How To Create a Winning Shipping Policy for Your Online Store

Jun 7, 2024

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2 min read

E-commerce retailers compete with similar businesses in their area and the entire internet for a customer’s time, attention, and money. In this environment, every detail counts — from your website experience to your pricing and discount strategy to your shipping offer.

Shipping, in particular, can make or break your online business. Consider these stats:

Almost half of online shoppers reported that extra fees, such as a shipping fee, will prevent them from completing the checkout process.
22% of customers will drop out of an online shopping session because delivery options are too slow.
More than 90% of customers expect two to three business days delivery as the baseline, and 30% expect same-day delivery.

Shipping is a vital component of an e-commerce business. Online retailers need to get this function right in order to gain — and retain — loyal customers. More than 70% of customers say they are unlikely to return after a bad delivery experience.

Offering a five-star delivery experience ensures that your business is prepared for long-term, sustainable growth. You will need to balance the cost of shipping with increasingly demanding customer expectations.

In this guide, we’ll break down why a shipping strategy is so important for your online store, as well as how to create an efficient, streamlined shipping process that benefits both you and your customers.

Why A Shipping Strategy Is Important For Your Online Store

First, some background: what is a shipping strategy?

A shipping strategy is a plan for how you will ship your products to customers. It accounts for factors such as the weight and size of your products, the shipping costs to different locations, and the desired delivery speed.

In addition, you will need to consider your budget, your target market, and your desired level of customer service to ensure your shipping strategy is aligned with your overall business goals.

There are many moving parts (no pun intended) when it comes to creating a shipping strategy. But, putting a strategy in place can help deliver a consistent, reliable customer experience that builds trust in and loyalty to your brand.

When customers know exactly what to expect in terms of shipping rates, shipping times, delivery timelines, and packaging options, it can reduce uncertainty around the purchasing process — lowering cart abandonment rates and increasing conversions.

Ultimately, delivering on your shipping policy, sale after sale, leads to increased customer satisfaction and loyalty.

Likewise, offering a competitive shipping strategy with faster delivery times, flexible shipping options, and reasonable rates helps your business stand out online.

What should your shipping strategy include?

Ideally, you’ll revisit your shipping strategy annually as your online business grows. Your initial shipping strategy could be fairly basic and include the following sections.

Shipping methods and carriers: Determine what delivery options (e.g., standard, expedited, same-day shipping, etc.) you’ll offer. And vet shipping carriers (UPS, FedEx, DHL, USPS, etc.) to determine which you will work with based on factors like the urgency of delivery, customer expectations, and cost considerations.
Packaging: Look for packaging materials that protect products during transit and minimize the risk of damage. Efficient packaging can also help reduce shipping costs by minimizing the weight and dimensions of packages.
Shipping costs: Evaluate the cost-effectiveness of different shipping options and carriers, considering factors such as distance, package weight, dimensions, and destination. A shipping calculator can help you figure these details out.
International shipping: Develop a strategy for handling international shipments, including customs regulations, duties, taxes, and any documentation required for smooth cross-border shipping.
Delivery times: Provide clear and accurate estimated delivery times to customers. This might involve setting realistic expectations based on the chosen shipping method and carrier's delivery capabilities.
Returns and exchanges: Establish a process for handling returns, exchanges, and refunds. An effective returns policy can boost customer satisfaction.

As your business grows, you may want to revise your shipping strategy to account for multiple fulfillment centers, technology that integrates with your e-commerce store to streamline the shipping process, and shipping promotions that can lower cart abandonment rates.

Nail the basics before expanding your shipping strategy. Since your shipping costs will directly influence your product pricing, it’s crucial to understand what shipping options and rates are best for your online business before offering free shipping, reduced shipping charges, or other discounts.

Determine Your Shipping Options And Rates

An effective shipping strategy for your e-commerce business starts by determining the shipping options and rates you can offer.

