Ecommerce shipping can get really complicated, really fast. As your order volume rises your ability to meet your shipping needs by yourself decreases significantly. International destinations don’t make it any easier. Inconsistent customs requirements, unexpected fees, and unpredictable taxes and duties can all cut into profit margins that are often paper-thin to begin with.
Even if you think your e-commerce shipping is going well, continue reading below to find out if you’re making any of these costly shipping mistakes!
If you’re taking care of your e-commerce shipping yourself you have already noticed how labor-intensive it can be. You’ll need to pack, label, and transport the items to the carrier (which you had to choose from amongst a baker’s dozen of options). On top of all of that, you’ll need to accept returns and store your inventory.
All of the above costs money. Even if you’re not paying out of pocket and doing all of these things yourself, you’re paying a fee in the form of time. It’s time that could be spent working on your business, chasing down new customers or leads, or improving your products and services.
And be prepared to spend a lot of time shipping your merchandise. All of this activity is incredibly inefficient, both with respect to time and money spent. Because the fulfillment process in small e-commerce companies is so ad hoc, efficient processes and systems are rarely developed. As a result, what few systems there are tend to be manual and labor-intensive.
Expensive E-commerce Shipping
Because you’ve been doing your own shipping for so long, you may have come to be under the impression that you’re “saving money” by doing it yourself. Nothing could be further from the truth. As we already wrote, your time costs money. And when you spend inordinate amounts of time manually doing everything yourself you wind up costing yourself a fortune.
This concept applies doubly when the company’s founder or owner is attempting to handle shipping on his or her own. A business owner’s time is immensely valuable. It should be applied to issues only he or she can address: overall strategy, business planning, demand development, etc. It is a shame for a founder or business owner to spend their valuable time putting items into boxes to fulfill orders.
When you take care of your own shipping things might seem organized at first glance. You have a “system.” Maybe you’ve even got some parts of the process automated. But the truth is that most self-made shipping solutions are chaotic at worst and haphazard at best.
Self-designed e-commerce shipping solutions often lack one or more of the following:
- Order content verification
- Address verification
- Detailed shipping cost analytics (both descriptive and predictive)
- Systematized returns processing
Failing to double- and triple-check addresses can lead to packages sent to the wrong address or to nowhere in particular. Failing to verify order contents can lead to the wrong products being shipped to the wrong customer. This means double the shipping costs and double the time for a single order, which can demolish any margins you may have realized on the sale.
Most glaringly, if e-commerce shipping is being handled in-house, it’s extremely rare that the business owner is conducting any kind of detailed analysis or audit of shipping costs. These sorts of analytics are typically only available to larger e-commerce fulfillment companies and third-party logistics (3PL) providers.
Descriptive and predictive analytics can have tremendously beneficial effects when applied to large-scale shipping operations. They can reduce the average overall cost of shipping packages, increase speed and efficiency, and even allow a company to predict large swings in inventory movement. For example, a properly equipped fulfillment center might be able to notice an X% uptick in shipments in a particular month and prepare for that increase the next year, reducing backlogs and decreasing shipping time-to-customer.
Poor packing can take two forms. First, a single person or employee, perhaps tired at the end of a long shift, packs a fragile product inappropriately, resulting in breakage during transit. Or, just as bad, inefficient packing techniques result in containers being unnecessarily large or heavy. This causes a dramatic increase in shipping costs over time.
Improper packing is much less likely to occur at a large fulfillment center. These centers usually have dedicated and specialized staff who are well-trained in the packing process. Contrast this with “mom-and-pop” e-commerce companies who typically have only a handful of people, each of whom is performing any number of tasks throughout the day and are much more likely to make a packaging error.
Over Reliant on One Carrier
Many e-commerce business owners are overjoyed when they’ve found the “cheapest” carrier. They quickly move to transfer all of their shipping and fulfillment work to that carrier, forsaking all others. And why not? This carrier is the cheapest.
The trouble is that, as with so many things in life, it’s not that simple. Some carriers are less expensive in certain kinds of fulfillment (for example, small, light packages sent domestically), while others will charge less in different areas (like heavier packages sent internationally).
What’s actually needed is an ability to examine, with rigor, the lowest-cost options for different sorts of fulfillment in different parts of the world. This kind of examination is usually out of reach for a small- to medium-sized e-commerce company.
However, larger fulfillment centers are often capable of carrying out these analyses. They have both the specialized knowledge and the capacity to take on the challenge of analyzing the countless permutations of shipping and address combinations.
Most e-commerce businesses operate at relatively low volume. While the amount of product you’re shipping seems tremendously high to you (given how much work it’s causing), it remains small compared to the amount shipped by larger fulfillment centers.
Crucially, most e-commerce businesses never realize the economies of scale necessary to achieve lower costs on their shipping and fulfillment services. Large fulfillment centers can negotiate special rates with multiple carriers, deploy detailed analytics to drive costs down, and employ specialized staff who reduce costs even further. None of these advantages are available to the average e-commerce business.
Most importantly, all of these costly e-commerce shipping mistakes result in a process that’s completely unscalable. And since growth is the goal of most small business owners, the lack of scalability makes this model of e-commerce fulfillment completely unsustainable.
A lack of scalability arguably renders the entire fulfillment process obsolete. If the purpose of any business function is to assist a company to profitably grow, an unscalable and slapdash fulfillment process doesn’t meet that definition.
All of the parts of a business must be designed, from the ground up, to scale comfortably. Those parts that are not can and will cause major headaches as your business begins to grow. The worst-case scenario is that the unscalable business functions in your company prevent you from growing at all.
How You Can Solve Your E-Commerce Shipping Problems
Luckily, there are solutions to all of the above issues. In a word, it’s outsourcing.
Outsourcing your fulfillment requirements ensures that all of the aforementioned pitfalls are avoided. A properly outsourced fulfillment process can:
- Ensure efficiency: Large centers are capable of streamlining operations to a point that few e-commerce companies can.
- Ensure cost-effectiveness: Because of greater efficiency and higher bargaining power, large fulfillment centers can negotiate better rates and send more shipments per dollar than your average e-commerce firm.
- Guarantee systematic operations: Operations at large fulfillment centers are highly automated and you can be assured that Order #2456 will be processed exactly like Order #147 was.
Outsourcing your shipping and fulfillment operations can also:
- Guarantee quality packing
- Ensure selection of the cheapest carrier in every circumstance
- Allow small businesses to access economies of scale that were previously out of reach
Most importantly, moving one’s shipping and fulfillment requirements to an external provider allows your company’s operations to scale with demand, without compromising customer service. By removing a major barrier to business growth, you’ll unlock the full potential of your e-commerce business.
Choose The E-Commerce Shipping Experts. Choose Fulfyld.
Amongst all third-party logistics (3PL) providers in the United States, only Fulfyld works exclusively with e-commerce businesses. We understand the challenges and pitfalls of this industry and work every day to help our clients overcome them.
If you’re struggling with meeting your e-commerce shipping and fulfillment needs, or your business is growing faster than you can handle, contact Fulfyld and let us take the shipping off your hands. You’ll work with a dedicated account manager to drive down your costs and increase your customers’ satisfaction and enjoy benefits previously available only to huge e-commerce companies. Schedule a call with us today, or send us an email. We’d love to hear what you’ve got to say.