Shipping in eCommerce refers to the process of transporting items purchased online from the eCommerce retailer to the destination stated by the customer. It encompasses all services involved, from receiving an order to delivering that order to the customer's doorstep. An eCommerce business with a solid shipping strategy to meet consumer demand can draw a distinct line between a sustainable brand geared towards long-term success and another one that is just getting by and might vanish soon.
Delivery time has an impact on eCommerce brand loyalty, with 85% of online customers revealing that shipping speed determines where they shop. Unfortunately, meeting fast delivery times comes with several challenges to eCommerce sellers. There are also many other challenges in the eCommerce domain, including cash flow issues.
Therefore, you need to choose a shipping solution that helps meet your needs without hurting your bottom line. But how do you go about it? Read on to learn more.
Customer Demands for Rapid Shipping
Competition in the eCommerce market is now at the international level, with millions of brands launching every year. With the growing shopper expectation, you must find ways to keep customers happy. Failure to provide a great post-purchase experience can lose you a lot of customers quickly.
Related: FCL vs LCL Shipments: Complete Guide for eCommerce Sellers
Why Rapid Shipping is Important
Shipping has a major role in eCommerce business success, considering it even influences customers' shopping decisions. Currently, eCommerce is an extremely opportunistic field, yet complicated. Customers want their items fast, and top marketplaces have been trying to make it easy for them by prioritizing quick delivery. It helps in retaining current customers and acquiring new ones.
As eCommerce shifted into the mainstream, it significantly changed customers buying experience, thus also changing the way retail businesses oversee their distribution and logistics. The convenience of customer services in eCommerce is one of the factors behind the worldwide recognition of the sector.
However, customers don't care about the logistics involved between making an order to receiving delivery. All they want is to see their product at their doorstep, and the sooner, the better.
The front runners in eCommerce are improving their delivery times to the same day or next day delivery. By fulfilling the need for instant gratification, these services allow the firms to be a step ahead of their competition. Besides, the need for faster delivery is even higher among firms delivering products with an expiration date, like groceries.
On the other hand, eCommerce firms that don't offer quick delivery are losing a lot, particularly with the young generation. Timing is a crucial factor in meeting or exceeding customer satisfaction. Customers, particularly the generation Y demographic, want same-day delivery. Some customers are quick to look elsewhere if they don't find same-day delivery on the site.
How Rapid Shipping Influences eCommerce Businesses
Let's say your brand specializes in selling Bluetooth speakers, and your eCommerce customer service and visuals are attracting many customers. You have also set aside funds to create a great distribution network whose delivery time is 2-4 days. All good, right?
However, you are competing against other brands in the eCommerce market. If the competing brands use Amazon fulfillment and pay an extra 13% per product plus an extra fee, they'll be able to offer one-day shipping. This way, they will attract more customers who will be enough to make up for the cost difference.
As you toil to ensure timely deliveries, Amazon can do that overnight without breaking a sweat. Although having high-quality products is important, your shipping speed is no less so. Many customers are likely to abandon a site that does not ship in two days or less. Some customers are even willing to pay more to get their ordered products faster.
Impact of Shipping Costs and Supply Chain Issues on Ecommerce Sellers
Shipping Costs
A major supply chain issue affecting eCommerce businesses is the costs of the supply chain itself. The main contributors to the increasing costs are rising fuel prices for shipping goods by road, sea, and other means and the high cost of labor from producers, manufacturers, suppliers, and other associates. Further, the complexity of eCommerce supply chains in terms of inventory and logistics leads to increased charges and overhead costs for warehouse, goods transfer, and overall product management.
Also, the rapid shipping demands by customers create a higher barrier to entry for small firms who do not have vast logistics infrastructure but wish to venture into the eCommerce market. There is a great push to live up to the current delivery standards for many organizations.
Short transit periods are also difficult since they require investments in technology, increased staff capacity, and raised costs.
Other Supply Chain Issues
The eCommerce field is diverse, spaced out in nature, and has multiple intertwined processes. Adequate infrastructure is necessary to help survey different practices in supply chain management for long-term success.
The three infrastructural pillars in eCommerce warehouse settings are flexibility, mobility, and visibility. They determine how clients interact with a particular product and are a critical factor that can break or make an eCommerce business. eCommerce sellers may find it difficult to have these three heads moving in the same direction, especially due to required investments. Consequently, businesses may fail to find success in the eCommerce domain.
