E-commerce shipping: A beginner's guide
If you're selling goods on the internet, then you need to get those goods to your customers. That's where shipping comes in. From pricing, packing, tracking and insurance, to shipping carriers, returns, profitability and more, we break down and guide you through the basics of e-commerce shipping.
Page overview
What is e-commerce?
E-commerce (electronic commerce) is the selling of goods or services on the internet. It's also known as online retail, e-tailing or online shopping. The goods or services are sold on a webshop – this is an e-commerce business. When you visit an online store to buy a pair of shoes then you are participating in e-commerce. Besides the transaction of goods and services online, e-commerce also involves the transfer of money and data.Â
There are different types of e-commerce businesses: business-to-consumer (B2C) and business-to-business (B2B). There's also consumer-to-consumer (C2C) e-commerce, which takes place on online platforms where individuals sell items directly to each other. E-commerce isn’t just useful for big business, it also enables small and medium businesses (SME) to reach larger markets. Plus it’s booming – year after year e-commerce becomes a bigger player in the retail industry, taking a growing proportion of global sales.
What is e-commerce shipping?
Shipping is a vital part of the e-commerce process because it transports products bought online from seller to buyer. After the digital transaction it ensures the physical transfer of goods.Â
However, e-commerce shipping is more complex than just putting something in the post. It involves inventory management, packing, budgeting, timing, working with a carrier, returns, exchanges and more. To ship successfully it's important for an e-commerce business to have a good shipping strategy and a good working relationship with their carrier.
What's the difference between domestic and international shipping?
Shipping can be domestic: within your own country, or international: across borders to other countries and economic zones. When you launch a webshop you can choose to ship domestically, internationally, or both.
International shipping has an added level of complexity – a parcel has to pass through customs when it leaves a country, and it must pass through customs again to enter the destination country. This can result in more administrative requirements, paperwork and costs. Learn more with our e-commerce international shipping guide.
How to start e-commerce shipping in eight steps
While the carrier is responsible for moving your parcels from A to B, there are still many aspects your e-commerce business must take care of. Before you start shipping, the eight steps to follow are:
1. Create your e-commerce shipping strategy
A shipping strategy is a logistics game plan that's uniquely tailored to your business. It ranges from financial aspects like your shipping pricing options, to marketing factors like branding and customer journey. There are also technological elements such as integrated shipping technology. A strong strategy can help boost sales and grow your business.
Your e-commerce shipping strategy should cover the following topics:
- Destinations – Where will you ship to?
- Carriers – Which shipping company will you choose? How much do they charge? What services do you need?Â
- Timing – How quickly do you want your goods to arrive?
- Cost and pricing – What will your shipping pricing be? Who pays? Will you offer fast or affordable shipping, or both?
- Packing and labeling – How will you pack (and brand) your goods for shipping? How will you label parcels?
- Customs documents – What paperwork will you need for international shipments? Will duties and taxes apply?
- Returns and exchanges – What will your returns and exchange policy be?
- Technology – How integrated do you want shipping to be with your webshop?
That's the starting point for your strategy – now let's dive into each topic in more detail.
2. Research shipping carriers and their services
A shipping company's main purpose is to deliver a package within a certain time frame for an agreed price. But e-commerce businesses often need additional services from carriers, which can include:
- Insurance – to cover loss or damage to a parcel during transit
- Parcel tracking – so senders and receivers can follow a shipment's progress (an increasingly standard service these days)
- Flexible delivery options for receivers – such as customizable delivery times, express delivery, weekend delivery or local pickupÂ
- Consolidation – bulk grouping of multiple packages to a specific destination for reduced costs or streamlined customs clearance
- Customs brokerage – to help international shipments clear customs easily
- Return services – from generating return labels to claiming duty refunds for international return shipments
- Integrated webshop features – shipping APIs (Application Programming Interfaces) integrate shipping functionalities directly into online stores to provide real-time carrier rates, address validation, parcel tracking or duty and tax calculators
- Business accounts – for better customer support with your own dedicated account manager
You might find one carrier that meets all your needs, or you may need a combination of carriers for different purposes, such as for domestic, international or return shipments. See our international shipping carrier services guide to learn more.
