Get ready to ship for the holidays

by TaxJar December 1, 2023

This blog post is from our friends at Shippo. Please note: This blog was originally published in 2020. It’s since been updated for accuracy and comprehensiveness.

More than 60% of sales in the Amazon store come from independent sellers—most of which are small and medium-sized businesses.

Over 60% of sales made on Amazon stores come from independent sellers, the majority of which are small and medium-sized businesses. Most Amazon sellers report a profit margin of 15%-20%, and some sellers find it tough to keep up their margins as they sell more on marketplaces like Amazon in order to compete with other vendors.

So how can you drive more sales this holiday season while keeping your margins? By starting with fulfillment.

Fulfillment is not just a backroom operations, it impacts your conversion and cart abandonment rates, how competitive you are against similar businesses, and it can impact the your customer support overhead. We’ve outlined five ways you can use fulfillment to win the hearts of buyers this holiday season and beyond.

1. Surface delivery information on the product page

Amazon has defined online shopping expectations, beginning an evolution towards transparency and a customer-focused checkout experience.

Consider what information a customer looks for when deciding to make a purchase. There are the basics, such as product information, pricing, photos, customer reviews and, sometimes, recommended products. But two key pieces of information are often missed: expected arrival date and exact shipping cost.

Amazon not only highlights that information but they use shipping to drive a sense of urgency, pushing customers to buy now.

Moreover, Amazon doesn’t let customers wonder about anything when they are looking at the product page. They don’t say “Two-Day Shipping” and let the customer guess when it actually arrives. They provide the expected delivery date and cost.

Whether you are selling on Amazon or in your own store, adopt the same visibility into shipping expectations for your customers and you will improve conversion.

2. Use free shipping to convert visitors

Never let the cost of shipping be an obstacle. According to research by UPS, 81% of shoppers cite free shipping as the most important thing they care about when going through the checkout process.

The most frequently taken action to qualify for free shipping is adding items to a cart to meet shipping requirements. Use free shipping as a way to get customers to do more.

Increase your average order value

Determine your minimum purchasing threshold by calculating your current average order value and setting the free shipping minimum slightly above it. This will drive the customer to add at least one more item to the cart in order to qualify.

Just be careful not to set your threshold too high. If your average order value is $10 and you set your free shipping minimum at $200, you’re not offering enough savings to counteract the increased spend by the customer.

Offer free shipping as a promotion

You don’t have to offer free shipping all the time. Free shipping can provide a boost in sales at opportune times like the holidays or for clearing out old inventory. A limited time span drives urgency and acts as an incentive for customers to buy now.

Also don’t forget that you can just offer ground services for free shipping. According to research, 50% of shoppers will choose a slower transit time to qualify for free shipping and 83% of them are willing to wait an additional two or more days to get free shipping.

3. Don’t put all your eggs in one carrier

While offering “free shipping” is easy to say on the product page, financially, it’s can be difficult to balance.

If you’re only relying on one carrier right now, you may want to consider adding a few additional carriers today, before the holiday rush. Working with multiple carriers can help you optimize costs and provide more delivery options for customers.

Early in the holiday season, consider using a cheaper consolidator for your free shipping promotions. There won’t be any problems getting your products to customers on time for the holidays.

But as Christmas day approaches, take a look at carrier holiday cut off date and consider offering a premium, paid shipping service that allows your customers to continue shopping with you and get their orders on time.

Aside for holiday cut-off date, financially, take note of carrier holiday surcharges. UPS will have an additional surcharge for packages sent to residential addresses between November 19th and December 23rd. Whereas, FedEx announced that it will not apply residential holiday season surcharges, except in the case of packages that require additional handling or are oversized.

Many businesses already use multiple carriers to ship. For example, at Shippo, we offer two carrier options by default with discounted rates:

USPS for all U.S outbound domestic and international packages
DHL Express for all U.S. outbound international shipments with accurate tracking cross-borders

By being prepared with multiple carriers, your team can better control costs, exceptions, and delivery expectations.

4. Insure high-value shipments

Not only will there be more orders over the holidays, but the value of each order is generally higher (especially if you’re incentivizing them with promotions like free shipping).

For these high-value order, consider purchasing shipping insurance. A single loss or damage of a high-value shipment can set you back significantly. Not only have you lost the original shipment, but you might have to send a replacement.

You may already be purchasing insurance and didn’t know it. Each domestic FedEx and UPS parcel is covered automatically up to a value of $100 against loss or damage. The U.S. Postal Service provides an automatic $100 of coverage on Express services like Priority Mail Express and Priority Mail Express International. If the value of your package is less than $100 you may not need to purchase additional insurance.

For shipments valued over $100, you can purchase additional insurance provided by the carriers or from a 3rd-party insurer. On Shippo, purchase insurance directly from the label creation step of the app or through our API. Our insurance is brought to you by Shipsurance.

5. Prepare for post-holiday returns

According to a report by the National Retail Federation, consumers return over $63 billion dollars worth of merchandise purchased online after the holiday season. While returns are simply part of doing business, you can still minimize costs and operational impact.

A good place to start is by outlining what your customers can expect, whether it’s an exchange, store credit, or a full refund. Every ecommerce store has its own preference, so don’t feel pressured to conform. Many people will be shopping with you for the first time, so be as clear as possible.

When it comes to the actual return procedure, include the specifics for your customers. Set expectations by making it clear who needs to ship what and by what date. Who pays for shipping—you or your customers? Should your customers use your packaging or their own?

The most important thing you should do is learn why customers are returning your products.

Consider implementing a lightweight return merchandise authorization process where the customer needs to fill in a quick survey before getting a return label.
Document what’s being returned and if there’s a pattern in the product or listing. Perhaps the quality of the item is poor or the photos are misleading
Look at the types of customer who are doing the most returns. Did you acquire them all through the same channel? Maybe they’re not the right audience for your business.

Getting ready for holidays is an ever- evolving task. It’s impossible to have everything perfected, but the better prepared you are, the easier and more successful it will be for your customers and your business.