Here at eFulfillment Service, one of the common questions we get from ecommerce sellers is how to ship products to their customers. In the video below, I describe the different ways to think about this topic, including choosing the right ship method, as well as how to choose the right order fulfillment method for your business.
Let’s take a closer look
Hey there, this is Steve at eFulfillment Service, and today I wanted to talk with you about a topic that comes up fairly often when we’re talking with online sellers about their order fulfillment needs. And that topic is how to ship products to customers.
Factors to Consider with Ecommerce Shipping
There are basically two different ways to think about this topic:
One is shipping. Who is actually delivering the package from the warehouse to the customer’s door?
The other is order fulfillment. How are you handling the warehousing and pick and pack part of the process?
So, today I wanted to talk with you about shipping and the three major carriers, and how to make sure you’re cost-effectively choosing the right option for shipping. And also the order fulfillment and the various options with order fulfillment….drop shipping, in house, and outsourcing…and how to make sure to choose what’s right for your situation.
Choosing the Right Ship Method
With regard to shipping, the main three shipping carriers here are the U.S. Postal Service, FedEx, and UPS. Those are the big three for shipping direct-to-consumer ecommerce orders.
From a reliability standpoint, which is obviously one consideration when choosing your shipping carrier, these carriers are all pretty reliable. They all have very large networks and have been around a long time, and generally you’re going to find that your package will be delivered on time based on the ship method you chose.
The second option to consider is availability. For example, if you’re shipping to an Army Post Office (APO) or Fleet Post Office (FPO), you may be limited with your options, and the U.S. Postal Service generally handles those packages. If it’s a very large order, it’s a wholesale order going to a retail customer that’s a pallet, then you cannot ship that via Home Delivery by FedEx or UPS, so that would have to go freight. So today, I’m primarily referring to shipping small parcels direct to consumer.
With FedEx, UPS and USPS, they are again comparable from a reliability standpoint. From a cost standpoint, though, it can vary quite a bit depending on a few different factors….
How far away from your warehouse are you shipping?
Actual Weight of the Package:
Is the actual weight 2 pounds or 10 pounds? It would potentially impact the most cost-effective carrier in those cases.
The Dimensional Weight:
How big is the package? This is important, and it’s becoming increasingly important because, for example, USPS has different dimensional weight rules than FedEx and UPS. If it’s a very large box but is low weight, then you may find that USPS is more cost effective.
Using Automation to Determine How to Ship Your Products
One way to handle all of this from an automation standpoint, or a software standpoint, is to use tools, like ShipStation, which is a great one, and there are others that are comparable out there, but what they will basically do is….
- Allow you to get an order from your ecommerce store
- Pack up that order
- Confirm what the actual weight is, the dimensional weight, and the destination
- Enter all of that into ShipStation (or a similar tool)
- It will come to you with the available shipping options
- From there, you can automatically choose the most cost-effective one
That all happens after the fact, after the order has come through your cart and you’re able to pack it up and confirm the lowest-available rate.
On the front end, while your customer is actually checking out, if you’re looking to charge them a best rate, or a live rate scenario where the shipping is totaled based on the products that they’ve entered in the cart, it becomes a little bit tricky, particularly when dimensional weight may be a factor.
Most shopping carts allow you enter at least one package size that you’d likely put the order in, but it’s not a perfect science. Maybe the units don’t actually fit in that box. So I generally recommend monitoring your order history within the shopping cart, and just make sure that whatever formula you’re using, especially if you’re looking to calculate live rates as your customer’s checking out, that it makes sense. But after that, it becomes easier using a tool like ShipStation to confirm the best-available rate.
The other thing to consider is obviously speed. For example, First Class Package Service from the Postal Service may not be as fast as, say, Priority Mail. In most cases, it isn’t, especially if it’s shipping a longer distance. And then you obviously have expedited options to consider, as well.
How to Handle the Order Fulfillment
So, a tool like ShipStation would allow you to plug in the expected delivery timeframes, and it would come back with appropriate options, as well. That type of tool is great when you’re handling order fulfillment in house, and that leads me to the different order fulfillment options…
1. In House Order Fulfillment
One option is just doing order fulfillment yourself, and a lot of online sellers do that, especially when they’re starting out. Maybe they don’t have the order volume to justify using an outsourced order fulfillment company, and that makes a lot of sense in some cases.
In other cases, maybe a seller has customizable products, so they essentially need to handle that on their end before the order goes out, and they would have a difficult time finding an order fulfillment company that could handle their needs.
In-house order fulfillment is very common, especially for smaller sellers, those that need customizable services, or very large retailers that the order volume is consistent enough where they don’t have to worry about fixed costs and in-house order fulfillment just makes sense for them.
2. Drop Shipping
Another option is drop shipping, which is basically when your products are being shipped from your suppliers. Drop shipping can be a great way to test out a new product without having to buy a whole lot of that product and warehouse it yourself. You could essentially try to find a supplier that would allow you to not carry stock but rather they will ship those orders with that product as they come through.
The potential downside of drop shipping is that, in a lot of cases, it can be slower. If you have the stock, you can pick, pack, and ship it faster than sending that order to a supplier and having them have to produce that product, especially if they’re not carrying it in stock themselves.
It may also be more costly, so you just have to weigh the costs. The manufacturers need to do the pick, pack, and ship part of it, so they may be charging for that, and you may also have to drop ship from two different locations. If you have an order with two different units, and one supplier had one product, and another had the other product, that would essentially be two packages going to the same location, which would be more costly than shipping from one location in one box.
The third option for order fulfillment, and how to ship products to your customers from that standpoint, is outsourcing. eFulfillment Service is an outsourced order fulfillment company.
We work with online sellers of all types and sizes, and a lot of our sellers come to us for all sorts of reasons. We have a lot of startups that basically don’t want to handle the order fulfillment. They don’t want to be tied down with that part of the business. They are limited in resources and they want to free up their time for other things rather than the shipping and order fulfillment part of it.
Some of them may also have high warehousing costs where they’re at. So, if they’re going to put product in a storage shed or rent a small warehouse it would be quite costly for them to do, especially if their order volume isn’t high right away, so we offer maybe a more cost-effective solution for those types of sellers. And then we have a lot of larger sellers, as well, and other other fulfillment companies have the same, and there are a few benefits of using an outsourced provider…
You can easily scale up and down and you, yourself, don’t have to worry about staffing up and down, that is all on the order fulfillment company.
You can rely on the company to flex up and down, not only seasonally or as you grow, but even week-to-week or month-to-month as your volume goes up and down.
With an outsourced provider, if priced right, and if you don’t have high minimums that you have to deal with or some of those types of fixed costs, then generally you’re able to maintain a variable cost model with outsourcing your order fulfillment, rather than having high fixed costs with rent, or handling yourself, or high minimums with certain order fulfillment companies. If your volume is low or inconsistent, then it can cause your cost your per order to go up and down throughout the year, and even throughout the month.
Those are the three basic order fulfillment models, and those are generally the three options for shipping. And with order fulfillment companies, when you outsource, they will use tools like a ShipStation, or maybe they have another tool or their own tool that they’ve developed to help rate shop packages, as well, and can even help you set that up on the front end with your cart to make sure you’re appropriately charging your customers.
How you ship products to your customers really varies depending on the size of the order, the product being shipped, the value, the speed that’s required, but that can all be automated with the right tools and, if you’re using an outsourced provider, they’ll generally have those tools to make sure you’re cost-effectively shipping to the customer.
Hopefully that was helpful, and we’ll see you next time for the next FAQ!