A Step-by-Step Guide to eCommerce Shipping

A well-thought-out eCommerce shipping strategy acts as a bridge between your business and your customers — it directly impacts both satisfaction and profits. When you fail to meet customer’s shipping expectations, expect fewer repeat purchases and more negative reviews.

However, the impact on profitability works both ways — smart shipping strategies help control costs through better carrier rates and optimized packaging, and boost revenue through free shipping minimums and premium delivery options. 

Whether you’re just starting out or looking to improve your current shipping process, this guide breaks down everything from choosing your shipping strategy and fulfillment method to packaging decisions, calculating costs, and ensuring safe delivery. 

What is eCommerce shipping?

Ecommerce shipping refers to the process of delivering products purchased online from a seller to a buyer.

From the moment your customer clicks “Buy” to the moment their package lands on their doorstep you’ll go through the following stages:

1. Order confirmation: First, you’ll want to verify the order’s details, check your inventory levels, and confirm the payment went through. 
2. Packaging: To prepare the products for their journey to your customer, you’ll need to pack them carefully to prevent shipping damage and generate an accurate shipping label. 
3. Carrier selection: You’ll want to select the most cost-effective and reliable shipping carrier for your needs, and provide your customer with tracking information so they can follow their package. 
4. Shipping: The package will move through various distribution points until it reaches its final destination — the customer’s doorstep. This last stretch, known as last-mile delivery, often involves local delivery services working to get the package to your customer on time.
5. Returns management: The eCommerce shipping process doesn’t always end with the delivery — you might also need to create return labels and manage the logistics of getting items back to their warehouses to ensure smooth returns management.

From the list above, you can see how eCommerce shipping is just one step of a much larger, eCommerce fulfillment process.

Choosing the right eCommerce fulfillment strategy

Your eCommerce fulfillment strategy is a necessary first step as it shapes what shipping options you can offer. Whether you choose to handle everything yourself, work with a fulfillment company, or use dropshipping, this choice sets the limits for what shipping promises you can make to customers.

1. Shipping the products yourself (a.k.a. self-fulfillment)

Self-fulfillment means you’ll manage the entire fulfillment process yourself, and have complete oversight of how your products move from warehouse to customer.

Here are the key advantages of self-fulfillment: 

• Full control: You oversee every step of the process, from packing to delivery, and ensure your quality standards are always met.
• Cost efficiency: For small businesses with manageable order volumes, you can save money by avoiding 3PL fees.
• Personal touch: You can add custom packaging, handwritten notes, or special branding elements that will make your customers feel valued. Also, it’s easier to create memorable unboxing experiences that match your brand identity.
• Easy start: New businesses can start from a small space like a home office without complex partnerships.

Of course, this approach also comes with major challenges:

• Time drain: You’ll spend significant time packing, shipping, and managing returns instead of growing your business.
• Hard to scale: As orders increase, you might struggle to keep up, especially during busy seasons. That could lead to shipping delays and unhappy customers.
• Upfront costs: You might need to invest in warehouse space, packing equipment, and shipping software — which is expensive.
• Complexity: You’re responsible for managing all shipping details, from choosing carriers to handling returns, which can get overwhelming quickly.
• Limited reach: Serving customers far from your location means higher shipping costs, which can limit your ability to expand into new markets.

This approach is perfect if you’re handling a small number of orders each day or if most of your customers are local.

2. Using a fulfillment company

When you partner with an eCommerce fulfillment company like ShipTop, you’re handing over your logistics to experts who will handle your order processing, storage, and shipping. This lets you focus on growing your business while we ensure the products reach your customers quickly and safely.

Major advantages of working with a fulfillment company include:

• Cost savings: You can get lower shipping rates these companies negotiate with carriers, which is especially valuable when you’re handling high order volumes.
• Time freedom and less stress: Focus on marketing, product development, and customer engagement while experts handle your logistics.
• Easy scaling: Handle order spikes and growth without investing in infrastructure — your fulfillment partner adjusts their operations to match your needs.
• Expert support: Take advantage of their experience in warehousing, inventory management, and shipping to run more efficient operations.
• Wider reach: Ship faster to more locations by using their network of warehouses, including international markets.

However, working with a fulfillment partner has some cons as well:

• Less control: You can’t easily make last-minute changes or customize orders since someone else handles your fulfillment.
• Generic service: Some large fulfillment companies might not offer the personal attention or customization options you want.
• Provider dependency: You’ll have to rely on their service quality and operations, which could be risky if they face issues. All the more reason to partner with a reliable 3PL provider.