As you explore your options, ask yourself these questions:

Are your products heavy, bulky, or oddly shaped? If so, you are likely going to pay more than if you are shipping lightweight, small products.
Where are your customers located? International shipping costs are going to be higher than shipping locally.
How quickly do you want your customers to receive their orders? Faster processing time and delivery cost more.
How much are you willing to spend on shipping? Figure out how much you can afford to spend while still making a profit.
What level of customer service do you want to provide? Free shipping or fast delivery can improve the post-purchase experience.

Once you've considered these factors, you can start to determine the specific shipping options and rates that you want to offer. Free shipping, flat-rate shipping, and expedited shipping are just a few shipping offers that you can use to increase conversion rates.

Free shipping

Offering free shipping for orders over a certain purchase amount or as part of a promotional campaign can attract customers and increase your average order value.

However, it can also be costly, so make sure that you can afford to offer it. Some businesses use free shipping as an incentive to join a membership or loyalty program, thereby encouraging repeat purchases and customer loyalty.

Flat-rate shipping

This option involves charging a fixed fee for all orders, regardless of size or distance. This option can simplify your shipping process and provide customers with a predictable cost.

It provides transparency and predictability for customers. But, if you’re shipping products globally, this can get expensive.

Real-time rate shipping

Also known as carrier-calculated shipping, your store will use the shipping rates of different carriers to calculate the shipping cost for each order. The shipping costs are determined based on the product weight, destination, and shipping carrier.

If you choose to use this option, you’ll get more accurate pricing information — but it’s likely you’ll need to integrate with carrier APIs.

Express or expedited shipping

Expedited shipping is a faster shipping option that delivers orders more quickly than standard shipping. This option appeals to customers who want their items sooner and are willing to pay extra for speed.

Likewise, express shipping is the fastest shipping option for next-day or same-day delivery. It’s ideal for time-sensitive purchases and urgent orders.

No matter which options you choose to offer your customers, make sure your rates are competitive with other e-commerce businesses in your industry — as well as cover your shipping expenses.

Allow for a reasonable profit margin to make sure your business is growing at a healthy rate.

Consider Shipping Zones And Delivery Times

When determining your shipping policy, another piece of the puzzle is to consider the shipping zones and delivery times according to where your customers are located.

Shipping zones are geographical areas that shipping carriers use to calculate shipping rates. The shipping costs and delivery times will vary depending on the shipping zone.

Understanding shipping zones allows your e-commerce business to accurately calculate shipping prices, estimate delivery times, and provide the right shipping options to your customers.

It can also guide your shipping restrictions to avoid import duties from international orders and other costs that can cut your bottom line. Shipping zones help you figure out the average cost to ship your products to customers and build this into your pricing.

Shipping carriers, like FedEx and DHL, charge different rates for different shipping zones, as well as provide different delivery times according to the distance each order has to travel.

Tailoring your prices depending on shipping zones lets you to balance the customer experience with profitability. You can adjust rates to remain competitive in local markets while still covering expenses for more distant deliveries.

Shipping zones also enable your business to offer appropriate shipping options based on delivery speed and cost.

For example, you can provide expedited options for local delivery where faster shipping is feasible. But, for international shipping, you may need to partner with a different carrier specialized in reaching remote locations.

Ultimately, this level of customization allows customers to set their expectations accordingly and choose a shipping option that suits their preferences and urgency.

It’s impossible to account for all possible delivery delays, but shipping information can help manage customer expectations along the way. Carriers can use shipping zones to give you expected delivery times, which you can then use with tracking information to keep customers informed about their order status.

Choose The Right Packaging And Carriers

The packaging materials that you use to ship your products ensure they arrive in one piece. But they also impact the customer experience and your shipping costs.

Packaging can cost an estimated 10-40% of a product’s retail price. In addition, 95% of customers say that packaging impacts their purchase decisions. Packaging can also impact your carrier costs — and choosing the right carrier is vital to ensuring that your products arrive on time (and in one piece).

How to choose product packaging

Ultimately, the right packaging is simply that which protects your products during transit while also being within your budget. Packaging materials must protect your products during shipping.

If your products are damaged in transit, you will have to issue costly refunds or replacements and risk frustrating customers.

