Shipping Carriers for eCommerce. Which One to Choose?

Although eCommerce and online business, they cannot exist without offline services.

Logistics in product delivery is one of the most important processes in online trading as it affects all customers. Moreover, it is the final stage of the purchase and, even if your online store operates perfectly there are some problems at the stage of delivery, your customer will remember these problems much better than general store service. As a result, their impression of your online store will leave a lot to be desired.

It’s not really fair because the shipping carriers service is not your business, but the customer is not interested in this fact. Therefore, for the online stores which deal with physical products, it is very important to choose the right shipping company and organize the delivery process in the most efficient way.

What is eCommerce Shipping: How to Choose a Shipping Carrier

1.Internal Logistics Service. Creating an internal logistics service can be beneficial for a business, but at the same time, it brings certain risks. For example, the goods that are at the delivery stage will not be insured, respectively, in the event of damage or loss of the product, the financial consequences fall on the company itself, and the customer will also have to bear the responsibility to the customer. The insurance of goods for the period of delivery has much more advantages than the rejection of it. Failure leads to potential damage to reputation and an increase in the cost of replacing goods to customers. If customers are not sure of a company’s ability to deliver the goods safely, they will not order from the company again. Having an internal shipping and insurance service can help protect the relationship between the company and customers, as well as prevent potential damage to the brand’s reputation.

2. External Logistics Service. The advantage of the external logistics service is the transfer of responsibility from the company to the provider. However, in this case, insurance is vital. External delivery can contribute to the rapid expansion and further development of the business, but the degree of control over the distribution of orders is significantly reduced. This can lead to negative consequences for customers if the provider’s standards decline.

When choosing a logistics method, you must first estimate the delivery volumes. If the content of the internal logistics service – transport fleet, personnel training, the cost of control and maintenance is not cost-effective, it makes sense to decide in favor of an external partner. If such a decision is made, it is necessary to think about how to control the work of the external logistics service, since the reputation of the company will depend on the partner’s activities.

There is also the option of combining the two services, however, it only makes sense when a company has an internal logistics manager who controls the work of the external partner, the correct distribution of orders, delivery timeliness, monitors the company’s reputation, and also ensures constant communication between the parties concerned.

No Shipping Carriers Service is Perfect

There are huge corporations in the shipping business. Cargo delivery includes complex business processes that involve people, equipment, transportations, etc. It can’t always be ideal. Problems and deviations from the standards and terms take place from time to time.
Each provider has pros and cons, so it is better to learn the working conditions of several companies in order to have a choice. Of course, you can offer all major delivery services in your online store but it is not effective.

Most likely, your clients do not have much experience with different shipping services, so it makes no sense to ask them to choose one. They do not know which option is the most beneficial for them. Moreover, the choosing process may confuse your customers and make them stop the checkout procedure by opting into cart abandonment instead.

It is recommended to offer one primary shipping option and possibly another secondary one. The main task for the merchant is to receive favorable prices and good discounts for shipping services.

Short Overview of the Key Players

US Postal Service (USPS)Can you imagine that this company was founded in 1775 and it has been providing postal service in the USA for more than 200 years?
For many people, this company is associated with the delivery of usual Christmas cards and letters. But it is not true. USPS is able to deliver all types of items, and it has the cheapest proposition for parcels under 2 lb.
If the item has a very small weight (less than 13 ounces) USPS is no doubt the best carrier to do this job. It also provides First Class Mail for parcels up to 13 ounces which is a very attractive proposition for delivering documents and lightweight parcels. The company provides free product collecting and Saturday delivery at no extra charge.
Despite all the obvious advantages, the feedback of our customers indicates that this company is not so reliable. Tracking shipment and delivery time is not always precise. In addition, if anything is lost or there are complaints from customers, their process to deal with problematic situations is not the best.

UPS (United States Parcel Service)This company is the leader in delivering online orders. It is good to use UPS for parcels that weigh 2 lb. and more. The company can guarantee quick delivery and has some convenient features such as SMS notifications which allow receiving all desired information about the delivery.
It is important to build a good relationship with this company to have special prices and conditions. Efficient negotiations can give a lot of advantages, so do not hesitate to contact your UPS account manager.