3. Understanding shipping costs
Before you set your shipping rates for customers, it's important to know what influences your carrier's shipping costs. The main factors are:
- Parcel size and weight – does it fit into a standard envelope or parcel category? Is it odd-sized or oversized?
- Dimensional weight – or package density – this is its size in relation to its weight
- Origin and destination addresses – long-distance and cross-border shipping naturally cost more
Keep in mind other preferences or needs you may have such as:
- Delivery speed – for example, express versus regular delivery
- Extra carrier services – such as insurance, tracking or customs brokerage
- Customs charges – on some international shipments, such as duties, taxes and any processing fees from the carrier
Once you know these details, then you can check the rates of different carriers. When you have some example rates, you can check the cost of shipping in relation to your total product price.Â
Shipping costs can add up surprisingly fast, so create an overview to see how they relate to your profit margin. To learn more see our page on what affects the shipping price.
4. Set your shipping rates and speeds
When you've found a cost-effective shipping arrangement with a carrier, you can then define your e-commerce shipping rates for customers. This is mostly determined by your financial strategy and who you want to cover the cost (whether you pay, your customer pays, or both).Â
It helps to provide a few delivery options so customers can choose one that suits them best. Some common ones are:
- Free shipping – for purchases over a certain value
- Flat-rate shipping – within a country or region
- Real-time carrier rates – calculated live at webshop checkout
- Express or regular delivery – allow customers to choose delivery speed vs cost
- Free or discounted local delivery or collection – from carrier's pickup points
5. Packaging, packing and labeling
When it comes to physically preparing your goods for transit, there are three main aspects to consider:Â
PackagingÂ
The materials in which you enclose your goods also serve as a branding opportunity and a chance to impress the receiver. Creative, surprising or eco-conscious packaging can enhance the customer experience – as shown by the growing trend for unboxing videos.
Packing
Besides appearance, the way a shipment is packed is crucial for its safe arrival. Using the right size box, sealing it securely and knowing how to pack fragile items with suitable padding are among the basic principles that can help you avoid common packing mistakes.
Labeling
A shipping label should not only have the correct details, but its placement on the parcel is also important – usually on the largest or uppermost flat side. A wrong or damaged label can result in your package being delayed. See how to label a package to learn more.
6. Customs requirements for international shipments
If you send an e-commerce parcel across borders, it must clear customs in the destination country before it can reach the receiver. This means extra requirements for international shipments. In particular:
- Customs paperwork – Do you need to provide extra documents or details with the shipment?
- Regulations – Does your company or product need to comply with regulations in the destination country?Â
- Duties and taxes – Will any import duties or sales taxes be charged when your goods enter the destination country?
- Returns – What is your process if a customer requests a return or exchange?
For more information see our e-commerce international shipping guide.
7. Returns and exchanges
Domestic return shipments can be quite straightforward – as long as you're clear with customers about who covers the cost.
International returns have an extra level of complexity. If duties and taxes were paid, you may need to request a refund from customs in the destination country (duty drawback), as well as request an exemption (duty relief) when the goods re-enter your own country. International carriers can often help you navigate this process.Â
Just like with shipping rates and speeds, you can offer customers a range of return options. See our e-commerce returns guide to learn more.
8. Start shipping and improve as you go
As with all things, it's best to just dive in and start shipping, adapting your shipping strategy along the way. Track your shipments, respond quickly to any delays or customer queries and aim for best practice e-commerce shipping.
As your business grows there are some shipping features you can develop such as:
- Setting up a business account with your carrier – to access extra services or cheaper rates
- Integrating shipping tools into your online store – such as more precise shipping options or inventory management
- Aligning shipping with customer service and communication – Educate customers about things like duties and taxes so they know what to expect, or offer customer support
- Consider a fulfillment warehouse or 3PL (third-party logistics partner) – if you're scaling up your shipping capacity and need extra support.
