Shipping & Fulfillment

ShipStation CEO on ‘Fast and Free’ Shipping Demands

The process of creating satisfied customers starts with providing a level of service that’s greater than their expectations. For ecommerce, shipping is customer satisfaction’s frontline, and online sellers should aim to meet shoppers’ expectations for fast and free shipping.

But providing fast and free shipping and profitability is not easy. To address it all, I recently spoke with Nathan Jones, president and CEO of ShipStation, a web-based shipping software solution.

Practical Ecommerce: Let’s imagine that you make a purchase online. How soon do you expect the order to arrive?

Nathan Jones: At the very minimum, I expect it to be delivered when the website says it’s going to be delivered. That’s the most important first impression to give. If you say it’s going to be two weeks, then it needs to be within two weeks. If you say it’s going to be two days, it needs to be two days.

Whereas traditionally we were happy to wait a few days or even a few weeks in some cases for products, now if you don’t get it to somebody within two days, they immediately feel like the expectation hasn’t been met.

PEC: Is it a good thing that some leading retailers are pushing the envelope on delivery?

Jones: I think for the category of ecommerce in general it’s definitely healthy. It does make it more difficult to run a business. It makes it harder to meet the standards imposed, but it also offsets the argument against traditional retail. You walk into a store because you can get something today. People have adjusted those expectations over time to say, “Well, what if I could just get it tomorrow or the day after tomorrow, is that fast enough?”

I think that’s to the benefit of the companies that execute it really well. But even for companies that don’t generally ship at that pace, they still benefit from the general feeling of people that you can get things almost as fast shopping online as you can shopping locally.

PEC: What are some of the things that a merchant can do during the shopping process to set a proper expectation for how quickly something will be delivered?

Jones: Communicating clearly with the customer upfront, in plain English, with words such as “usually delivers in” or “will deliver in” and setting the number of days that it takes to deliver it is important. If you’ve done that, the next most important thing is to execute on it every time correctly.

Making sure the confusion is eliminated at the point of sale is really important. If you say “usually ships in two days,” that doesn’t necessarily clearly say the same as “usually delivers in two days.”

PEC: What are some of the things merchants can do to deliver very quickly?

Jones: You have to arm yourself with technology and tools that make the time from when an order is placed to when it leaves your warehouse as short as possible. A lot of companies get burned because their internal processing is slow. So it’s not actually time on a truck that causes the delay. It’s the time required to get the order from their system into their warehouse, and then into a box, and then onto a truck.

It’s easy to look at what other companies do [those that excel at shipping] and think that it’s voodoo, that they must have some special relationship with the carriers. That’s really not it. The thing they do is make the decision of how to ship it and get it in a box as simple and quick as possible.

PEC: What do you think about a distributed inventory strategy — using multiple warehouses?

Jones: With distributed inventory, now you get the chance to cut the delivery times even shorter by shipping it closer to the customer’s delivery location. It’s not cheap to warehouse in multiple places, but once you do, having a system that lets you route that efficiently can make a difference.

Distributed warehousing is a really powerful tool, and it’s becoming more accessible with the proliferation of 3PLs [third-party logistics], where merchants no longer have to run their own warehouse in multiple locations. They can use somebody else’s warehouse in another location.

PEC: What are other tips for keeping the cost of shipping down?

Jones: First is that sellers should consider a multi-carrier solution. All sellers should be thinking about more than just one carrier when they are considering the fulfillment options. A lot of times a small seller will start up and they’ll be lured in by saying, “We just want to work with UPS, or we just want to work with FedEx.” They pick up one carrier and they stop at that.

Depending on what you’re shipping and where you’re shipping it, you’re going to get a different value from different people for carrying those packages.

PEC: What about for returns?

Jones: We see a general trend towards merchandise being returnable in most cases. We have thousands of users inside of ShipStation that accept returns very generously.

Once you’re doing that, you’re back to another problem of managing operations. How efficiently can customers get a return label in their hands, and permission to return something? How do you track the product once it comes inside?

PEC: What are customer expectations for shipping going to be in the next three years or five years?

Jones: I’ll engage in speculation. It’s hard to predict the future, but what we can do is look at the past and use that as a guide. What we find is that no matter what you give to any other human, we adjust our expectations to find that to be the norm, and then someone else has a chance to step up and do better.

If I’m the only company selling a thing, I might be able to use non-two day shipping, non-free two-day shipping, or handle shipping a different way. If I’m selling something that can be bought someplace else, often the winner is going to ship it for free by two day air.

For the people who can participate in delivery networks that can get delivery down to same day, I think in three years you’re going to see a considerably larger percentage of goods shipped by that method. That’s going to require collaboration between merchants, across industries, where one company that might be able to distribute warehouses all across the country.

Armando Roggio
Armando Roggio
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