The experience that shoppers have with your ecommerce brand isn't limited to interactions with your website. It continues offline through the product fulfillment process – including how an order is packaged, the condition of the items in an order, and efficiency of the returns process. While your direct control over shipping and handling is limited during the last mile, there are a few things you can do before packages leave your warehouse that will go a long way toward giving customers a delivery experience that makes a good impression.
In a Harris Poll survey (funded by packaging manufacturer, Sealed Air) of more than 2,000 U.S. adult consumers, 66% believed that an item’s packaging tells them something about how much the brand cares about them. From excessive or messy dunnage (like Styrofoam peanuts) to small products in oversized containers – when customers are left to do the dirty work of cleaning up all that wasteful material, their experience with your brand suffers. Customizing your packaging to an optimal size can not only help create a better brand image in the eyes of your customers, it can reduce shipping and materials costs over the long-term.
In the previously mentioned survey, 59% of consumers believed that retailers and carriers are equally responsible for damage to a product that was ordered online. By right-sizing your containers and using the latest in dunnage technology, you can better protect your shipments and spare your customers the disappointing experience of waiting for an order, only for it to arrive in less than mint condition. Additionally, since customers are more likely to place the blame on you if your products arrived damaged, strive to work more closely with your carriers and/or 3PL provider to find solutions for reducing damaged inventory.
By mastering reverse logistics, you can minimize the cost of the returns processing and recoup lost profit from the returned product. But more importantly, customers love a smooth returns process, so your customer satisfaction can increase as well. Remember: Every return is another point of engagement with your customer. It should reflect the same focus and attention to detail as every other part of the customer experience. Once you assure a customer that your returns process is easy, then you eliminate hesitation from the next purchase and convince them to shop with you again and again.
Following in the footsteps of last year's rate increases from UPS and FedEx, the USPS enacted several rate increases of its own on January 27 this year. To help you estimate the impact on your business, we've outlined some of the key changes below:
Priority Mail Rates
Across the board, Priority Mail services increased by an average of 5.9%. Other changes of note include the elimination of balloon pricing for parcels shipping to Zones 1-4, and an average 3.9% increase for Priority Mail Express rates.
First Class Package Services
For the first time, First Class Package service rates will now be calculated based on Zone, similar to Priority Mail. Rates for this service will also increase by an average of 11.9%. First Class International rates will increase by an average of 3.9%.
Commercial Plus Flat Rates, and other services
Prices for Commercial Plus Flat Rate boxes and envelopes increased by an average of about 7% (but, if you disregard the very small 2% increase for Medium Flat Rate Boxes, all other flat rate containers actually increased by an average of 10%). In addition, Parcel Select Ground rates decreased by an average of 1.3%, while Media Mail rates increased by an average of 2.9%.
Changes to DIM weight pricing: Coming Soon
Originally slated to go into effect January 27, the USPS delayed the reduction in its dimensional weight divisor (DWD) from 194 to 166 until June 23 to provide shippers with more time to prepare. A package's DIM weight is calculated by dividing the cubic inches of the package by the DWD. The shipping rate for the package is calculated using whichever is greater - the package's actual weight, or its DIM weight. So, a lower DWD means that the DIM weight for all packages increases, making them more likely to incur a higher rate. However, that's not as bad as it sounds when you consider that both FedEx and UPS have been using a DWD of 166 since 2015.
It’s worth noting that although the USPS is raising many of its rates, it’s still an affordable option for lightweight packages traveling to residential destinations. Plus, the USPS doesn't add surcharges for things like fuel, regular Saturday delivery, or holiday “peak” season delivery – so it's still a valuable part of any shipper’s distribution mix. For a detailed review of all of USPS' prices changes, visit their website.
UPS announced changes to its rates for 2019 in December last year – giving customers a mere 3 weeks before they went into effect. With the holidays in full swing, the entire fulfillment industry was extremely busy at that time – so if you missed the announcement or didn't have time to process the details, you’re not alone. To help get you up to speed, we’ve highlighted the some of the most important changes in the list below. For full details and pricing information, visit UPS to read the official announcement.
