service or courier provider to find out what documents and procedures you need to prepare. Remember to fill in all information truthfully if you want your goods to be shipped smoothly.

The cost of customs duties depends on several factors:

• Country of origin
• Imported water
• Product classification
• Materials used to manufacture the product
• Value of the shipment

Chapter 6: Strengthening Transportation Strategy

As your business grows and the number of orders coming in daily from your website increases, you’ll need solutions for storing new inventory. Expanding your warehouse is the most common solution; you can adjust the size based on customer demand and product characteristics. Alternatively, renting a third-party warehouse is also convenient, as the partner will automatically receive orders, pack, and ship the goods for you.

If you choose the warehouse rental option, you can enjoy several benefits:

• Cheaper shipping costs: Because these warehouses are often rented out to multiple companies handling large volumes of goods, the prices are more favorable. Additionally, since they have contracts with major shipping companies, you are usually not limited by delivery distance.
• Short shipping times: Because the third-party system is highly professional, goods are delivered very quickly, which both satisfies customers and reduces your warehousing costs.

But of course nothing is perfect, and such warehouse rental services often have some limitations:

• Branding packaging is difficult to implement: Goods are stored in a third-party warehouse, packaged and shipped by them, making it challenging to print your brand information on the packaging. Of course, you could prepare the packaging yourself and give it to them, but that would only add time and cost.
• Additional costs: The service provider will handle most of the transportation process for you, and of course, they will charge a fee for each step, such as loading, unloading, packing, etc.

Chapter 7: Some service providers for reference

With the aim of providing you with detailed guidance on the shipping process in online businesses, we will share some additional information about service providers.

1. Provide packaging

Box available:

• ULINE
• ValueMailers
• Fast-O
• Papermart
• eBay

Custom box:

• Custom Boxes Now
• Any Box Today
• ULINE – Colored Boxes
• Box Geek
• Custom Boxes and Packing
• InstaBox (Canada)
• Packlane

Envelope:

• Envolopes.com
• ULINE – Envolopes

Stickers:

• Sticker You
• Giant Sticker
• Sticker Mule

2. Providing printing services

• Shopify: You can find many unique print templates on the Shopify app.
• OrderCup: $20–$50 per month
• Stamps.com: $15.99 per month
• Shippo: $0.005 per sticker
• ShipStation: $25 – $145
• ShippingEasy: Free or $99 per month for higher options.
• ShipRobot: $10 – $50

3. Shipping company

• USPS Business Gateway
• Canada Post Venture One
• UK Royal Mail Online Business Account
• Australia Post Business Credit Account
• FedEx Business Center
• UPS Business Solutions
• DHL Business Account