A client just placed an order and you’re happy about the new sale. But even though you sent it on time and packed it up with care…
The package arrives 2 days late and is partially opened. The result? An angry client and a possible return.
It’s too difficult to get clients just to lose them over a shipping problem. That’s exactly why it’s so important to properly manage your e-commerce logistics.
Don’t worry, because this post is going to explain everything you need to know so that your clients receive their products in perfect condition.
Let’s get started.
What is logistics and why is it essential for your e-commerce?
Maybe you’ve heard the word a million times but still don’t know what it is? In that case, let’s start from the beginning. ;)
The basic definition of logistics talks about the group of activities and solutions that allows a product to successfully make it to the end client.
This general explanation includes different phases that can be summarized as:
Who’s in charge of all this? Your logistics system is. We’ll read about that in the next section.
How to choose the best logistics system for your e-commerce
Before you choose, you need to analyze the needs of your e-commerce. The first thing to be done is to determine the volume of products that you’re going to move from your online shop.
This way you’ll be able to choose between:
1. Logistics operators (or integrated logistics systems)
If you ship a large volume of products, integrated logistics platforms are a great option.
A logistics operator is a company that designs and manages the logistics processes of a different company.
2. Courier companies
In this case…
The logistics company is a shipping company that only takes care of distributing the products of the contracting party.
This is the most convenient and best option for small retailers and companies that sell online (your case if you are just starting out).
You probably known several of them:
A priori, we can’t tell you that one is better than the rest, but we can tell you how to choose one depending on your shop’s needs.
Factors to bear in mind when choosing your logistics system
Choosing who is going to deliver your products is a key decision since they will be the visible face of your e-commerce in the eyes of your final clients. Therefore, you need to properly analyze your needs before choosing your operator.
Here you have some factors that may help you make the decision:
1. The type of products you sell
Courier companies usually make a distinction between:
Las empresas de mensajería suelen establecer una división entre:
A. Normal packages
These are those that fit the standard measurements and vehicles and that don’t require any type of special conditions to be shipped.
They are the cheapest to send.
B. Special packages
These are packages with specific needs. We’re talking about products that are:
- Bulky: furniture, construction material, or certain decorations.
- Fragile: anything made of glass, handcrafted items, electronics, or goods that need a more delicate type of transportation.
- Perishable: such as fresh food that needs refrigerated transport.
Shipping these items is normally more expensive because they need specialized staff and means to be transported.
2. Your target clients
Your logistics needs depend on whether another company or your final clients are buying.
A. B2B (Business to business)
If your client is another company, delivery periods are normally longer and, therefore, cheaper.
The type of product is also important: if they are perishables, you won’t be able to extend the shipping times.
B. B2C (Business to consumer)
Individuals who buy on the Internet want fast delivery, so delivery periods have to be short.
If you take too long to deliver a product, it may be returned.
3. Price rates
Both courier companies and operators typically have different rates depending on your sales volume. Logically, they don’t charge the same for an online shop that sends 3 packages per week and for the one that sends 30 per day.
When asking about their rates (and you should ask several different companies), ask them to show you their additional services.
Sometimes it’s more profitable to pay a bit more to have a comprehensive service that will ease the logistics management of your e-shop. Some of these extra services may be:
- Traceability (or order tracking)
- Incidents management
- Customer service
- Inverse logistics (returns)
Bear in mind that good customer service in this phase of the process has a direct impact on:
- Decreasing the number of returns
- Repeat purchases from clients that have a good experience
Paying more may actually be cheaper in the medium term.
4. Shipping zones
Depending on where you’re going to sell your products, we can organize the shipping into:
A. Domestic shipping
This normally gets broken down into local, regional, or national.
In Spain, you should also be aware of the 4 special areas that often mean higher prices:
- The Canary Islands
- The Balearic Islands
Check whether your country also has areas that entail additional costs.
B. International shipping
If you’ve decided to have an international e-commerce (and you can read about everything you need to do that here), be careful because you’ll have to pay extra attention to the logistics and the different types of shipping and customs management.
5. Delivery periods
Just like the shipping areas, delivery periods are also different for domestic and international shipping.
A. Domestic shipping
There are quite a few options. Normally, the more urgent it is, the more expensive it will be:
- Same day
- Next day
- In 48 hours
- Saturday delivery
- Delivery at a specific time
Some shops offer different options at different prices so that the clients themselves can decide.
B. International shipping
Depending on the clients’ needs, we can talk about land or air shipping.
Air shipping is obviously faster, but it’s also more expensive.
6. POD delivery
This payment method is highly valued by final clients who don’t want to pay until they get their product.
The problem is that the refund process comes with a cost charged by the shipping company, normally 2-3% of the price of the shipped product.
This cost is normally passed on to the client if they choose this option. Make sure that your operator offers that option if you want to include it as a payment method.
Are you still undecided about which payment platform to use?
7. Insurance for the shipped products
In order to avoid problems with lost, incomplete, or damaged packages, you need to decide what type of insurance you’re going to take out with your logistics operator as well as the compensation they offer for each case.
Double-check the terms and conditions offered by each operator.
8. Return policy (or inverse logistics)
You have to be especially careful since this topic deals with unhappy clients.
Returns can be the result of several different situations:
- The wrong product is shipped.
- An error when processing the order (for example, if you sent a different size).
- The package was damaged.
- The package is rejected by the client (right to withdraw).
Be sure to carefully revise the policy used by the operator when dealing with these returns because it will have a direct effect on how satisfied your end client is.
What can you do if your clients don’t buy because of the shipping costs?
Shipping (and return) costs can be one of those objections if they are not properly defined. In order to avoid that situation, you have several options:
- Free shipping: if you don’t want to pay for it, you can just increase the final price of your products and avoid adding “shipping” section altogether on the final invoice;
- Flat rate: establishing a fixed price for shipping, regardless of the volume or final price.
- Free when they spend a certain amount: this is a very popular option for online shops. For example, you can offer free shipping on orders over €100. Remember that this is also a strategy to increase the average checkout price.
- Subscriptions: The Birchbox e-commerce uses this model. When you pay €10.95 per month, you get a box with 5 beauty products selected in accordance with your profile. And, of course, shipping is included in that price.
Try different options and measure the conversion rates with each of them. After all, it will be the clients who tell you what they prefer in the end based on sales numbers.
Other options that you can offer your customers
Because of the growth that e-commerce has been experiencing, logistics companies have also felt the need to evolve.
That’s why more and more shipping options are popping up to meet the needs of every type of client.
1. Delivery in 1-2 hours
This is especially in demand in big cities and perfect for impulse-shopping items.
2. Afternoon delivery
The online shop Naëlle offers same-day delivery between 6:00-10:00 p.m. for orders placed before 2:00 p.m.
3. Pickup points
There are already a few logistics companies dedicated to offering this service, such as Mondial Relay.
Instead of delivering the product to the clients’ address, they leave it in an associated “Package Point” and clients go to the one they prefer to pick it up.
This is a way of avoiding returns because of an absent addressee and it also decreases shipping costs.
Have you already decided whom you want to send your products?
The final delivery of your products to your end client is no joke. Remember that you shouldn’t choose the first one you see and that the cheapest option may not be the most convenient.
A good strategy is always a big plus in terms of the image clients will have of your brand.