This approach works best if you’re growing quickly or experiencing seasonal peaks in orders — you won’t need to invest in infrastructure to handle these spikes. It’s also perfect for startups wanting to focus on product development and marketing, for businesses planning to reach international markets, and for companies that are looking to reduce overhead costs.

3. Relying on dropshipping

With dropshipping, you never even touch the products you sell. When a customer orders from your store, you simply forward their order to your supplier, who ships directly to your customer. 

Here are the key benefits of dropshipping:

• Low startup costs: You can start selling without investing in inventory or storage space.
• Minimal risk: Only purchase products after you make a sale and avoid losses from unsold stock.
• Location freedom: Run your business from anywhere with an internet connection.
• Product variety: Offer a wide range of items without buying inventory upfront.
• Easy scaling: Grow your sales without worrying about warehouse space or inventory management.

Keep in mind these downsides you’ll face with dropshipping:

• Slim profits: Expect lower margins since you’ll pay higher wholesale prices and cover shipping fees.
• Limited control: You rely on suppliers for inventory, shipping times, and product quality.
• High competition: Low entry barriers mean many sellers offer the same products.
• Return headaches: Managing returns gets complicated since products ship directly from suppliers.
• Supplier dependency: Stock shortages or shipping delays from your supplier directly affect your customers and their (un)happiness.

Dropshipping works best if you’re starting a new business and want to test products without risking much capital — you can focus on marketing while your suppliers handle logistics. Furthermore, if you’re targeting niche markets or running a seasonal business, dropshipping lets you adapt your product range quickly based on trends or demand.

4. Implementing a hybrid approach

Instead of sticking to just one approach, you can combine various fulfillment methods we mentioned earlier. For example, you might handle your bestsellers in-house while using dropshipping for niche items, or work with a fulfillment company for international orders while managing local deliveries yourself.

Hybrid approach for fulfillment has benefits such as:

• More flexibility: Choose the best fulfillment method for each order based on product type, customer location, and delivery speed needed.
• Better costs: Pick the most cost-effective option for each situation.
• Happier customers: Offer various shipping options and faster delivery times by using the most efficient method for each order.
• Backup options: If one method faces issues, you can rely on others to keep orders flowing.

However, you’ll face these challenges with a hybrid approach:

• Complex coordination: Managing multiple fulfillment methods requires sophisticated systems, careful planning, and coordination with multiple partners.
• Higher setup costs: While you’ll save money long-term, starting costs are higher than using just one method.
• Quality variations: Maintaining consistent service across different fulfillment methods takes extra effort.
• Stock tracking: You’ll need robust systems to manage inventory across various locations.

Hybrid strategy works best if you’re selling a wide range of products or experiencing rapid growth. It can also work for businesses with physical stores that want to ship from both their shops and warehouses to speed up delivery times. You get a lot of flexibility at the cost of some complexity.

A quick overview of standard eCommerce shipping options

Your shipping strategy will affect everything from your profit margins to customer loyalty — so it’s important to get it right.  

Types of shipping methods

Today’s online shoppers want different delivery options. Some want cheap shipping, while others just want their items ASAP. Let’s look at the main shipping choices merchants can offer:

• Standard shipping: This is your basic shipping service. It takes 3-7 business days and costs less than faster options. It works well for everyday orders and large shipments that aren’t urgent.
• Expedited shipping: This option delivers in 2-3 days, making it faster than standard but cheaper than overnight shipping. It’s good for customers who want their items soon but don’t want to pay premium prices.
• Overnight or next-day shipping: When customers need items the next business day, this is their best choice. It costs more but guarantees fast delivery. People often use this for emergency parts, important papers, or last-minute gifts.
• Same-day delivery: This service gets packages to customers within hours, but it is expensive and only works in big cities. It’s perfect for things that can’t wait, like fresh food, emergency medical supplies, or urgent documents.
• International shipping: Delivery takes anywhere from 3 to 21 days, depending on how you ship and where it’s going. You can send items by air (faster but costs more) or by sea (slower but cheaper for big shipments). To succeed with international shipping, you need to understand customs rules and pick the right shipping method for what you’re selling.

The key is to pick the right mix of shipping choices that work for your products, your budget, and your customers’ expectations.

Common eCommerce shipping rates and strategies

Your shipping rates don’t just affect your profits — they influence how customers shop, what they buy, and whether they complete their purchase. 

