When you first set-up your online store, you must decide on two things. The first is how will your customers purchase your products or service? (This is covered in another solution.) Once you have organised this, you are then faced with another challenge – how are you going to get the products to your customers?
Speed of delivery is an important aspect of post-purchase satisfaction. Unfortunately the cost of delivery is also a factor. Very few of your customers will say “send it to me regardless of the cost” particularly if it is a fairly common, inexpensive item which they can purchase from an offline store with a little more effort on their part. Remember, convenience motivates online customers so you must make delivery convenient too.
How will you deliver?
The first thing you must do is organise delivery and set up an account with a courier service, if applicable. A freight account will not only allow you to send your products in the most cost-effective manner, but can also allow you or your customers to track their order.
The most obvious company to use is, of course, Australia Post .Australia Post gives you the advantage of offering choice to your customers – your customers choose how much they want to pay for delivery, standard rate or express, depending on the urgency.
Australia Post’s product, Post eDeliver, will integrate with your own systems allowing you to eliminate data entry and letting you track the order.
Alternatively, there are the traditional courier services, such as FedEx. FedEx has raised online deliveries to a new level. It has a range of online software tools developed specifically for e-commerce. This software allows you and your customers to control the ordering and delivery process directly from your Web site.
Customers can track their order from your site instead of being directed elsewhere. What makes it cost-effective from a business point-of-view is that the software tools are free. It costs you nothing to integrate them into your system and can even streamline your operations.
FedEx also provides free supplies, which you can also order online. Of course, this all hinges on you using FedEx as your preferred courier/delivery agent and the cost of delivery may not be as cheap as Australia Post, which could be a drawback for your customers. However, FedEx does offer volume discounts.
Other companies such as TNT and DHL also offer online tracking support, a freight price checker and in the case of DHL, free software for your use.
You will need to shop around to find out which courier company will offer you the best deal, depending on the volume of goods you intend to deliver and whether you pre-pay bills or not.
You should also compare the prices of mailing your best sellers against using a courier service. You may find that if your product is under a certain weight, it is cheaper to use an overnight courier service than Australia Post, and has the added advantage of getting to your customers quicker!
Of course, if you already have a good relationship with a freight company, you should talk to that company first to discuss your options.
It would also help you and your customers if you used a company which allowed for online tracking of goods. That way you are providing a good customer service and if something goes missing, you have a better chance of tracking it down.
Another advantage for you in using a company which offers integrated solutions, such as software which works in conjunction with your POS system, is it streamlines your operations. As soon as an order is placed, your agent can be automatically notified at the same time and pick-up arranged.
Both Australia Post and FedEx, for example, also offer warehousing and inventory facilities where they hold your products for you and automatically send out the product once the order has been received and processed.
The main factor to bear in mind is the need to keep your delivery costs as low as possible. Customers may not purchase your products if the cost of delivery and handling doesn’t make the purchase cost-effective.
Once you have chosen a freight company, whether it is Australia Post or a courier, or a combination of the two, find out what times they pick-up and deliver. You will need these times to get your orders ready and so you can display the deadline for ordering on your Web site.
For instance, if the products will be picked up at 4 pm and you need at least two hours to process and pack any product, you should have on your Web site that “orders must be received before 1:30 pm (Pacific or Western standard time) for delivery the next day. Orders after that time will not be processed until the next day.”
That way, if you are offering next day delivery and the product doesn’t arrive until the day after next, you won’t have disappointed customers calling you, wanting to know why the product hasn’t arrived.
Organise your goods & supplies
Because you don’t know when a product is going to be ordered, you need to keep your inventory up-to-date so products can be delivered quickly. Unlike your offline customers, online customers are less likely to want to wait for products – that’s one of the reasons why they are shopping online – because they don’t have time to do anything else!
This is where your relationship with your suppliers becomes very important. Without regular deliveries, you could be without products to sell. The last thing you need is your supplier telling you that they are out of stock and it will take four weeks before any new stock arrives.
