Aah, yes, shipping - the not-so-sexy-old-school-offline-dirty-work that gets done somewhere in the shadows of eCommerce and no-one really talks about. There are no fancy metrics or online tools to help you optimize this critical part of your business. Despite the fact that shipping accounts for up to 40% of the costs of running an online shop! Here is what I would have wanted to know before opening mine...
About a year and a half ago I started building an online shop.
I had a clear idea about how it should look like and what kind of audience it should attract. I even had the product ready, designed and manufactured from scratch. It received brilliant feedback from anyone I used as a guinea pig. First marketing activities already lined up, everything under control. The rest – duck soup, just a matter of materializing the plan refined to sweet perfection in my head. There was no crucial detail I was missing. Just execute and start selling.
Or so I thought.
I had been shopping online for quite a bit myself (…guilty…) so I did know what makes a great online shopping experience. I knew how to run a business and keep customers happy from my previous endeavours. And I even must have got the marketing “thing” right, because my first orders started rolling in much faster than I expected.
Which is when I realized I had overlooked a major part of my whole eCommerce setup – the shipping!!
Shipping, the not-so-sexy-old-school-offline-dirty-work
How could I have possibly forgotten to plan better for the costs and problems related to delivering the orders?
Everyone seems to be selling anything online quite successfully. As a customer, you go online, find what you want, pay and for a modest amount, or in most cases for free, you get your order shipped home. Nothing to it.
Shipping is kind of a hidden part of the eCommerce business. It happens somewhere behind the scenes. The not-so-sexy-old-school-offline-dirty-work that gets done somehow somewhere in the shadows and no-one never really talks about it or asks any questions.
Like in the Narcos!
There are no fancy metrics or online tools to help you optimize this critical part of your business. Despite the fact that shipping accounts for up to 40% of the costs of running an online shop!
So, I too… forgot. Forgot, that I had to actually ship the orders when they come in!
Sending packages is not rocket science, and since there is a post office around every corner I was not worried. Every online shop I ever shopped at made it seem like just an afterthought – the shipping part really seemed so simple and redundant that I never even thought about it, until I had to!
I had to learn the hard way the reasons why shipping can mean the difference between success or failure for an online shop.
Working with couriers can be tricky
It was clear from the beginning that the slow and crowded post office was not the solution. I needed professional and reliable partners that would enable me to scale up the business.
But, there were some interesting lessons to be learned:
- If you do not have a contract with a courier (the case with most online shops when they start), the shipping rates you get are ridiculously high. You start wondering if they ship your packages by limo or pampered-up in business class.
- To make a contract with the couriers you must stride with the patience of a turtle. If you want to ship with one of the A-players, be ready to fill in and sign tons of documents.
- In case you manage to make a contract, something not that easy since in the beginning your shipping volumes will be tiny, the rates are still high.
- Forget about getting any sort of automation in your shipping process. Be ready to manually enter each and every one of your orders. You have to gather more turtle patience in case you want to get the courier to agree to automate your label printing – which you do, unless the possibility of doing lots and lots of data entry was your main motivation for getting into the eCommerce business.
- In case you manage to convince the couriers to offer automated processes – get ready to hire some developers to do some fancy “integrations”, because what is supposed to be a ready-made solution by the courier… well… it is not.
- If you want to allow your customers to seamlessly return orders, you are out-of-luck. No courier offers any kind of tools to manage returns. Your returning goods will be left at the mercy of your customers and the cheapest possible transport means they can find. Just imagine Homer Simpson handling your package. Yes, it’s entertaining, but not when it’s your package!
- If you want to ship worldwide, you will certainly need to work with more than one partner. So repeat steps 1 to 5 for each new courier selected.
You know what they say – the simple and seemingly effortless things are the most genius ones. And this is true. But what they are not telling you, is that it takes more determination and effort than assembling a Patek Philippe to actually come up with those easy, seamless and intuitive solutions.
And what I found out was that in order to efficiently and seamlessly manage my shipping, it took quite a lot of assembling (read: headache, money and time). And I was maxed out on all three of those!
Shipping policy hurdles
In addition to the need for external help from couriers to deliver the orders, it became clear that there were also internal issues that needed addressing. Shipping policy related issues.
Who knew shipping policy was not just something you copy-paste from a competitors site! For most companies that process online payments, having a genuine shipping policy adapted to the unique characteristics of their business is a must.
If I would have the chance to rewind time and start again I would really appreciate that someone would give me the following advice regarding this “insignificant” part of my online shops’ setup:
1. Considering shipping already when selecting products, efficient packaging saves your margins and the planet.
It might seem a bit ridiculous to think that the product selection process should somehow take into account the delivery to your end customers, but – it should!