Here’s a quick overview of the most common shipping strategies:

• Free shipping: You pay the shipping costs instead of your customer, usually by building it into your product prices. People love it, but this will cut into your profits.
• Flat-rate shipping: You charge one fixed price for shipping, no matter what the package weighs or where it’s going (within limits). Customers will like the simplicity, but this only really works if you ship products of similar size and weight.
• Calculated shipping:  Your customers pay the exact shipping cost based on their package’s size, weight, and delivery address. While this allows you to not lose money on shipping, customers might be surprised by the high shipping costs. It’s also harder to set up on your website, and you can’t easily advertise shipping costs since they vary.
• Local delivery and pickup: You deliver orders yourself or let customers pick them up from your location. This significantly lowers shipping costs but adds a lot of extra work and simply isn’t scalable.

It’s usually best to combine multiple strategies — like offering free shipping on orders over a certain value while maintaining calculated rates for smaller purchases. Test different approaches and find the right balance between customer satisfaction and profitability. 

Breaking down all of the eCommerce shipping costs

Let’s break down each cost that goes into getting your products safely to customers, so you can make smart decisions about your shipping strategy.

Carrier fees and service charges

The main cost comes from shipping carriers like UPS, FedEx, USPS, and DHL. While they advertise base rates, your final bill is usually higher. This happens because carriers add extra charges to the basic shipping cost. For example, they use dimensional weight pricing — and charge you based on either your package’s weight or its size, whichever costs more. 

They also add fuel charges which change as gas prices go up and down. You’ll pay even more for certain deliveries: for sending packages to rural areas, deliveries to homes instead of businesses, shipping during busy seasons, or when you need a signature for delivery. 

Packaging and material costs

Every package you ship needs materials, and these costs add up quickly. Basic boxes and mailers cost between 50 cents and $5 each, depending on their size. You also need packing materials like bubble wrap, air pillows, or packing peanuts, plus tape and labels. These extras add about 30-40 cents to each package. When you ship hundreds of orders every month, even these small costs become significant.

If you want to use custom boxes with your company’s name and logo, expect to pay more for packaging. The same goes for special packaging for breakable items. 

If possible, buy packaging materials in larger amounts to lower your cost per package. Also, use boxes that fit your products well to save money on materials and avoid extra charges from carriers.

Insurance and tracking fees

Most carriers now include basic tracking at no extra cost. However, protecting your packages costs more. Insurance fees depend on the order value — the bigger the value, the bigger the fee. You can save money by using third-party insurance companies instead of carrier insurance – they often charge less for the same protection.

Here’s a smart way to save: think carefully about which items need insurance. If you’re shipping a $15 item, the insurance might cost more than replacing the item if it gets lost. Many successful online sellers will only buy insurance for expensive items. 

Customs and duties for international shipments

Shipping to other countries brings extra costs that change depending on where you’re sending items. Each country charges different import fees based on what you’re shipping. You’ll also pay:

• Customs processing fees
• Document fees for shipping papers
• Broker fees, especially for business shipments
• Sales tax or VAT in the destination country

Returns from international orders cost even more because you pay duties again to bring items back.

Some sellers choose to handle and pay all customs fees themselves (called DDP shipping). While this costs more upfront, it stops customers from getting surprised by extra charges when their package arrives. Happy customers often buy again, which can make up for the extra cost.

Calculating your total shipping costs

Let’s break down the real cost of shipping with a simple example. 

Say you’re selling a premium coffee maker for $149.99 and sending it 500 miles to someone’s home. At first glance, shipping seems straightforward — your ground shipping is $12.50. But then you need to add $4.00 because it’s going to a home address, plus 88 cents for fuel charges. Now your shipping cost is $17.38. 

Your coffee maker needs good packaging to arrive safely. You’ll need a special box that’s 18″ x 14″ x 10″ — that costs $3.25. Then add bubble wrap (75 cents), packing peanuts (50 cents), tape (25 cents), and a shipping label (15 cents). All this packaging adds up to $4.90. 

There’s more: insurance costs $4.60 because it’s a valuable item, someone needs to pack it (that’s $3.50 in labor), you need space to store your shipping supplies (25 cents), and your selling platform takes 75 cents to process everything. Add it all up, and you’re spending $31.38 to ship each coffee maker.

So what can you do? Generally, you have three choices: 

1. Charge customers $34.99 for shipping (which covers your costs and gives you a small safety net).
2. Offer free shipping (and pay the costs yourself).
3. Meet in the middle with a $15.99 shipping fee. 

Finding the right packaging for your products

When you package items poorly, you risk damaging both your products and your business reputation. Damaged goods are the leading reason for returning the products, and they damage customer’s trust. On the other hand, overprotecting items with too much packaging wastes money on unnecessary materials and shipping costs.

