Conquer the Cost of Ecommerce Shipping

By Julie Knudson | Posted October 08, 2015

Ecommerce businesses tend to focus primarily on selling—attracting customers, identifying the products most likely to sell—and that's perfectly understandable. But for many customers, shipping cost plays a deciding factor. Providing the right shipping options at the right price is crucial, but shipping remains a puzzle to many small business owners.

Understanding Ecommerce Shipping

In today's increasingly competitive ecommerce shipping environment, knowledge is essential. Robert Gilbreath, vice president of marketing at ShipStation, says that getting a good education on the various options—for carriers, shipping methods, etc.—is a helpful starting point for small business owners.

"Understand there are different tiers of pricing," he explains. The retail pricing available to post office walk-ins may be different than what's available online. "For your product, there might be a particular carrier that's a better choice," Gilbreath says. "If you have a wide variety of products, you might want to pick and choose which carriers you use."

If you're shipping light items—or merchandise that needs to reach its destination sooner— you may be better off choosing a method that differs from when you're shipping something heavier, larger, or less time sensitive.

Jeremy Bodenhamer, CEO and founder of ShipHawk, agrees that while small business owners may be experts at making clothes or finding vintage books, they also need to become an expert in transportation. "If you just call up a carrier with a familiar name and you say, 'Give me some shipping prices so I can ship my goods,' you're going to spend more than you need to spend," he says. And speed of delivery is just one factor that will affect pricing.

"Which boxes do you use to ship your items?" Bodenhamer asks. "How do you pick the boxes you have in your inventory?" The difference of just one or two inches can significantly affect how much each carrier charges to ship a purchase. Add weight to the formula,  and you can see why small businesses need to closely examine how they manage their ecommerce shipping.

Shipping for small business ecommerce

Ecommerce Shipping: Tackle Challenges, Avoid Risks

One of the biggest challenges Bodenhamer sees in ecommerce shipping is the vast spectrum of available options. "The sheer breadth of the industry is overwhelming," he says. "Understanding all those different options, understanding the changes in pricing, the language the carriers speak" can be challenging.

For example, what one carrier considers simply large or heavy may be classified as cargo or freight by another. One provider's priority service might be different from another's. Each aspect affects pricing as well as speed of delivery.

Complicating matters even more, many ecommerce shops lack knowledge about how the shipping industry works. "When buyers go online to buy a chair or to buy a book, they don't know all this data," Bodenhamer says of the many factors that affect the shipper's pricing.

"The burden is on the seller to answer these questions, and to understand and interpret it correctly so your bill actually matches the real-time quote that's in the cart." Shipping costs are typically part of a customer's buying decision, and while making sure the options and their prices are clear and accurate may be a time-consuming activity, it's crucial to the bottom line.

A bit of planning and legwork can help small ecommerce shops avoid any pitfalls they may encounter. "Assuming that you won’t qualify for discounts simply because you're a small business is a mistake," Gilbreath says. No longer do smaller firms need to rely solely on retail pricing from one carrier. Their shipping volume, though it may not match that of a larger company, isn't always a barrier to better pricing.

Gilbreath says that many small business operators assume that shipping and fulfillment technology is expensive, hard to learn, and hard to scale up. A lot has changed in just the past five years, and cost-saving software platforms have become largely democratized. "There is a plethora of multi-subscriptions tools available that don't require a lot of training or time to learn," Gilbreath explains.

Julie Knudson is a freelance writer whose articles have appeared in technology magazines including BizTech, Processor, and For The Record. She has covered technology issues for publications in other industries, from foodservice to insurance, and she also writes a recurring column in Integrated Systems Contractor magazine.

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