eCommerce Shipping: Strategies & Practices

By: Jingsourcing

eCommerce shipping fees can significantly reduce profits, making it unsustainable with a gross margin below 15% and causing cash flow issues below 25%. Thus, finding affordable and efficient shipping solutions is essential. This is especially true for cross-border logistics, which add challenges like warehouse congestion, customs delays, and delivery issues, leading to increased customer complaints and negative reviews. These problems can severely impact after-sales service and account management.

What is eCommerce Shipping?

E-commerce shipping refers to the process of delivering goods purchased online to the customer. It encompasses all steps from order fulfillment, packaging, and labeling to choosing carriers, managing logistics, and ensuring timely delivery.

Why is eCommerce Shipping So Important Today?

In today’s globalized world, eCommerce logistics involves domestic fulfillment and cross-border shipping. According to the DHL International Shopper Survey, cross-border eCommerce is crucial, with 55% of global shoppers willing to buy from other countries.

Cross-border logistics is a big challenge. Efficient and reliable logistics ensure that products reach customers on time and in good condition, which is vital for eCommerce operations and customer satisfaction. It’s a key part of the eCommerce supply chain. By improving logistics, the sales cycle speeds up, cash flow improves, and cross-border sellers can increase their profits.

How to Select Optimal Shipping Solutions for eCommerce?

Effective eCommerce shipping strategies should match your business goals, target audience, product type, strengths, and budget. Key components involve options like standard, express, and international shipping, tracking systems, returns management, and cost-saving measures to improve customer satisfaction and business efficiency.

There are two main shipping strategies: cross-border shipping and overseas warehousing.

Three Methods of eCommerce Cross-Border Shipping

1. International Express: DHL, UPS, TNT, FedEx

International Express is the fastest but most expensive shipping method. It offers a global network and customs clearance capabilities, providing efficient, safe, and fully trackable services. Shipping from China to the U.S. typically takes about 3 to 7 days. However, they involve complex customs procedures, strict inspections, and a higher likelihood of duty charges.

DHL offers good rates for Europe, Japan, and Korea, with the fastest customs clearance in Western Europe. FedEx and UPS are the best for the U.S. and can deliver to Southeast Asia within a day. The main issue with commercial express is the cost; even with significant discounts, it remains high.

This method is suitable if the shipment is less than 2kg, the product has a high unit price and profit margin, and the consumer demands quick delivery. It’s also ideal for new sellers or those with uncertain presale periods, as it allows for quick cash flow. Additionally, it suits sellers with products affected by seasonal demand or with short product cycles.

2. Dropshipping from Suppliers by Dedicated Logistics Lines

Due to the high cost of individual cross-border shipments and sometimes unreliable delivery times, dedicated logistics lines have emerged. Carriers consolidate a large number of shipments and send them together to destination warehouses once fully loaded. This consolidation strategy creates economies of scale, effectively reducing the per-unit shipping cost. Additionally, dedicated lines have fixed routes with no transfers, which shortens transit times and addresses the shortcomings of traditional postal packages.

These lines are suitable for shipping small items such as:

• clothing, shoes, and accessories
• mobile phones, tablets, and cameras
• stationery, kitchenware, and home decor
• cosmetics, skincare products, and shampoo
• small gifts and crafts

Currently, in addition to mainstream lines like China-U.S., China-Europe, and China-Russia, there are also dedicated lines to India, Brazil, Latin America, and Turkey.

3. Dropshipping from Suppliers by Postal Service

Postal networks cover 230 countries worldwide, offering strong customs clearance capabilities at a much lower cost than DHL or UPS. Delivery times to Europe and the U.S. are 7-15 days, and 7-30 days to other countries. This method is suitable for packages under 2kg without batteries and with no urgent delivery needs, such as costume jewelry, accessories, and other small items. It is also the most cost-effective option for remote and small island countries. However, the downside is the lack of tracking and a higher risk of lost packages.

