You must have been excited about the idea of selling online. Reaching out to customers with your products can be an excellent experience. While the cherry on the cake lies in watching those customers come back for another purchase. The pleasures of doing online business are many. Yet many online sellers quit within six months of getting started. Wondering why? The answer lies in the cost of shipping.
A big part of eCommerce is order fulfillment. Right from the time you receive a customer’s order, the order fulfillment process begins. It is the subsequent steps you take that complete the order fulfillment process. Nonetheless, the success of your online store lies in how well you complete the order fulfillment process.
The Order Fulfilment Process
As a seller, you pick, pack, and ship your products. You also send your customers notification from time to time so that they know that their package is moving. Once your customers receive the package, they might have opted for Cash on the delivery payment method. In this case, they will pay the money to the delivery representative.
Now the next chain of activities will start. Since the delivery executive collected the cash, they will then take it to the courier hub. Upon receiving the payment, the courier hub will then keep an account of the cash and then make a deposit into your account; Alternatively, if you’re shipping via a third party logistic platform, the courier will send the money to the 3PL. It is after this that the 3PL will then go onto depositing it in your account.
The point is that order fulfillment can be a tiresome task, but no matter what your business has to go through it. It requires an investment of your time and money. And even the slightest disruption to it can cause your entire fulfillment chain to break. However, loss of customer experience is not the only loss you face with the disruption of your order fulfillment process. You lose unnecessary money, that could have been otherwise utilized with proper order optimization process.
The Cost of Shipping and Optimization Tips
More to this, if you are a big seller, you might be handling more than a hundred orders a day. Regardless of whether or not you store the inventory, a share of your earnings is passed onto the supplier of your goods unless you’re making everything from scratch where the cost of raw materials, labor, etc., are given away.
Then comes giving away money to the selling platform you’re using, your resources such as picking, packing, and labor, if you’re using any. In the end, it is the final shipping costs. Shipping costs are something that gives to your courier provider or shipping platform to take a customer’s order from your door to the customer’s doorstep. While this is an essential part of the fulfillment process, it also ends up eating into the profits of many sellers.
Let’s take a look at the cost of shipping for online business in more details-
Package Dimensions
If you’ve always thought that the dimensions of your package have nothing to do with your business, you’re wrong. Maybe you’ll be shocked to know that your courier company charges you on the basis of your package dimensions.
So, no matter if you’re shipping a half kg product, but if you’re packaging it in a 5 kg box, the courier company will charge you for that. The base on which he courier companies calculate the costs is known as the volumetric weight.
The volumetric weight is calculated by multiplying the length, breadth, and height of the package along with dividing it using a common factor. For most companies, the common factor is 5000.
Volumetric Weight = (Length * Breadth * Height)/ 5000
Therefore, make sure your packaging is optimized as per the real dimensions of your product. This will save you from paying unnecessary shipping costs.
Package Weight
The weight f the package also plays a crucial role in deciding your cost of shipping. In order words, while the courier company charges base don the volumetric weight most of the time, they also pay attention to the actual weight.
This means if you have a product that weighs 3kgs but is packed in a box of smaller dimensions, the courier will charge you based on the order weight. While you can do nothing about it, the weight of the product adds up to your cost of shipping.
To save yourself from this burden, you can do either of the following things-
- Choose a line of business with lightweight products. For example, apparels, jewelry are all lightweight with lower shipping costs.
- Ask your customer to bear the cost of shipping. If you’re into machinery or some heavyweight products, you can charge your customers for shipping. Alternatively, you can include the shipping costs in the product price itself. But, keep in mind your competitor’s price as you adopt this strategy. This is because customers are always looking for cheaper options.
Shipping Destination
Based on your shipping destination, you are charged for courier services. If you’re shipping to a far off location, shipping rates will be high. Therefore, your overall cost of shipping will increase,
The point is your customers can order from anywhere if you claim that you can deliver to their location. While this is a good thing for your business, it also raises your shipping costs. However, you can optimize these by-
- Partnering with a 3PL that can store products in their warehouses that are near your customer’s location. Therefore, you will incur lower shipping costs.
