Your online business is doomed to fail if it can’t solve the shipping conundrum. You must get your goods to your customers as quickly as possible - with minimal costs. It’s a challenge all e-commerce entrepreneurs face, though there are generally four ways you can approach this problem. All 4 of these ideas will have benefits and drawbacks — and they will suit different types of online businesses. Let’s explore them all to see which one makes sense for your situation.
By Team Savant
Image: Eric Prouzet
Option 1: Stock and ship goods from home
This is very much an old-school approach for small online businesses that are just starting out — or ones that don’t have many products to sell. For example, you run a small Etsy store that sells handcrafted products. In this scenario, you only need to ship products after making them, so you’re unlikely to need a lot of storage space.
Collect orders, package them at home, and then find a delivery option to post the orders to each customer. You could go down to your local post office to ship the orders off or pay for a company like UPS or FedEx to send them for you. Either way, all of your goods are stored and organised at home, ready for you to package and send.
This may require the use of storage space in your home, like a garage or basement. As you can imagine, the main drawback of this approach is that it’s only suitable for smaller enterprises. If you expand your business or see lots of orders, then you’ll need to increase your supply levels. Eventually, you’ll have no space at home, which forces you to try one of the next two options.
Option 2: Rent a warehouse to store goods
When you run out of at-home storage space, the next logical step is to rent a bigger place to keep your inventory. Warehouses are your best bet - you’ll find them in all shapes and sizes to suit your requirements. Having a slightly larger warehouse is also beneficial; it gives you room to grow your business without needing to move.
Kit out your storage facility with warehouse shelving to make the most out of your space and organise your inventory. In the early stages, you can manage the warehouse alone — or with help from a friend or two. As your company grows, you may need to hire full-time warehouse staff to deal with orders and get them ready for shipping.
Like the first option, you can collect and send orders on your own. However, the benefit of a warehouse is that it’s easier to partner with shipping companies. You pay a fee, and they come to your warehouse, load up their truck, and deliver your goods. It’s a wonderful option for growing businesses, but the downside is that renting a warehouse and managing it can be very costly. You’ll need to weigh up whether or not the costs align with the benefits - could it be cheaper to adopt a slightly different approach?
Option 3: Work with a fulfilment service
What if you wanted the benefits of a warehouse without the ongoing running costs or responsibility? This moves us to the most popular shipping option for lots of online businesses: fulfilment services.
A fulfilment service — or fulfilment centre — is a warehouse that stores inventory for dozens of different companies. You pay to store your goods in this place, and the fulfilment company automates all the orders for you. They get the goods delivered to the warehouse straight from your suppliers before shipping them out when an order comes through your website. It’s a hands-off approach to this issue that tends to hold nothing but benefits.
Working with fulfilment centres saves money, though there is one main disadvantage. You don’t have as much control over the shipping process, which can lead to extensive problems if a customer has an issue. For example, imagine a customer complains about a missing order. They contact your online business to submit the complaint, but you have to get in touch with the fulfilment centre. It extends the customer service process and makes the whole situation a lot harder than it should be.
If you want to pursue this route, partner with a reliable fulfilment centre. Check reviews and recommendations to find a trustworthy partner, which will mitigate the chances of issues.
Option 4: Use the dropshipping technique
The final option only makes sense if you’re selling generic goods from other brands. As an example, you have an online retail business that sells fashion items. You don’t make the clothes; you simply sell things from other brands. This often means you partner with wholesalers to buy the goods, stock them on your website, and then ship them to customers.
In specific situations like this one, you can speed up the shipping process by doing something called dropshipping. This is where you list products on your website, your customers order them, and you place the order with your supply partners. Here’s the catch: every order you place will have the customer’s address attached, meaning the goods get sent directly to them.
It removes the need for any storage space and keeps shipping costs as low as possible. There are two big downsides to dropshipping:
It won’t work for every business
It tends to result in longer delivery times
Find the best shipping method for your online business
To recap, storing goods and shipping them from home will be a low-cost way of managing online orders. It works wonderfully in the beginning, or if your business doesn’t deal with a high volume or orders, you can store your entire inventory at home.
Renting a warehouse gives you the most control over your shipping process and allows for growth, yet it’s also the most costly approach.
Working with fulfilment centres is a great middle-ground for many online companies; it’s cheaper than running your own warehouse and lets you store more stock than you can at home.
Finally, dropshipping is an alternative option that cuts out the middle-man and makes sense when you sell branded products that are bought from wholesalers.
All of the ideas have benefits/drawbacks; read through them again to gauge which one aligns with your unique business needs!