5 Common Shipping Mistakes to Avoid
Free Book Preview Cannabis Capital
With the passing of the 2018 Farm Bill and general public acceptance of CBD products, the floodgates are starting to open for cannabis brands as consumer demand booms. In 2019, major retailers, such as Walmart and CVS, stocked their shelves with CBD products, further driving consumer awareness and demand.
However, starting in March of 2020, the coronavirus pandemic dampened in-store foot traffic, and consumers shifted their focus to buying CBD products online. As a result, many CBD sellers have shifted their attention to their e-commerce channels, primarily their own online stores, to sell products. According to the Brightfield Group, a CBD data research firm, e-commerce sales will garner 39 percent of all CBD retail sales in 2020, making it the largest sales channel. Sellers had to adapt quickly this year by scaling their fulfillment operations and optimizing their shipping strategy.
Here are a few common, but not necessarily obvious, shipping mistakes CBD sellers should avoid if they want to stay competitive in this new market.
1. Not verifying customers' addresses
A key milestone in a buyer's journey is hitting the confirmation button in the shopping cart. This simple act triggers the fulfillment process: The order is picked, packed, and shipped. And the buyer sits back and waits for their newly purchased goods to arrive on their doorstep. But approximately 1 percent of delivery addresses on the packages get flagged by the carrier as unrecognized or, in postal terms, undeliverable as addressed (UAA). The errors are most commonly a result of the buyer mistyping their shipping address during the checkout process (stupid autocorrect!).
Although the buyer often mistypes their address, the seller usually pays the steepest price. If the package gets lost or takes a lot longer to arrive, the seller risks canceled orders or getting social media shamed. A missed sale is one thing, the risk of losing that customer and that customer's endorsement for good is irreparable.
Sellers can avoid this angst by ensuring that the buyer's shipping address is correct at the point of purchase. Most modern e-commerce platforms, like Shopify and Magento, can provide turnkey integrations with fulfillment companies or third party address verification services to quickly check and validate the buyer's shipping address.
2. Only looking at the upfront shipping costs.
Shipping carriers have continued to adapt their business to meet online sellers' growing needs, offering lower-cost shipping options with faster delivery speeds for small packages. When setting up these shipping services, it appears that the rates will be straight forward— rates are often marketed at a flat fee or heavily discounted rates for cross country deliveries to make it more enticing for sellers. Savvy sellers know that the upfront rates are not always what they are cracked up to be as there can be ancillary costs, called surcharges, added to the upfront fees.
Surcharges come in many forms and are primarily presented at the time of shipping (i.e., much later than when you're putting together your shipping budget). Common surcharges include:
- Fuel surcharges - carrier fees that are changed frequently in accordance with changes in global fuel prices. These fees vary from 3 to 6 percent of the total price of the shipping cost.
- Residential fees - fees added for some residential deliveries.
- Peak surcharges - seasonal fees added, primarily added during the holidays. During the coronavirus pandemic, "COVID" surcharges have been implemented by many carriers. With both surcharges, some carriers topped out at as much as $2.50 per package during the holidays.
All in, surcharges can cost you an additional 15 to 20 percent per package shipped, so understanding the surcharges by carrier and service is critical to developing the right shipping strategy for your business.
3. Relying on one carrier
Let's face it; we all have our loyalties to certain brands—maybe to a fault. Often, sellers are no different when it comes to choosing a shipping carrier. They find a carrier whose shipping service works well with their types of packages. Or maybe they feel they've negotiated a really great rate with that carrier and fear switching will disrupt a good thing. Experienced sellers and fulfillment companies know that working with a single carrier can be shortsighted. The benefit of diversifying your carrier services is that you'll avoid disruption in the long term.
Like all businesses, shipping carrier performance has its ups and downs. System outages, disruption at the carrier distribution centers, and employee unrest are common and can severely affect a seller's business. By having established relationships with other carriers (including having them programmed into their shopping carts and fulfillment operations), you allow a quick pivot to another carrier when it may be necessary.
Additionally, carriers are consistently launching new service lines to meet their customers' needs and win market share from their competitors. Sellers should take full advantage of these services to keep costs down, provide more options to the buyers, and improve overall shipping performance.
4. Cutting corners on packaging
Brands focus the majority of their time on their brand strategy and product development—as they should! The CBD market is highly competitive, and brands need to exhaust all efforts to ensure their product stands out. One common mistake: not paying enough attention to the last phase of the sales cycle: fulfillment and shipping. These are important (and customer-centric!) aspects of a product strategy that are often not factored into the early development process, which can create problems down the road.
Successful brands set a high bar when creating an excellent unboxing experience for their customers. They want to delight their customers with the goal of increasing brand loyalty and having them buy again. It's becoming more common for brands to use more intricate box designs and branded packaging, which, in theory, achieve their goals of delighting their customers. Still, it can add significant costs to the fulfillment process and reduce the overall margin.
The security of the product within the box should also be factored early in the packaging design process, especially for fragile products. Packaging fill, often referred to as dunnage, may not effectively protect certain types of product, causing breakage during transport.
As unsexy as they may seem, these packaging considerations should be as integral to a product launch as the product creation itself.
5. Not fully understanding your shipping service
With shipping costs making up as much as 70 percent of the total fulfillment costs, sellers must understand what they are getting out of that shipping service (and what they're not). Knowing the nuances of your shipping service can save you costs, provide you and your end customer with better visibility, and improve your customers' satisfaction.
Small parcel shipping services, like UPS Surepost, FedEx Smartpost and DHL eCommerce (Curious how these stack up against each other? Here's a great comparison of the big three.) , are continually changing in terms of price, features, and how those packages are delivered. The common thread between the three services is that they are intended for small parcel shipments (under 10 pounds), and they leverage the United States Postal Service (USPS) for their last-mile delivery. During the 2020 holiday season, USPS experienced significant delays that directly affected customers using Surepost, Smartpost, and DHL.
If you choose a service strictly based on cost, you're missing a huge component of what that carrier can do (or is doing, or not doing) for you. It can seem daunting to rate-shop and compare the many options in terms of service, but it's essential to ensure you're working with a partner who is the right fit for your brand.
Feeling overwhelmed by all of these tripwires in the fulfillment side of your business? A great 3PL can help manage these aspects of logistics for you. It's often a common misunderstanding that you need to be a certain sized company to work with a 3PL, but in fact, a well-matched partner can save you on costs, headaches and help your business grow.