To protect your products properly, you need:

• A primary layer that touches and protects the product directly
• A middle layer for cushioning and keeping items stable
• An outer layer that protects everything during shipping
• Extra protection for corners and edges of fragile items
• Appropriate filling material based on product weight

Using the right size packaging makes a big difference to your bottom line. When you ship boxes that are too big, you pay for empty space. Here’s what you need to know about dimensional (DIM) weight:

• Different carriers use different formulas 
• Using oversized boxes can double your shipping costs
• Regular size checks can reduce your shipping costs
• Better box sizes usually pay for themselves quickly
• Large businesses might save money with custom box sizes.

Common types of packing solutions

Choosing the right packaging does three important things: it keeps your products safe, controls your costs, and shows off your brand. Most businesses use Regular Slotted Containers (RSC) — these are your basic boxes. But if you ship heavy items, Full Overlap (FOL) boxes offer better protection. For special products, you might need custom-cut boxes or boxes that slide together.

Shipping clothes or soft items? Poly mailers or padded envelopes work well and cost less. You can choose from simple bubble-lined mailers or ones made from both paper and plastic that are better for the environment.

You need to protect what’s inside too. Most items do well with air pillows or bubble wrap — they’re light and don’t cost much. For expensive items, you might want custom foam inserts or special hanging packages. 

Some products need extra care — temperature-sensitive items electronics that need anti-static materials, or liquids that might break. These need special packaging to meet shipping rules and keep your business looking professional.

Your package can also help market your business. Adding your logo, brand colors, and social media information to boxes turns simple deliveries into marketing opportunities. Many brands now add QR codes that link to online content and include thank-you messages that make customers feel special as soon as they see their package.

More customers now care about packaging that’s good for the environment. You can choose from many earth-friendly materials: recycled cardboard, packing peanuts made from cornstarch, and even packaging made from seaweed or mushrooms.

Don’t forget the shipping label

Your shipping label is like your package’s ID card — it has to stay readable and stick firmly to your package. A lot of businesses use thermal printers for their shipping labels. While these printers cost $200-300 up front, they save money over time because they don’t need ink and they are simple to use.

A few tips to make sure your shipping labels are:

• Double-check that the label is accurate: One wrong digit in an address can send a package across the country by mistake. Some modern shipping platforms include address verification  — which is a real lifesaver.
• A lost label means a lost package: A regular printer will do just fine. Just make sure you’re using a quality label that won’t peel off during transit. For extra protection, cover the whole label with clear tape or use a plastic sleeve.
• Label placement: The best technique is to peel and apply from one corner, smoothing as you go. Always place it on a flat surface of the package, never across seams or corners.

Selecting the right insurance and tracking options

Every eCommerce business needs to make smart decisions about shipping insurance and package tracking — these two elements can protect your profits and keep your customers happy. 

Shipping insurance options

You can get shipping insurance in two ways. First-party insurance comes straight from shipping companies like UPS and FedEx that offer reimbursement based on the package’s declared value — and they already cover your first $100 for free. Third-party insurance companies like Shipsurance, InsureShip, or U-PIC usually charge less, especially if you ship a lot. 

You probably want insurance when shipping:

• Items worth more than $100
• Things that break easily (like electronics or art)
• Packages going overseas
• Large shipments
• One-of-a-kind items
• Holiday products during busy seasons

If you’re shipping a $500 smartphone, the extra dollars for insurance makes sense compared to potentially losing the entire value. However, for a $20 t-shirt, the standard carrier coverage is usually sufficient.

Product tracking options

When people see their package moving through the shipping journey, it dramatically reduces support tickets and anxiety. Modern customers expect Amazon-like visibility — they want to know if their package is sitting in a warehouse, on a truck, or out for delivery. 

Modern order management systems should use tracking in several ways. For customers, this means sending automatic tracking emails, text updates about important events, alerts about delivery problems, and current delivery time estimates. 

For your business operations, you need a central dashboard to manage tracking information, tools to handle multiple tracking numbers, ways to deal with delivery problems, and data to analyze shipping performance.

Simplify eCommerce shipping and fulfillment with ShipTop

When you’re running an online store, every shipping delay or mistake can cost you customers. That’s why we handle everything that happens after your customer clicks “buy.” From same-day shipping for orders placed before 1 PM PST to professional packing that prevents damage, we take care of the complex parts of order fulfillment.

Whether you sell on Shopify, Amazon, eBay, or any other large eCommerce platform, we’ve got you covered. Our real-time dashboard shows you exactly what’s happening with your inventory and orders, while our network of warehouses across North America means your packages get to customers faster. 

Ready to turn shipping from a daily challenge into a competitive advantage for your business?

Contact ShipTop for more information or request a quote today.