Contact your suppliers in advance and let them know your store is going online and as a result, you could need more regular deliveries. Warn them that in the short-term, you may have to order products with little notice and a quick delivery time and ask if that will be a problem.
A sales pattern should start to emerge from your online store after four to eight weeks, so you can start to schedule your orders.
If you don’t have enough room on your premises for all your inventory, check with your supplier(s) and see whether they could hold the products for you.
You will also need to arrange supplies from your agent. If you are using Australia Post, for instance, you will have to organise your own boxes or buy them from your post office or an office supply company.
Couriers, however, will usually provide packing and bags etc., free of charge and some, such as Fedex, even offer the facility of ordering online.
Because delivery is an integral part of any online sale, you will also have to inventory your supplies the same way you would keep an inventory of your products. Your customers are unlikely to forgive a delay in delivery because you have run out of packing material or boxes.
If you need to have your boxes printed, you must ensure that you always have this stock on hand, keeping in mind the time it takes to have these boxes ready when you reorder. If you know you have two weeks supply but it takes three weeks for the boxes to be printed and delivered, you have left the order too late. You would need to order a month in advance.
You must also consider the amount of space these supplies will take up on your premises, particularly if space is limited. It may be better for you to make an arrangement with your printer to hold some of your stock for you until you need it so you can still order in bulk and gain savings.
If you are selling a variety of different products, in different shapes and sizes, you will also need to make sure you have a variety of different boxes and material so you can accommodate each shape and size.
Keep a couple of extra large boxes as well in case you have a customer who has a large order.
Should you insure your goods?
In addition to organising who will deliver your products, you must also decide whether the products will need to be insured and who will pay the cost you or the customer.
Many companies incorporate the cost of insurance in the freight and handling fees because if an item gets lost in transit, most customers will want that product replaced free of charge.
Australia Post offers fairly cheap insurance depending on the cost of the products and if only to be perceived that you “care” about the customers receiving their goods in one piece, it would be worth your while to insure the more expensive items. Couriers usually offer insurance rates depending on the coverage needed. For instance, for DHL it currently starts at $15 for cover up to $750.
For the less expensive items, it is unlikely that you can pass a $15 insurance cost onto your customers. In this case, you should give your customers the option of paying for insurance or not. You must make it clear, however, that if they opt out of the insurance, the risks is theirs and you will not be liable for any lost or missing items.
For expensive or “big ticket’ items, you should insist on insurance. Nine times out of 10, your packages will arrive on time and in good condition. But you don’t want the tenth item to be worth $500, and have a customer who is demanding a new one because it was damaged in transit.
What should you charge for delivery?
In addition to convenience, price of delivery plays an important role in the customer deciding whether to purchase an item or not.
As mentioned previously, nearly half of those customers who abandon their shopping carts do so because of high freight and handling costs. If you are delivering books or CDs, for example, a $15 freight and handling fee could mean you won’t get the order unless the customer is living in the middle of nowhere and has no alternatives.
However, it’s a fact of life that any service costs money and you have to cover those costs. In addition to the actual freight or mailing costs, you also have to factor in your overheads or the “handling.”
Unless you are getting your supplies free from your courier service, there is the cost of packaging. There is also the very real cost of staff. Someone has to be responsible for getting the product ready to deliver and processing orders. If you have a staff person working full-time on distribution then the full cost of that person needs to be included into your handling fees. However, if that person is only working 50 percent of his/her time on distribution, you can lower your costs respectively to reflect that.
To keep your handling fees to a minimum, you should also check to see if you can deliver directly from your supplier. This will save you time and money but the disadvantage is you have less control over getting the product to your customer.
If there is a problem in delivery, it will be harder for you to work out what exactly went wrong. You will also need to clarify with your supplier how and when the goods are to be delivered. The customer will complain to you, not the supplier, if the goods are delayed for whatever reason.
