Shipping is a vital and slightly underappreciated aspect of online retail. While we generally don’t think shipping when we think online retail, its importance cannot be exaggerated enough. Shipping and logistics form the nervous system of e-commerce across the world. The online transaction that begins on your cell phone only ends when the product is delivered at your doorstep. For someone who is getting into e-commerce therefore has two choices when it comes to shipping – The first option is to give drop shipping a try. Drop shipping is a business model where the online seller forwards the customer details to the wholesaler who bears the packing and shipping responsibility while paying a commission. The second option is getting acquainted to the world of shipping and logistics.
The online retail boom of the last decade in India has greatly affected the logistics market too. The logistics sector, specific to e-commerce retailing in India was valued at $0.2 billion in 2014, and is growing by a compound annual growth rate of 48%, making its value at around $2.2 billion by 2020. While most of the online retail giants have in-house logistics arms that handle their shipping, these companies only command up to 50% of the market share. The remaining 50% is controlled by Third Party logistics providers, which include various small and medium sized businesses. As an online seller looking to partner with a logistics provider, this is where you should be looking.
Shipping Considerations
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Make Sure Your Product is Shipping Compatible
Shipping compatibility is something that should be given some serious thought by the online seller. Shipping is generally a brutal process for your product. Since a typical courier company has to transport tons of packages per day, a certain amount of wear and tear is accounted for within the industry. On top of that, if the product is inherently fragile or likely to malfunction as a result of a tedious and jampacked journey through train, plane and automobile, it is best to reconsider the product altogether. A complaint of this sort is generally heard in the electronics and home appliances category, and it can lead to heavy losses for the seller. It is therefore advisable to test whether your product can handle a few bumpy rides.
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Safe Packaging
It is not always the product’s fault when it comes to damage in transit. Most of the times, it comes down to packing. It is so important to invest in packaging when it comes to shipping products because it is an excellent preventive measure against losses due to product damage. If you regularly ship similar sized items or products, it would be beneficial for you to invest in packing material like customized polyfoam layers and corrugated sheets. Intelligent packaging design keeps your products safe from harm and does not fail to impress your customer.
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Choosing a Logistics Partner
There are a lot of options to choose from when it comes to a logistics partner. A large part of the answer depends upon the location of your customer and that of your product. Out of the 26,000 pin codes in India, the major logistics providers generally cover around 4,000 to 5,000. It is common practice therefore, to choose logistics partners according to geographical sectors. Important considerations while choosing the logistics partner include cost, estimated delivery time, quality of service and reputation among others. Many logistics providers are starting offer extra services returns management, extensive tracking services and an option for the customer to swipe their card on delivery.
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Cash on Delivery
Cash on Delivery seems to be the favored mode of payment for the Indian consumer, as it seems to account for between 50 to 80% of the market share in India. This can be marked down to the low penetration of electronic payment and credit cards in India, among other things. The Indian online seller therefore must take this fact into account and make sure that they provide a Cash on Delivery option with their products. Cash on Delivery is a chargeable service when it comes to logistics, and the charges may go from a fixed amount between Rs.21 to Rs.35 per product, to around 1.5 to 2% of the product’s value. Cash on Delivery must be an important item on your agenda while deciding on a logistics provider.
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Managing Returns
On an average, 6-8% of the products are returned by customers, while sometimes this number rises up to 25%. Product returns has always been a slightly controversial topic because it has been extensively misused by scam artists and malpractitioners, but its importance cannot be overstated, as a way for the customer to trust your service and as a marketing strategy. In fact, studies show that the way you manage your product returns can make or break your reputation as an online seller. Returns can either be due to failure of logistics or due to customer dissatisfaction. We have written extensively about managing your product returns here, but the relevant point in this case is that product returns are generally chargeable services add up your shipping costs by up to 50% of your delivery. Some logistics providers also provide return shipping assistance to the customer, by providing them repacking material and picking the package from their doorstep. The important thing to remember is to weigh customer satisfaction against your logistics budget.
This is what we have on shipping considerations. To know more, get in touch with Browntape. We are India’s leading e-commerce solutions experts, and we are always happy to help.