Three Overseas Warehouse Solutions

First, overseas warehouses are suitable for:

Large and heavy products: These items face size and weight restrictions, typically far exceeding 2kg, and international express can be very expensive. Using overseas warehouses can bypass these restrictions and reduce shipping costs.

High gross margin products: The cost of using overseas warehouses is higher than cross-border direct shipping, so only high-value items can cover this cost.

Best-selling products: For bestsellers, sellers can process orders faster and improve cash flow using overseas warehouses.

Platform-operated warehouses and third-party warehouses

Sellers send their products in bulk to the official platform’s operation center, where the platform provides a range of services including warehousing, order picking, packaging, shipping, payment processing, customer service, and returns handling. However, the logistics and storage fees are relatively high, which can reduce seller profits.

For example, Amazon’s FBA (Fulfillment by Amazon) service. FBA warehouses are often located near airports, ensuring high delivery efficiency. With increasing competition in eCommerce these years, more Amazon businesses are using FBA. However, FBA has high fulfillment costs, complicated returns, strict storage rules, and many product restrictions. New sellers should thoroughly understand FBA details before stocking.

Third-party warehouses are mainly provided by freight forwarders, such as 3PL companies. Their services are comprehensive and generally cheaper than Amazon FBA, helping sellers maximize their profits. For many sellers, third-party warehouses are a good choice.

Setting Up Your Overseas Warehouse

Setting up your overseas warehouse is the most challenging shipping strategy. It involves cross-border eCommerce sellers pre-stocking products in a self-built warehouse in the destination country. When customers place orders on the seller’s website, the products are shipped directly from the overseas warehouse to the customers, improving delivery times and providing a better shipping experience.

Overseas warehouse logistics cover storage, distribution, and also include bulk goods international shipping, warehouse operations, last-mile delivery, and returns management. This requires substantial resources in warehousing, distribution, and information technology. Additionally, you must navigate the laws, tax policies, and logistics challenges of different countries.

Compared to outsourcing to third-party warehouses, setting up your own warehouse demands significant financial strength. You’ll need to invest in software and hardware, warehouse management systems, and personnel. However, businesses with a good reputation and customer base can save on shipping costs, improve delivery times, and control after-sales service by establishing their overseas warehouses.

The classic case here is Anker, a well-known brand for consumer electronics, which is worth studying not just for its product innovation but also for its supply chain. Anker initially rose rapidly relying on Amazon, using FBA, and setting up warehouses on the U.S. West Coast because the shipping time from China to the West Coast was 12 days. Leveraging their large customer base and efficient logistics network, they quickly expanded into the international market. Now, Anker currently has warehouses in 146 countries worldwide.

What to Consider When Choosing eCommerce Shipping Providers?

1. Type of products you sell Different shipping providers have their specialties. Some excel in clothing, others in lightweight international packages, and some in large and heavy items. Finding a provider that matches your product type ensures professional service and lower costs.

2. Optimal packaging Many providers use excessive packaging, leading to larger dimensions and higher shipping costs. Minimize unnecessary waste while ensuring product safety, especially for fragile or electronic items, to keep shipping costs down.

3. Consistent delivery times Cross-border logistics involve several stages, including domestic transportation, export customs clearance, destination country customs clearance, and final delivery. A reliable provider ensures stable delivery times through all these stages.

4. Avoid the lowest price The logistics industry has many hidden fees, especially in cross-border shipping. Ensure the service rates are transparent, reasonable, and stable, with clear pricing models. Choose cost-effective providers with good service and delivery times, and avoid the lowest-priced options, which often come with hidden problems.

5. Professional and attentive service Beyond price and delivery time, service quality is crucial. Shipping can involve many issues like lost or damaged packages and delays. Cross-border shipping also deals with multiple customs and tax regulations. A good provider has the knowledge and experience to handle these issues and can provide timely solutions to minimize losses.

Jing Zhu is the founder of Jingsourcing, a leading China sourcing company that helps businesses find reliable manufacturers in China for quality merchandise and import them to their countries. They have assisted over 4,000 small and medium-sized businesses, with 70% of them involved in various types of e-commerce.