- Alternatively, you can opt for a low-cost shipping service or courier company. Check the shipping rates of different courier companies before you ship with any one of them. Then choose the one with the lowest shipping costs.
Packaging
Like we stated earlier, packaging can make or break your business. You have to choose the perfect packaging for your product. This is so that you don’t spend more and make your cost of shipping rise. At the same time, your products are not under packaged and damaged in transit.
- Read and research the kind of packaging material suggested for your line of goods.
- Selling delicate and fragile products can cost you more since they require fillers and multiple levels of packaging to keep them safe.
- Outsource your packaging to a 3PL so that they can do it for you at the lowest costs.
Delivery Speed
If you’re delivering products the same day or providing an expedited shipping option, it is bound to cost you more. While this is an excellent option for your customers, it leaves you with a higher cost of shipping unless you ow your delivery fleet. Here’s what you can do-
- Charge your customers for expedited shipping. Provide standard shipping free of cost and charge a few bucks for faster shipping.
- Partner with a shipping company that provides you faster delivery att he closest costs.
- Start a membership for your customers. In this membership, they can pay a cost for a year and avail expedited shipping throughout. For example, Amazon Prime is an excellent membership for faster delivery.
Product Costs
There’s not much that you can do about product costs. They are the fundamentals of your business. Moreover, it is what you’re selling to your customers, so these costs are fixed. However, you cant try to reduce these by-
- Search for a local manufacturer or supplier for your online business. Purchase more products from them, which will lower the per-product costs.
- Alternatively, switch to a dropshipping business model, where you don’t have to manage inventory at all.
- If you’re manufacturing on your own, buy raw materials from low costing suppliers. Research well before you find the one for your business.
Return Orders
Return orders are a nightmare for any eCommerce business. But, they are inevitable and help you keep going in the eCommerce industry. While you can’t stop taking returns entirely because it damages your customer experience, you can-
- Specify clear policies around returns. For example, specify which products can’t be returned. These can be cosmetics, innerwear, etc. This way, your customers will make a purchase mindfully.
- Partner with a courier company that helps deliver efficiently. Since customers return orders that are damaged, your cost of shipping increases. With a reliable shipping partner, your package is delivered with care.
- Ask for shipping insurance from your courier company. Therefore, if the package is damaged in the transit and the customer wants to return the product, your costs are covered.
How Does a 3PL Reduce Your Cost of Shipping?
The costs of shipping are undoubtedly high. But, if you outsource your order fulfillment to a third-party logistics provider, then all of this becomes easier than ever. A 3Pl helps you optimize your shipping costs in many ways.
Since they are the experts in order fulfillment, they present you with the best solutions as per your requirements. For example, Dash101 is a shipping platform that helps in delivering products to over 26000 Pincodes in India. It takes care of your order fulfillment process while helping you ship at the lowest costs.
Since the cost of shipping also depends on your packaging, Dash101 helps you stay updated with packaging best practices. By staying aware of these, you can package your products in a way that doesn’t land in a weight discrepancy. This helps you save time and money.
Moreover, 3Pls help you streamline your online business and reduce the cost of shipping in the following ways-
- Ship to 26000+ with a 3Pl like Dash101 at the lowest costs
- Maximize your reach no matter how small do you start without worrying about costs
- Plan to scale your business and take it to the next level with multiple courier partners
- Provide customer experience at a reduced cost of shipping. Deliver delight as you deliver your packages
- Reduce the risk of return orders with the best in class shipping, thus reducing your return to origin costs
Conclusion
Shipping costs can be a massive hassle in an online business. But it doesn’t have to be this way with the right shipping solution. No matter how many orders you’re selling in a day, if your shipping strategy isn’t optimized, you are losing out on money without even realizing it.
Save yourself from making such mistakes by opting for a 3rd party logistics provider. Reduce your cost of shipping and enjoy an unparalleled shipping experience. Watch your customers fall in love with your brand as you make profits at the same time.
