Here are the key things to consider when building your shipping strategy.
What does your target market expect?
Your shipping strategy depends largely on your customers' demographics and preferences. The more you know aboutyour target market, the better. If you haven't done so already, figure out your customer demographic (location, income level, education level, etc.). Psychographic criteria (attitudes, behaviors, lifestyle preferences) should also influence your strategy.
What are your competitors doing?
It's not enough to simply know that you compete on price with your competitors. Take a look at things like:
- How many different shipping methods do they provide?
- What happens when you add products to cart?
- Do they offer free shipping? If so, is it obvious?
- Which carriers are they using?
- What do comparable products cost to ship from your store versus theirs?
- Do they offer local pickup?
In short, you'll want to make sure you're as competitive as possible. Maybe you can't undercut them on price, but that means you need to think outside the box (pun intended), and come up with a strategy that sets your store apart.
What are the needs for your specific product?
Take some time to think through and plan for any specifics around packing, fulfilling or delivering your product. Those specific requirements should serve as the foundation of your shipping strategy. If you can simply fold your product and place it in a box, great. If not, consider the following:
- Will you be needing any special or custom packaging for your product?
- Is it consumable or perishable?
- How about large or awkwardly shaped?
- What about fragile?
- Will you need to get it shipped quickly?
- Can it be turned upside down? If you sell something like pies, that could get messy.
- Does the product need any special packing materials or paperwork? Shipping something as delicate as a live animal requires a lot more planning and precautions.
What's your expected order volume?
Having a good idea of how much you expect to sell can influence decisions like when and where you plan to drop off your items, how many boxes you should purchase or whether you should schedule your carrier to pick up shipments at a regular cadence.
You can typically expect higher-priced items to have lower order volume and lower-priced products to bring in a higher volume. If you're just starting out, it may take time for your traffic and orders to ramp — which gives you an excellent opportunity to test different shipping methods, packaging and providers.
Will you ship internationally?
Many businesses start by shipping domestically and expand their reach over time. Whether or not you ship internationally right away, you'll want to consider the average shipping cost for an international shipment versus a domestic shipment so you know which options to offer for the best return on investment for both you and your customers.
If you ship a product overseas and foreign customs doesn't accept your package, you could be stuck paying the return costs or charges for improper documentation. Here's what you can do to ensure you're ready to ship internationally:
- Research policies and restrictions: Always check the hazardous or prohibited items list of a potential shipping provider. We offer some great resources for each provider in the Shipping Options section of this guide.
- Complete customs declarations and forms: Customs documentation for international shipping is readily available online or at your local post office. These forms tell customs officers what's in your shipment, how much it's valued at and whether it's a gift or purchase. Check with your postal service to find out exactly what forms you'll need. Complete all documentation honestly and clearly to prevent your delivery from being delayed.
- Avoid getting stuck in customs: Packages can occasionally be stuck in customs for days and sometimes longer, even if all your paperwork is in order. Be sure your customers are aware that you don't have control over customs delays. See Shipping and Returns Policy for ideas on how to address this proactively.
- Communicate any tariffs, taxes or duties: Your customers will be responsible for any additional customs fees, usually at the time of delivery. Include this information on your policy page so your customers are prepared. A customs duty calculator can give you an idea of the amount of fees to expect. See “Shipping and Returns Policy” for ideas on how to address this proactively.
What's your profit margin?
Your profit margin is the ultimate concern, right? The goal of your shipping strategy should be to avoid a negative profit impact while still offering your customers value and options. This is a tricky balancing act. Whatever shipping options you decide to offer, make sure you can afford them. While offering free shipping is the best policy from a customer standpoint, it isn't always possible.
Here are some things to consider when calculating how shipping will impact your margins:
- Product cost: The actual cost of your product.
- Shipping cost: The actual cost to ship your product from location A to location B.
- Packaging cost: What type of container will you be placing your product in? Will you be using packing tape? What will you use to secure your product in the box? Tissue? Newspaper? Packing peanuts?
- Additional fees: Calculate any additional costs like tracking confirmation, signature confirmation, insurance, credit card fees, etc.
- Apps: Calculate the cost of any apps you'll use to scale or streamline shipping.
- Fulfillment services: If you plan to hire someone to dropship for you, calculate in the costs, plus any tracking and insurance required.
Does it look like shipping will impact your margins? You may want to consider applying a handling fee. Typically, a handling fee is charged on a per order basis to pay for the expenses required to handle and/or pack and ship items. That can include shipping materials, additional services required, or even things like delivery and signature confirmation. Handling fees are typically applied when:
- Shipping live animals, highly perishable products or fragile items.
- Required by the shipping provider.
- Shipping costs are within a consistent, predictable range (e.g., between $10-$15).
Ask our community: If you're having trouble with shipping or need some advice, our expert clients, staff and partners are here to help.
Every business will have its own unique challenges to address with a shipping strategy. Remember, nothing says the strategy you come up with now will be the same one you have a few years from now. As your business grows, you'll learn more about your day-to-day operations, your industry and your target audience — and that will lead you to your ultimate shipping strategy.