When you sell online, you are not only selling your product. You are selling the ease to shop from your store, you are selling your shipping packaging and, you are selling the way you deliver that order to your customer’s doorsteps. And all your customers consciously or unconsciously know that.
Let’s leave aside the cases where considering shipping costs will be an obvious deliberation, like pianos vs. mobile phones. Instead think about the most basic, simple, fundamental everyday item you absolutely need – shoes. Shoes are a great item to sell online and the shops that have dedicated to this niche do extremely well. But shipping them can be tricky.
When talking about shipping rates we are used to talking about weight and kilograms. But what I, like many others, did not realize in the beginning of my online business was that when couriers say kilogram, they don’t really mean kilogram. They actually mean volumetric weight!
And a shoebox is just the right volume, that depending on how you package it for shipping, can move up a shipment size and a cost bracket (or 2), without you even realizing it.
That’s the “beauty” of volume to kilograms conversion. And when you are starting your business (or growing it, or ruling it for that matter) you do not want to overpay because of shipping empty space. You need to be in control.
No matter what you are selling – think about how it is packaged and how you will be packaging it for shipping. Think about how you have to pack when you have an order with multiple items. Try to make the packaging as economic and small as possible, because in the end it’s not about the kilograms, it’s about those sneaky cubic meters.
If there is more than one packaging option from the manufacturer – if at all possible, choose the least bulky one. If you are in a position to design your own packaging – try to minimize it as much as possible. Less is definitely more in this case.
And the best part of all this packaging optimization?
Adjusting for cost and efficiency automatically also means you are producing less waste. And this is something you can feel truly good and fuzzy about inside!
2. Warehouse location still matters.
The internet, globalization, the surge of work-from-where-ever-you-want mentality – it all has us believe that it really does not matter where you run your business from. Which is true, kind of. If you are willing to pay extra for it.
Remote areas will usually provide higher quality of living at a cheaper price point. But they also will increase your shipping costs because couriers will charge a supplement to pickup and deliver to these locations. Additionally, your delivery times will certainly be always 1 or even 2 days longer than when shipping your products from a location easily accessed by couriers.
Also, shipping regionally will help you save huge amounts of money, so the best location for your stock is close to where most of your customers are living. Even when your customers are all over the world, being close to a major international airport will immediately save up to 1 day on your deliveries (not to mention the euros from your shipping bills).
3. Restricting your customer base geographically might become a necessity without special agreements with the couriers.
Surely one of the main lures in eCommerce is the promise of instant infinite world wide market. Thus, it was a very frustrating realization for me that some destinations, even some that are not geographically that far, can be too expensive to ship to.
Even once you have gone through the painstaking process of contracting slightly tolerable rates from your shipping providers – be ready for the add-ons and extra charges and small print regarding “remote” destinations.
Just to be clear, “remote” often refers to any location more than 20km from a major city. It is not the Sherpas milking llamas in Nepal you need to be weary of. Its those troublesome hipsters that decide to move to a scenic lake, 45 minutes from the city limits, that won’t stop buying from your internet shop!
Despite all the hype, the world still is not completely global. Some of your clients are going to be living in areas where you are going to have to ship to, while losing money. If this is not compatible with your business planning, then restricting delivery locations might become a necessity.
4. Set up solid shipping processes and analytics to facilitate faster growth of your business
When you are just getting started this part might not seem relevant, since everything is still simple and clear and manageable. But things escalate quickly. Especially if you want to be dedicating your time to business development and marketing (which you should!), instead of just wrapping up heaps of boxes.
It is important to get this right from the start because it will enable you to grow faster and stop you from being stuck with mundane fulfilment chores.
So, think about a solid step-by-step process to get your orders on the way to your customers. Develop it in a way that can be delegated with ease.
Delegating is the key that will enable you to grow your business. No one ever did it alone. If you keep this in mind from day one, you will be able to set up operations that do not rely on your person to function properly.
Try to also gather as much data as you can about different locations you ship to, the size of your shipments (both monetary and physical), failed delivery and returns rates, etc. All this will make it possible to pinpoint areas that need to be improved and give you a valuable advantage on the competitive online shopping scene.
In the end, the only physical contact you have with your clients is via the delivery process. You do not want to leave this to chance.
The truth is that the struggle to set up a cost efficient, clear and effortless shipping routine for my online shop turned out to be a much more demanding task than I had expected.
I was hoping for a turn-key solution, something that would do what Stripe had done for payments or Shopify for making online shops, but it did not exist.
Well, until Outvio!
If there would have been a service like Outvio when I started it would have saved me a lot of headache and money. I wouldn’t even be aware of these problems nor have the insight to tell you about them (well, I guess there was something positive about it after all:).
Online business should be global and seamless, not only for the giants, but for everyone. If you agree, then join the revolution and forget about everything I just told you – these problems will never affect you!