FedEx (Federal Express)FedEx is the company with a perfect reputation. The delivery service can cost more than with UPS for special services like 2-day quick delivery, but the company can provide better prices when ground shipping is needed.
FedEx offers many opportunities on fedex.com which allows you the ability to save money. If you need special delivery conditions such as extra security for packages or temperature control during transportation and storage, FedEx is your answer.
Shipping Carriers Rates Comparison
It is not easy to compare the shipping rates of different carriers because each company uses its own algorithm calculations. Some of the factors which influence the prices are shown in the chart below.

The shipping prices are calculated based on the size and weight of a parcel. According to the algorithm, the cost for sending a lightweight product with large dimensions (for example, not so small but light bag) is not as beneficial compared to the products which weigh more.

As you see from the table above, when you choose the shipping company, it is very important to check the DIM Weight. In order to determine what you need:

• Determine the volume of the parcel (V = L x W x H) and then divide the result by 166. (It is a standard formula which is used by FedEx and UPS for domestic Ground shipments);
• Round the result to the next higher number – it will be your DIM weight;
• Compare the DIM weight with the real weight of the parcel;
• The higher weight will be used in calculations.

It is not easy to make the right choice from a rational point of view. Moreover, don’t forget about the client’s desire. The main thing is to understand what is in the first place for the client in the order of importance:

• Price (the client prefers to save money). In this case, you can choose the company with the cheapest price for delivery;
• Accurate delivery times. In this case, it is better to choose the most reliable company;
• Product safety. Choose the company which can ensure packages and provides special conditions for storage such as temperature control, damage protection and so on.

Your clients are not always interested in the delivery price. That is why you need to be flexible in your service.

How do I start an eCommerce Delivery Business

Implementing an effective delivery strategy is an important step towards optimizing online business. While most brands use a simplified approach to delivery – for example, they offer free delivery in all directions – the most successful retailers apply integrated strategies that distinguish them from competitors and increase profits.

But, although the delivery system can be a powerful tool for brand positioning, it is important to make sure that the company is able to provide it. This will require coordination between several departments within your organization: the marketing team, the courier service, and some others. Developing a delivery strategy in eCommerce ensures that all participants in this pipeline understand both the whole process and their role in its framework.

The first step is to find the right people.

• Marketing. The marketing team must provide delivery information to customers, and they may use promotions such as free shipping or flat-rate delivery. This will attract people to the site and increase the cost of the order.
• Web design and development. This team must control that the correct delivery options are displayed to customers at the right time and that the offers are clear to visitors.
• Implementation. This team must ensure that orders are collected, packaged, and shipped accurately and on time.
• Customer service. This team needs to know how the delivery strategy affects customers at every stage.

When you decide on the main teams that should be involved in developing a delivery strategy, it’s time to decide what you want to accomplish with this strategy.

• Increase in conversion. Offer options and rates that customers are interested in. Delivery options can have a significant impact on your conversion rate.
• Raise the average bill. Offer promotions that encourage people to buy more. They include an average check limit for free delivery, expedited delivery for an order of a certain amount, etc.
• Expand your market and target audience. Offer delivery to new areas.
• Cut costs. Make adjustments to the implementation processes and delivery services. Often, major carriers offer alternative delivery services that will help to reduce costs while maintaining a high level of service.
• Increase work efficiency. Make sure your teams have the necessary information to make the right decisions about choosing, packing and sending orders.

Some more important points which can help to create a profitable delivery strategy:

1.Show delivery time
Modern customers are impatient, they want to know exactly when their purchase will be delivered – especially if the warehouse is located far away. Offers such as “next day delivery”, without specifying whether the product will arrive tomorrow, on Monday or the day after it is shipped from the warehouse, should become a thing of the past.

2. Offer free shipping under certain conditions.
Increase the minimum order price for free shipping. Run a split test to find out how this will affect sales. You can also offer free shipping for small items or a specific category.

3. Launch promotions
We all love promotions and discounts. For example, you can give a departed customer a 20% discount for the first order. Or the marketer can offer free shipping when the customer orders the most expensive products in the catalog. There are many marketing combinations that encourage customers to spend more money.

4. Offer expedited delivery for an extra charge
It works easily. You go to the site of the store, see the offer of free delivery and arrange it. But when you pay you will find out that the goods will be delivered to you for free only in 10-14 days, and a small amount will speed up the delivery two or three times. Amazon is the master of this technique. The corporation deliberately keeps the shipment of goods after the purchase in order to increase the attractiveness of paid delivery.

So, what can we recommend to merchants?
It is essential to plan the shipping process in advance and compare the prices according to the type of products being sold. You should have a clear understanding of your planned sales volume, shipping margins and conditions of all possible carriers.