When ecommerce companies are so focused on offering a compelling product selection and online storefront, shipping can sometimes be an afterthought.
Ecommerce shipping covers the entire process of getting products from the virtual shopping cart to the customer’s doorstep — which is no small feat.
Getting shipping right impacts two key business areas: customer experience and cost control.
Customers expect timely, reliable deliveries and to remain informed regarding delivery status. What’s more, some buyers make purchase decisions based on shipping cost and expediency, turning shipping into a competitive differentiator.
Consequently, ecommerce shipping standards are constantly evolving. According to a survey by cloud services provider Bringg, just 35% of businesses offer same-day delivery, but 99% plan to offer it by 2025.
Shipping costs represent a substantial expense for ecommerce businesses, especially those offering free shipping. Choosing the right carrier, packaging, and ecommerce shipping options are critical business decisions that touch the bottom line.
Types of ecommerce shipping models
Online businesses might offer one or more shipping levels to let customers choose between expedient or cost-effective shipping.
Two-day shipping is a great option for rush orders that aren’t absolutely critical. For example, a last-minute gift purchase or emergency back-to-school supplies.
Popularized by Amazon, free two-day shipping is a perk offered to Amazon Prime members on eligible items, and has become an industry standard among top ecommerce companies — which the Wall Street Journal dubbed “The Prime Effect.”
A survey by Voxware found that 48% of consumers expect ecommerce companies to offer this perk.
Same-day delivery requires maintaining well-stocked local warehouses strategically located close to major metropolitan areas. These warehouses stock a selection of high-demand products, allowing businesses to fulfill orders rapidly without the need for long-distance shipping.
Rapid order processing efficiently routes orders to the nearest local warehouse for fulfillment. This expedited delivery model is ideal for everyday essentials such as groceries and perishable items.
Typically used for the holiday season and last-minute gift purchases, overnight shipping ensures shoppers receive their purchase within the following business day after placing the order — for an extra fee.
Overnight shipping provides a solution for emergencies, such as replacing a broken gadget before an important meeting or obtaining a last-minute gift for a special occasion.
Shipping items abroad enables ecommerce stores to vastly expand their customer base. However, it’s a complex logistical endeavor involving shipping regulations, customs procedures, and taxes or import fees for each target destination.
Partner with a trustworthy international shipping carrier with expertise in navigating cross-border delivery. Businesses must also offer international payment processing to accept foreign currencies.
Ecommerce deliveries bear a significant carbon footprint — particularly last-mile delivery.
Businesses are introducing the following sustainable shipping practices to cut back on environmental impact:
Eco-friendly packaging: Items may be packaged in materials that are recyclable and/or reusable. Excessive packaging materials such as bubble wrap or cardboard can be eliminated.
Localized warehousing: Regional warehouses reduce the distance products travel and lower carbon emissions associated with transportation.
Electric vehicle fleets: Carriers such as UPS, USPS, and FedEx have invested in modernized delivery trucks that emit fewer pollutants.
Reverse recycling: Meal kit delivery companies, for example, encourage customers to return packaging materials for recycling or reuse.
Hybrid shipping combines multiple shipping methods and fulfillment processes to maximize efficiency. It may involve a combination of the following:
Carriers: A business might partner with a different carrier for domestic shipping, international shipments, and last-mile delivery.
Fulfillment centers: Businesses may operate their own fulfillment centers or use third-party fulfillment services.
Dropshipping: Businesses can partner with suppliers who fulfill orders and ship products to customers. This prevents businesses from having to hold inventory.
Grow from $1 million to $100 million
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Ecommerce shipping carrier options
Each carrier has its own approach to calculating rates and negotiating discounts with ecommerce businesses. When shipping internationally or to remote areas, it’s important to find a carrier with the coverage you need.
United Parcel Service (UPS) serves over 200 countries and territories, delivering over 24 million packages daily.
UPS is known for its commitment to time-definite deliveries, including options like UPS Ground (domestic delivery in 1-5 business days), UPS Next Day Air (one-day domestic), and UPS 2nd Day Air (two-day domestic).
The UPS shipping portal and APIs enable seamless integration with ecommerce platforms, making order processing efficient.
Depending on your location, you may qualify for free package pickup at your home or office. Flat rate boxes let you ship items of various weights at a fixed cost, which simplifies shipping cost calculations.
