As a startup, you dream of growth: more staff, more infrastructure, more product to ship and more customers to receive your goods.
But the prospect of scaling up and the reality of handling that growth are two different things. Scaling your startup magnifies fault lines that might have previously gone undetected. At scale, small cracks can become big problems.
So, as you drive your startup forward with dreams of achieving unicorn status, it’s important to remain hardheaded about the logistics solutions required to scale effectively. And one of the key elements to growing your business is the ability to ship your product efficiently and cost-effectively.
To ship smartly and at scale, you first need to understand every aspect of your product, from how it is manufactured to where you store inventory.
While it’s tempting to view logistics as an afterthought, the most forward-thinking startups plan for an efficient supply chain from the outset. This means weighing all options as you piece together your logistics plan. For instance, you might consider innovative ways of manufacturing your product, such as 3D printing, or explore options for optimizing your warehouse configuration.
Although it’s easy to feel overwhelmed by all the moving parts in your supply chain, don’t try to figure everything out on your own. Bring in experts at supply chain management to help. For example, a company like Ware2Go can quickly get you up to speed with warehouse space and fulfillment options.
Planning preemptively is smart, as growing a small business is never straightforward. On every level, the more meticulous your logistics planning, the easier your shipping solutions will scale.
Once you have established key infrastructure for your startup, it’s time to get your product out the door. Remember that shipping is a variable cost, meaning that shipping costs expand and contract in relation to the volume of goods you’re shipping. The greater the volume, the higher your costs. Factor this into your cost of doing business as you scale.
As you develop your shipping strategy, there are several factors to think through. One aspect to consider is international delivery. However small your startup, size should not be a barrier to international commerce. If your product works domestically, there’s a very good chance it will work overseas, too. Think globally from the beginning and turn to expert resources for help with breaking into global markets. Exporting is a great way of driving business growth. In fact, U.S. companies that export not only grow faster, but are nearly 8.5% less likely to go out of business than non-exporting companies. In addition, companies that export are 17% more profitable than those that don’t.
You may also want to consider free shipping, particularly for e-commerce transactions. The reality is free shipping is becoming an expectation for a growing number of consumers nowadays. According to the UPS Pulse of the Online Shopper™ survey, 80% of shoppers cited shipping fees as a prime consideration during their product search, while more than half of the shoppers surveyed acknowledged abandoning their carts because of shipping fees.
Given this, explore ways of pricing the cost of shipping into your product so you’re able to recoup some of the expense of offering free shipping. Alternatively, you may decide to limit free shipping to orders above a certain amount, or to extend free shipping to customers in return for enrollment in a customer loyalty program.
Providing your customers with different shipping tiers that put them in the driver’s seat when it comes to deciding speed of delivery and cost of shipping is another popular option, as is offering free shipping as part of a time-limited promotion.
There are many ways of using free shipping to nudge your customer into doing other things along the purchase pathway. Whatever you do, don’t simply give free shipping away without deciding its role within your business plan.
Plan proactively in costing out your shipping. Whatever your startup’s shipping needs, there’s a solution available for everyone. UPS offers numerous programs to help not only with shipping but with every aspect that goes into delivering a product, from labeling and tracking to picking and packing.
While cash flow is always a critical factor, it's easy to overlook the importance of billing. Get full visibility into your shipping invoices through the UPS Billing Center, and gain control over shipments moving among your facilities with UPS CampusShip® service.
Whichever approach you take to managing shipping costs, check out UPS’s Calculate Time & Cost tool, an invaluable resource for startups. It displays your options for getting packages where they need to be in the most time- and cost-effective manner, whether you’re shipping domestically or internationally.
The tool can help you understand the additional costs associated with international shipments and assist with completing the commercial invoice, which is critical documentation when shipping internationally.
It also considers your shipment’s size relative to its weight in order to determine the billable weight. Simply input your shipment details, and the tool will update with real-time delivery options and pricing as you go.
Another key aspect of your shipping strategy is determining how to package your products effectively. Proper packaging is both good for the environment and good for the customer experience. Nobody wants to receive their goods in an oversized box or have them damaged in transit due to ineffective packaging.
Design your packaging with cost optimization and product integrity in mind. For optimal results, Quint Marini, UPS Package Design and Test Lab manager, advises you test the effectiveness of your packaging before you start shipping products.
Additional factors to consider as you build your shipping strategy include label generation and address verification. Explore ways of integrating your shipping systems with your back-end office applications, and rely on inbound and outbound dashboards from UPS My Choice® for business, to know exactly where your shipments are at all times.
For small business shipping solutions, one further option is to fully entrust your startup’s online fulfillment to a third-party logistics expert like UPS. This is great for startups who would like to remove the challenges of logistics altogether.
With so many competitors in the marketplace, creating a good experience is essential to engaging customers and retaining new business.
As you scale up, consider every step from the customer’s point of view and place the right shipping solutions at the heart of your customer experience strategy. Conduct surveys to understand how customers discovered your product, how easy it was for them to get the information they needed to make an informed purchase decision, and how they want the product delivered to them.
Develop your website into a self-service portal, with shipping options, delivery costs and tracking information easily displayed for your customers. How robust is your delivery notification system? How user-friendly is your returns process?
Just as with free shipping, there are growing customer expectations around free returns, too. According to the UPS Pulse of the Online Shopper survey, the majority of consumers claim to read a company’s returns policy before deciding whether to buy a product online.
Reverse logistics can be an expensive proposition if not properly planned for. Design a clear and cost-effective returns policy early on, and explore ways to keep your customer experience personal as you scale operations. Happy customers are less likely to return products, after all.
Shipping logistics can play a central role in shaping the success of your business, including a good customer experience. Anybody can ship, but shipping well and at scale goes a long way toward driving up client satisfaction.
At UPS, we understand that startup growth occurs in stages, and that each stage brings its own challenges that require custom solutions. Email us at firstname.lastname@example.org or sign up for a virtual consultation. Together let’s explore how to optimize your shipping strategy for successful growth.
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