• November 18, 2015

A Startup Primer: Packaging, Shipping & Logistics

A Startup Primer: Packaging, Shipping & Logistics

Our team works with many e-commerce, B2B and B2C businesses embarking on their startup journey and experiencing challenges inherent with physically shipping products & goods to customers. A startup’s good idea for a product is created, marketed and sold, and all under the startup’s control – but at some point, they need to determine how they will get their product into the hands of customers. For most startups, a third party controlling all or part of the shipping experience is the best or only option from a cost and operations perspective.

The quality of a startup’s customer experience can’t go out the door when it comes to packaging, shipping & logistics. A negative experience could actually be a deal breaker for customers and affect ratings and reviews, and ultimately future & potential customers. A startup can have a great customer experience lifecycle, but an unoptimized packaging and shipping process can also greatly impact profitability for a startup.

If your business requires any sort of shipping, fulfillment or logistics planning, make sure you don’t enter this space blindly. We pulled together a quick primer to help you get started in understanding the complex world of delivering goods.

Packaging Options – Packaging and labelling styles can add huge benefit to your marketing and word-of-mouth efforts. A quality approach to packaging can help create a stand-out brand and truly become part of a memorable customer experience. Here are further tips to consider:

  • Boxing & package types & sizing: There are thousands of options for boxes, envelopes and other methods for packaging your goods. Depending on what you are shipping, consider unique packaging that will set you apart from competitors or other mailed goods and create an “unboxing” experience a customer will want to tell their friends about. Certain services exist that will let you design your own box or container design. But remember, above all else, your container must be sturdy and durable against various elements – weather, driver or customer mishandling, etc.
  • Protect the goods: Building upon the previous point, you have to ask yourself certain questions about your product before you can determine the best packaging options. Are you dealing with perishables? Do your goods need to be preserved in any way? Are they very fragile? This will help you to understand the packaging add-ons you need to consider, such as dry ice, insulation, bubble wrap, tissue paper, etc.
  • Don’t inflate costs: Shipping fees are typically based on size and weight. This point seems pretty obvious, but can be overlooked in the heat of the moment when deciding on packaging options that are flashy or unique. If it weighs a lot or is incredibly complicated to put together, it might not be worth it. Testing various packaging options is always a smart idea in the beginning to see how customers react and what your budget can support.
  • Create a new marketing channel: There are so many examples of incredible packaging experiences, especially from hot new subscription services that live and die by that experience for customers (think Stitch Fix, Birchbox, Trunk Club, etc.). These packaging experiences ultimately create a new source of customer satisfaction driving buzz, referrals and social sharing. Done right, your packaging can elicit natural, and even viral interactions between customers and prospects online. But, beyond just picking the coolest packaging and labelling styles, smart marketers will encourage social sharing within the packaging, on labelling, and throughout the product experience to keep promotion top of mind with customers.

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Shipping Options – Ultimately startups will want to calculate various factors to determine the best shipping options for their business based on originating location, destination, weight, size, customer tracking options, and more, ultimately factoring in rate and time-to-delivery.

  • Most businesses go with the larger couriers for obvious reasons – ease of use, cost, on-demand support, etc. Here is a good list of providers and their own resource pages to get you started:
  • Consider outsourcing once you hit product market fit. In the beginning you will likely want to control and have a hand in everything – even shipping. But, as the orders start to increase, keeping up with demand can become tedious. You will want to focus on supply, and let a third party handle all fulfillment. There are plenty of options out there, like BoxC, Amplifier, Shipwire, and others, and you need to truly vet them as you do any other vendor or service provider to make sure they have rates you can support, no hidden fees, high ratings and low incidents of error.
  • Don’t forget about insurance. Mistakes happen – it can happen on the road on the way to delivery or in the warehouse waiting to be shipped out. You are going to have to deal with unhappy customers and mishaps with shipping so have a grasp on the costs you will incur for the various edge case scenarios. If insurance and tracking is not built into the cost, determine what you need to tack on to give yourself and your customers peace of mind.
  • Save yourself time and money. Solutions and APIs exist to make your shipping experience more streamlined. Look into options like Shippo, which makes shipping easy & cheap for ecommerce stores, with a developer-friendly API, seamless web interface, and incredibly affordable shipping rates.

Want help determining the best shipping option or service for your business?

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Shipping Fee Options – It’s no secret that the holy grail for consumers is free shipping. Exorbitant shipping fees can be a tipping point for consumers to discard a purchase, and likely result in high rates of shopping cart abandonment for the startup. Shipping fees can cause a psychological reaction for some consumers, so you need to determine if that is how your consumers feel about fees, and as a result, what shipping costs you are able to either cover from your own margins, or cover with product cost increases. A/B testing in the early days is always a good way to determine what your customers can tolerate:

  • If you offer free shipping, look into ways that you can make up those costs in other ways. Can you increase the cost of the product slightly? Can you charge for returns? Once you determine what makes the most sense for your business & budget, be clear in your language about your shipping policy. For instance, if you are an early stage startup, it’s okay to test different or no shipping fees to see what sticks, but be clear that you are testing so that customers won’t be upset when you ultimately decide on a long-term strategy that might be a change from what they are used to.
  • If you make customers pay for shipping, determine and articulate your strategy early on. Will you charge users a flat rate? Will you charge them the exact carrier rate? If you’ve decided on a long-term shipping strategy, provide information to consumers in one place about your shipping & return policies. If your rates vary, provide a calculator or estimate so customers can understand it before they get to the “buy” button. Doing so will reduce confusion or discouraged buyers in the shopping cart stage. A popular strategy that you should also test is shipping fee minimums. If customers get free shipping when they purchase a certain amount, this also helps retailers upsell or hit ideal shopping cart amounts with each purchase.  
  • Test and understand what your customers react to the best. In addition to researching and having a solid understanding of the market and what your competitors are charging (or not charging) for shipping, you can also get more granular to understand what your customers want. Leverage shopping cart analytics & traffic monitoring to see when customers drop out – is it when they see your shipping fee? You can also go right to the source: ask your customers early on what they prefer via polls and VIP focus groups. Or if you are already in the thick of shipping and want to get reactions to fees: invest in social listening as a means to understand how shipping & packaging impacts the customer experience. If your customers are upset, they are likely talking about it in review portals or on social networks. Emails that circle back with customers abandoning a shopping cart can also collect data and feedback on why the customer is disinterested, and how to convert them back.  
  • Get fast if you can’t be free. In some cases, super fast delivery models can be more appealing to a consumer than no-cost shipping. If you determine that you can’t cover shipping costs, can you get the package to the consumer in a day or two?  This creates an alternative yet memorable experience for consumers that want items yesterday.

Need help researching shipping fees and how to implement a strategy for your business?

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Ultimately, you’ll want to conduct a thorough cost benefit analysis for all aspects of your packaging, shipping, fulfillment and logistics decisions. The most cost-effective option in the near-term might end up costing you in customer satisfaction and loyalty in the long-term, or vice versa.

Every business is different, and it always helps to speak with an expert or a consultant to nail down your specific strategy. Contact VENTUREAPP today if you’d like access to shipping, fulfillment & logistics experts on our platform. Are you a shipping, packaging, logistics or fulfillment expert or solution provider? We’d love to talk to you. Contact us today: info@ventureapp.com.