Look for packaging materials and designs that protect a product without incurring unnecessary expenses. Lightweight packaging materials can reduce dimensional weight charges imposed by shipping carriers. And by eliminating excessive packaging materials, businesses can minimize packaging waste.

Make sure any packaging you choose is the right size and weight for the item being shipped. Oversized packaging not only increases shipping costs but can also lead to damage during transit, as the product may shift around inside the box.

How to choose a shipping carrier

The right logistics and shipping partner will determine the success of your e-commerce shipping strategy. This partner can help you enforce your shipping policy and help meet customer expectations as promised.

Some of the most popular shipping carriers are USPS, UPS, FedEx, and DHL. Consider your shipping zones when vetting these options. DHL, for instance, is known as a reliable partner for international shipping. USPS could be a cost-effective option for local delivery.

As you compare different carriers, look into the services available from each carrier, including standard, expedited, express, and international shipping options. Evaluate additional services like package tracking, insurance, and delivery confirmation. These add-ons can help you frame your return policy in addition to your shipping policy.

Lastly, consider carriers that offer easy integration with your ecommerce platform or order management system. This integration speeds up the process of order fulfillment and helps you improve on-time delivery.

Streamline Your Shipping Process With Automation

A well-executed shipping strategy not only improves the customer experience but also streamlines your business operations. Integrations with shipping carriers are just one way to make the order fulfillment and shipping process faster and more efficient.

Shipping software can perform a range of tasks, calculating shipping rates and generating shipping labels to managing inventory, tracking shipments, and integrating with your e-commerce platform. This type of software can help save time and improve order accuracy.

For instance, a tool like Address Validator integrates with Shopify to prevent customers from entering invalid addresses and block addresses that are undeliverable, such as PO boxes or ship stations. It automatically checks the address a customer enters during the purchase process against an address database.

Automating this small but important step ensures that packages are addressed accurately, shipping costs are properly estimated, and delivery times are quoted correctly.

Communication With Customers

A successful strategy isn’t just about the behind-the-scenes work of getting products packaged, tracked, and delivered on time and at a reasonable cost; it also requires effective communication with customers throughout the shipping process.

Amazon set a high bar with the introduction of Prime expedited delivery. Now, when customers make a purchase, they want to know when their order will arrive, how it will be shipped, and what to do if something goes wrong.

Some of this information can be included in your returns policy: a key document outlining what to do to initiate return shipping, your refund policy, and how to ship a product back to you.

Many e-commerce brands set up a shipping policy page where customer questions regarding order processing time, shipping rates, FAQs, and contact details (e.g., your phone number or email). Link to this in your website footer to make it easy for customers to get domestic shipping and international shipping information.

It’s also helpful to send automated notifications throughout the initial delivery process. Consider sending alerts via email or SMS to provide updates at the following order fulfillment milestones:

A confirmation email when the order has been received (include order number)
Shipping details when the order has left the warehouse (include tracking number)
The day before the order is scheduled to be delivered
In the event of a delay, notifying the customer of the issue
When the order has been delivered (including where or who signed for it)
A day or two after delivery asking for feedback

These messages can be sent via email or SMS and customized for your specific customer experience.

Final Thoughts

A comprehensive shipping policy is key to ensuring your e-commerce business consistently meets — and exceeds — customer expectations.

This policy identifies shipping costs, carrier requirements, preferred shipping partners, and packaging materials. And a shipping policy should instill consumer confidence in your business.

When someone visits your online store, they want to feel secure that the product they purchase will show up in a normal time period, without unexpected shipping fees, and in one piece. Your shipping policy can ensure that all these needs are met.

For your business, a shipping policy helps control costs and optimize your pricing to account for different shipping zones, speeds, and product requirements.

There are dozens of tools that can help put your shipping policy into practice. The best ones, like Address Validator, can automate elements of shipping for you. Learn more about how Address Validator can bring your shipping policy to fruition by getting in touch.

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Cici Nguyen

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Email Marketing Specialist

September 4, 2024

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3 min read

How To Create a Winning Shipping Policy for Your Online Store

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