Small Business Shipping Basics: A Guide for Entrepreneurs

Typically, as new business owners prepare to open their doors, they need to focus on marketing, finding customers, and generating sales first. Later they’re able to turn their attention to issues such as e-commerce sales and shipping. If you’re at a point where shipping decisions need to be made, the following tips will help you get started.

Determine Your Needs

Before you begin searching for a shipping vendor, take the time to figure out exactly what services you need. For example:

  • Are you shipping nationally or internationally?
  • Do you have any perishables?
  • Do you need special packaging for fragile items?
  • Are your items expensive enough to require insurance?
  • Do you need pick-up services?
  • What kind of delivery speeds do you plan to offer?

Make a list of any services you might need, then contact multiple vendors to get quotes and compare offers. If you haven’t sorted out how to handle shipping product orders to your warehouse or storefront yet, learn more about it here.

Determine Your Fee Structure

Once you’ve calculated the cost to ship your items, it’s time to decide how much to charge your customers. Your goal here should be to maximize your profits without losing customers to high shipping costs or slow delivery times. There are a few ways to do this:

  • Charge a flat rate based on product weight, size, or cost.
  • Offer free shipping at a certain price threshold and increase your price to cover the cost.
  • Offer free shipping regardless of order total and increase your price to cover shipping costs.

You can also offer shipping incentives for first-time customers or combine any of the above options to come up with a custom fit that works with your business model.

Offer Sensible Product Returns

Not every customer will be satisfied with the products they receive. It’s possible that items become damaged during shipping, the wrong item is delivered, or the order doesn’t meet customer expectations. As a business, it’s up to you to offer a fair return-and-exchange policy.

In some cases, that means you’ll lose revenue. However, to gain repeat customers and a good reputation, it’s well worth it to offer a simple return process. Have checks and balances in place to limit the number of return and exchange requests you receive. And, consider the shipping cost as well.

Decide up front if you plan to offer free return shipping on exchanges and returns, or if you’ll require customers to pay shipping fees. E-commerce giant Amazon manages return costs on a case-by-case basis. If the product is damaged or misrepresented, the company pays for return shipping. They also cover return-shipping costs for select Prime items. However, if the wrong item is ordered by mistake or just ends up not being a good fit, the customer pays to return the item.

Once you’ve decided on your fee structure and return policy, review your small business shipping costs every few months and evaluate whether or not you need to make any changes. Don’t be afraid to renegotiate rates with shipping vendors or update shipping policies regularly to maximize your profits.

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