- The rates for UPS® Ground, UPS Air and International services will increase an average + 4.9% (which follows the precedent set by FedEx's previously announced rate increases for 2019)
- The index for determining the Domestic Air Fuel surcharge increased +0.25% for all thresholds. In addition, fuel surcharges will apply to accessorials such as Additional Handling, Over Maximum Limits, Signature Required and Adult Signature Required.
- A new processing fee (+$2.00 per package) will be charged when Package Level Detail (PLD) is not provided to UPS prior to delivery.
- The Additional Handling charge for all packages will increase by $2.25. Any U.S. domestic package exceeding 70 pounds in actual weight (i.e. not DIM weight) will incur an Additional Handling charge of $4.00.
- The Address Correction charge will increase +$0.50, and the per shipment maximum will increase +$3.50.
- The Large Package Surcharge will increase +$15.00 for U.S. Domestic commercial packages, +$25.00 for U.S. Domestic residential packages, +$15.00 for International packages.
The cost of shipping is a major competitive differentiator in ecommerce. Shoppers will quickly abandon a cart or buy from a competitor if it means they will save money on shipping. To reduce shipping charges for your customers, you'll need to go beyond investing in cheaper dunnage or renegotiating with carriers for better rates. In addition to those strategies, here are some more holistic considerations for improving the cost efficiency and customer-friendliness of your packing and shipping operations.
Evaluate current packing materials and processes
From material and labor costs, to DIM weight optimization and customer experience – you may find there's a lot to "unpack" by doing a comprehensive review of your current approach to packing and shipping. Some useful questions to ask during this process include:
- How do factors such as total weight, dimensional weight, oversize charges, special handling, and the number of packages shipped per order affect your total average shipping expenses?
- What do your customer service and operations reports show about damages from improper packing or packing materials?
- What is the average labor cost on oversized items requiring special labor and materials to pack?
Consider the potential benefits of branding
Stylized packaging helps to create a memorable, positive experience for customers. When done well, customized packaging can improve your brand perception and boost your marketing reach through word-of-mouth and social media. Besides adding your brand messaging to packaging materials, interactive packaging inserts with social media instructions (“follow us at…”), post recommendations (“take a picture and tell us how excited you are to start using this product”), and hashtag suggestions are an inexpensive way to get more ROI from stylized packaging.
Right-sized packaging & kitting
Customizing your packaging to an optimal size and level of protection can save you money on shipping costs over the long-term. Right-sizing the cartons for each order will help get you the best DIM shipping rate every time. Customized dunnage that is lighter and less voluminous dunnage also contributes to getting better shipping rates. Depending on the level of variation in your typical order sizes, the best solution could range from onsite box-making equipment, to custom packaging and kitting services.
Free shipping is the most effective promotion you can offer ecommerce customers, hands down. However, not every ecommerce site has the ability to shoulder the shipping costs for 100% of their orders. Fortunately, there are many different ways you can have free shipping, and some cost less than others. Below, we go over some ideas you can use to offer free shipping at a reasonable cost.
Set a minimum order condition
Look at your product margins and calculate how much a customer would have to spend on an order to make free shipping easier for you to offer. You can help customers reach that minimum requirement by showing them either products based on their browsing history, or low-margin "add-on" products that cost just enough to make the order qualify for free shipping.
Reserve free shipping as a reward for repeat customers
In ecommerce, returning customers are your bread and butter. In fact, returning customers generate about three times more revenue than new customers. Invest in these customers by offering free shipping as a reward for actions like:
• Placing an order for the first time
• Signing up for your email list
• Participating in a survey or submitting other useful data
• Placing a certain number of orders over time
• Referring new customers
Try free returns instead
It may not be free shipping, but it can relieve customer anxiety about paying for shipping. As the next best thing to free shipping, a free and easy to understand returns process can be a great selling point that increases trust in your brand.
Negotiate with your shipping provider
Review your current shipping expenses to find the major cost factors, and research the prices from competitors to get a better understanding of average shipping costs. If your carrier can give you a better deal, free shipping may become a more viable option for you. At Fulfillment Works, we are always negotiating with carriers for the lowest price so we can pass those discounts on to our clients, which allows them to give better shipping rates to their customers.