USPS also provides parcel return services, allowing customers to easily return items using the carrier.
FedEx is a carrier of choice for time-sensitive deliveries or deliveries of valuable items.
FedEx offers various shipping options, including FedEx Express Saver (three-day delivery), FedEx 2 day shipping, and FedEx Standard Overnight. FedEx also offers reliable cross-border shipping and customs clearance in over 220 countries and territories.
The shipping company also provides packaging solutions to protect fragile or high-value items during transit.
DHL is one of the most trusted carriers for international shipments. DHL offers international express deliveries and freight forwarding services.
DHL also offers a range of time-definite services, such as DHL Express Worldwide and DHL Express 9:00, which guarantee delivery on specific days and times to meet various shipping needs.
The company offers carbon-neutral shipping for U.S.-based deliveries, too.
Costs associated with ecommerce shipping
The cost of shipping isn’t limited to the fees carriers charge. Beware of packaging costs and any applicable import duties when shipping overseas.
Effective packaging protects products during transit while minimizing shipping costs. Packaging costs can include the cost of boxes, envelopes, and cushioning materials (bubble wrap, packing peanuts, air pillows).
Custom packaging, such as branded boxes or inserts, comes with additional printing costs but helps differentiate the business and create a memorable customer experience.
Delivery speed costs.
Carriers often charge higher fees for expedited shipping. Ecommerce businesses must decide if and how much of these costs to pass on to the customer. Premium delivery services like next-day or same-day shipping come with higher costs due to urgency and priority.
Online stores can negotiate carrier contracts with the best rates for certain delivery speed options, provided they have a consistent shipping volume.
The costs of shipping internationally add up quickly. Here are the costs ecommerce stores should beware of:
Shipping carrier fees: Each carrier calculates international shipping fees differently. Carriers often categorize countries into shipping zones based on geographical proximity, with a flat rate or fixed range in each zone.
Customs duties and taxes: Most countries impose a tariff on imports. Customs officials assess the amount based on the information on the shipping label. It’s important to factor this into the total cost of shipping.
Shipping service level: Expedited or express international shipping comes with higher costs.
Bulk shipment discounts.
Some shipping carriers offer incentives to ecommerce businesses that ship a large volume of packages each month. Business owners can negotiate contracts for bulk shipments at favorable carrier rates.
The agreement specifies the discounted rates for different shipping services, the minimum shipping volume required to qualify, and the duration of the agreement.
Insurance provides financial protection in the event items are lost, damaged, or stolen during transit. While it adds costs, insurance may be necessary for high-value or fragile items.
Here’s how shipping insurance rates are calculated:
Item value: Higher-value items generally have greater insurance premiums.
Item type: Certain items are considered high risk for loss or damage in transit, such as art or fine jewelry.
Destination: Shipping to high-crime destinations raises insurance premiums.
Packaging quality: High-quality packaging may be more expensive, but carriers may offer lower rates due to the reduced risk of damage.
Top ecommerce shipping software
Ecommerce shipping management systems help businesses efficiently route and process customer orders from multiple channels, such as their ecommerce website and online marketplaces like Amazon or eBay.
Here are some ecommerce shipping solutions that integrate with BigCommerce:
Used by more than 130,000 merchants, ShipStation acts as a central hub for ecommerce shipping operations, helping businesses seamlessly connect with various marketplaces and ecommerce platforms. API integrations enable merchants to place important orders from ERPs, CRMs, or IMSs.
ShipStation’s carrier partnerships provide discounts of up to 84% on shipping from UPS, DHL Express, and USPS.
Designed for high-volume shipments, ShipWorks offers on-premise and cloud solutions with order routing automation, batch processing, and barcode scanning.
Businesses can set up rules to automatically assign shipping methods based on factors like package weight, destination, and shipping service level. Users can also customize shipping labels and packages with their company’s branding.
ShipBob is a tech-enabled 3PL (third-party logistics) provider that fulfills ecommerce orders for direct-to-consumer (DTC) brands.
ShipBob operates over 30 ecommerce fulfillment centers strategically located across different regions. This enables businesses to store inventory closer to their customers, reducing shipping times and costs.
ShipBob's software intelligently routes orders to the nearest fulfillment center for efficient shipping.
Designed to accommodate businesses of various sizes, from small businesses to large enterprises, ShipHero offers integrations with carriers such as USPS, UPS, FedEx, and DHL.