Why eCommerce Sellers Must Find solutions
Although managing cash flow is a serious issue in every business, it's particularly complex in eCommerce supply chain management. Businesses must monitor the complicated web of costs. However, the main issue is the long eCommerce cash cycle which may leave sellers cash strapped.
Finding solutions to supply chain challenges allow businesses to predict and respond accurately to demand and market changes. It also improves your bottom line. For instance, cost-effective solutions eliminate wasteful expenditures and reduce overhead costs, thus contributing to a positive cash flow. Your business can lower overhead costs related to storing slow-moving items or warehouse fulfillment.
Solutions Available to eCommerce Sellers
eCommerce sellers have options to overcome the rapid shipping, high shipping costs, and supply chain issues. Fulfillment by Amazon is one popular option, but the eCommerce owner can also choose third-party logistics (3PL) services. The two are basically similar but have marked differences. Another popular option is dropshipping. Let's look at the three solutions in detail:
Third-Party Logistics (3PL)
With third-party logistics, you outsource fulfillment to a provider who handles several aspects of the supply chain, including inventory management, warehousing, shipping, returns, etc. A 3PL offers similar services to many businesses at once and can be a great option to manage huge changes in sales or fast growth that a business may encounter after bringing a new item on board.
As you look for a service provider, you must ensure its resources are compatible with your needs. You need to check whether the 3PL work with similar products and brands to yours since that means they understand your market. Further, you should consider whether their technological tools are compatible with your business. Working with a 3PL provider that suits your needs ensures you reap the arrangements' benefits and avoids customer satisfaction issues.
Some of the benefits of working with a third-party logistics provider include expertise. Professionals handle everything from picking to shipping. They also pay personal attention to your items and thus can help you solve any issues that may arise.
An established 3PL has adequate storage space for your products. Although you pay for the storage space, you have the benefits of distributing the inventory to different warehouses across the region.
One of the major benefits of partnering with a 3PL is reduced shipping and storage costs. These providers can choose between carriers and negotiate the best price; thus, you get lower shipping rates than you could have negotiated yourself. You'll also enjoy cheaper storage costs since you are leasing space in their existing warehouse.
Related: Your Guide to Third Party Logistics and Amazon FBA Prep Services
Fulfillment by Amazon
Amazon no longer limits its services to strict eCommerce. The company has built an efficient and effective supply chain and now includes services such as logistics. It has always maintained a step ahead of the game. Amazon offered unlimited two-day shipping when other firms were yet to attain it. However, the company raised the bar when others caught up and now offers two-hour, one-day, and one-day shipping.
Fulfillment by Amazon is an option allowing eCommerce businesses registered as a seller on the platform to hold stock in its distribution centers until customers make an order. The company does the picking, packing, and delivery of the product and provides customer support.
Other than fulfillment, another benefit of fulfillment by Amazon is the prime access to millions of shoppers. You will have access to more than one hundred million subscribers on the platform. Amazon will also handle complaints and return logistics on your behalf.
The company provides a transparent fee structure, thus allowing you to calculate costs to establish your potential profit easily. Amazon also has a multi-channel fulfillment feature that allows you to fulfill orders from other sales channels using your products stored in the company's distribution centers.
Dropshipping
Dropshipping is another popular option that can help you overcome the challenges mentioned above. This arrangement involves finding manufacturers who can deliver items to customers. So, when your clients make orders on your channel, you forward them to the manufacturers who will handle the rest.
You won't incur the costs of holding stock for your business. The manufacturer offers warehousing and shipping services while you handle marketing and customer service. Dropshipping lowers the costs of launching and maintaining an eCommerce business.
Therefore, it is a great option if you don't want to invest in warehousing and logistics or don't have the capital to buy stock. You will also not get stuck with products that don't sell.
Improve Your Cash Flow Today
Choosing a shipping solution that suits your eCommerce needs is key to your business success. But while you enhance your shipping, you also cannot ignore the need for a healthy cash flow solution. The right cashflow solution is the one built specifically for eCommerce businesses and provides services specifically tailored for them. Contact Onramp today to learn more about cash flow solutions for your eCommerce business.
