To Beat Ecommerce Rivals, Know Your Shipping Options
By asking yourself these five questions, you can better understand what your company needs and how to stay competitive.
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Researching the best way to ship your products might not top of mind, but it should be. But being complacent about shipping is one of the biggest mistakes an online retailer can make, says Jason Malinak, an accountant in Colorado Springs, Colo. After advising his wife on her own Etsy venture, Malinak wrote the e-book Etsy-preneurship (Wiley, 2012) to help Etsy sellers run their businesses. Taking time to research the best shipping options for your business will go a long way toward "finding the sweet spot between maximizing profits and keeping your customers happy," he says.
When calculating your shipping budget, keep in mind that a new ecommerce business could allocate up to 10 percent of its sales to shipping, says John Haber, CEO of Spend Management Experts in Atlanta. However, shipping can also provide a competitive edge if the business can deliver its products more quickly and inexpensively than its rivals, Haber adds.
To stay competitive, here are five questions you should be asking as you research your shipping options:
1. Do you have the right packaging?
Shippers bill based on the dimensional weight, not the actual weight, of a package, says John Haber. Dimensional weight is calculated using a package's length, width and height to take into account how much space a package will occupy during transportation, he explains. A package's actual weight and dimensional weight can vary significantly, Haber says, noting that a package that weighs 5 pounds can have a dimensional weight of 15 pounds.
Don't forget to factor in the weight of the box and packing materials, says Hal Altman, president and co-founder of Motivational Fulfillment & Logistical Services in Chino, Calif. "The heavier a product weighs, the more it costs to ship." Take your packed product to different shippers who can weigh your packaged product and start a conversation about pricing options, says Altman. As you cost compare, you can ask about lighter, less bulky packing alternatives.
2. Do you qualify for any deals or services that can save you money? The most economical option will vary depending upon your business and your customers' needs. Different shippers offer special programs for small businesses (for instance, the U.S. Postal Service offers discounted rates, free tracking and no surcharges for delivering to a residence.) Determine what your usual monthly needs are and set up a meeting with shippers to learn more about how they can help your specific needs.
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3. What is your biggest competitor doing? While simply copying competitors' shipping policies is a bad idea, it's still important to know what they offer so you can meet or exceed it, notes Haber. Sticking with standard ground shipping, which delivers packages in one to five business days, might not make sense if all of your competitors offer same-day or next-day shipping. If the competition provides free shipping you may have to take a serious look at doing the same, he says, even if it's only for premium items or specific products that will keep you competitive.
4. What do your customers want? How fast do your customers want to get their packages and are they willing to pay for speedy deliveries? Consider reaching out through an online survey to ask specific questions and look at what your competitors offer. Additionally, make sure to study which services your customers use the most. For a broader perspective based on existing research, Haber recommends checking out comScore, which analyzes consumers' online behavior, including shipping preferences.
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5. What unplanned shipping-related costs can you anticipate or avoid? According to Haber, perhaps the biggest surprises come from shipping surcharges. Some of the biggest shippers can impose up to 300 different surcharges on deliveries, so it's crucial to find out from companies such as UPS, FedEx and others exactly which fees will apply to your packages, says Haber.
Ensuring that addresses are correct can also save you time and money since shippers levy surcharges for address corrections. Consider asking if your shipper will review and correct addresses before sending. Many offer this service, albeit for a fee.