Its reporting features provide insights into sales trends, order fulfillment efficiency, and inventory turnover, helping guide efficient decision-making.
With labor costs under $1.50 per package, ShipHero is positioned as an affordable solution.
International ecommerce shipping
Overseas shipping involves a complex supply chain, hence the importance of working with a reliable carrier with up-to-date knowledge of cross-border shipping regulations. Beware that customs inspections may take time and cause shipping delays.
Calculating international shipping costs.
The cost of international shipping varies widely depending on shipping distance, package weight, destination country, and more.
Carriers calculate fees according to these variables:
Package weight and dimensions: Carriers often use dimensional weight pricing, which considers the package’s size in addition to its weight. Some shippers offer flat-rate shipping for items of a certain dimension, regardless of weight.
Destination country: Each country imposes its own customs duties, import fees, and taxes — typically a percentage of the item’s value.
Shipping service level: Prices vary for standard, expedited, and express shipping.
Customs documentation: Some ecommerce shipments may require documentation to avoid delays and potential fines.
Additional fees: Additional fees may apply, such as fuel surcharges, remote area surcharges, handling fees, or insurance costs.
International shipping taxes.
Goods must go through customs clearance before entering the country. Customs officials assess the value of the goods and calculate applicable duties and taxes. These fees generate revenue and protect local businesses from overseas competition.
Here’s a breakdown of the fees you might incur:
Import duties: Tariffs are imposed on specific goods when they enter the country, typically a percentage of the item’s declared value or its weight.
Import taxes: Value-added tax (VAT), goods and services tax (GST), or sales tax are examples of taxes applied to imported goods. These taxes are often based on the item's value, including the cost of the item itself, shipping fees, and insurance.
Selecting the right carrier.
Carrier selection is a business-critical decision for ecommerce companies that ship abroad, impacting shipping prices, delivery times, and customer satisfaction.
To make an informed choice, consider the following steps:
Identify your shipping needs
Determine destination countries, average package weight and dimensions, the volume of international shipments, and the desired delivery speed.
Find a reputable international shipping carrier whose services align with your needs. Consider shippers known for reliability, global coverage, and a range of delivery options.
Compare shipping rates
Obtain rate quotes for specific shipments from different carriers. Use online shipping calculators or contact a representative for a custom quote based on your shipping requirements — particularly if you have a high volume of shipments.
Evaluate delivery speeds
Decide whether to prioritize fast delivery or wait longer for lower rates.
Review tracking and communication
Find carriers that offer real-time tracking information to keep you and your customers informed.
Consider additional services
If you require insurance or returns management, find carriers that offer these services.
Find carriers that offer API integration with your ecommerce platform or shipping software to streamline order management.
Once you’ve chosen a carrier, negotiate shipping rates and terms. Having a consistently high shipping volume typically entitles you to discounts.
Regulatory considerations in international shipping.
To ensure smooth cross-border transactions, you must be aware of regulations that impact international shipping, particularly for complex, bulky, or high-value items.
Here’s what you need to know about:
Customs documentation: This includes commercial invoices, packing lists, certificates of origin, and other required documents.
Import and export regulations: Certain items may be prohibited or restricted, and others may require licenses or permits. For example, the U.S. banned the import of Kinder Eggs because the toys are considered a choking hazard, and it’s illegal to ship chewing gum to Singapore.
Harmonized System (HS) codes: HS codes are used to classify products for customs and taxation purposes. You or your carrier must find the appropriate HS code for a product before shipping it abroad.
De Minimis values: Some countries have thresholds, which exempt goods below a certain value from taxes and duties.
Sanctions and embargoes: Be aware of international sanctions and embargoes that restrict trade with specific countries.
Labeling and marking requirements: Some countries have specific labeling and marking requirements for imported goods. Non-compliance can lead to delays and fines.
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The Final Word
While it might seem trivial, deciding what level of shipping service to offer and choosing the right shipping carrier represent major decisions for an ecommerce business that directly affect the profit margin.
It’s important to research what types of shipping options your customers want, as many purchase decisions are made on the basis of shipping speed.
This includes deciding how much of the shipping costs to pass on to customers and whether to offer expedited options. Avoid cart abandonment by displaying shipping fees alongside product prices, and provide tracking numbers so customers can be informed of their order status.