Category: Fulfillment and Logistics
What is Amazon Freight and Why to Use It
Over two-thirds (69%) of online shoppers are less likely to make a return purchase with a retailer if an order fails to arrive within two days of the estimated delivery date.
As an eCommerce seller, navigating the complex shipping landscape can feel daunting. With Amazon Freight, however, the journey becomes much smoother. If you’re seeking to revolutionize your shipping process, this might be the solution for you.
Understanding Amazon Freight
Amazon Freight is an Amazon service that serves as a one-stop shop for managing freight shipments. It offers an integrated platform designed to streamline and simplify the shipping process for businesses through its:
- A network of carriers: Rather than a solitary shipper, Amazon Freight is an extensive network of partner carriers, both large and small. This network allows Amazon Freight to provide comprehensive coverage so your shipments reach any destination.
- User-friendly interface: Amazon Freight provides a user-friendly online platform where you can manage all your freight shipments. You can easily schedule shipments, track them in real time, and manage documentation — all from one place.
- Amazon’s logistical expertise: With decades of experience in managing complex delivery networks, Amazon brings their fine-tuned systems and processes to their freight service, ensuring reliable and efficient service.
The challenges of managing freight shipments
Due to their large size and weight, managing freight shipments can be complex and demanding, especially for eCommerce retailers that often have to handle a high volume of orders.
Below are some of the most common challenges online sellers face with this type of fulfillment.
Variable shipping costs
One of the significant challenges in freight management is the variability of shipping costs.
Factors like fuel prices, demand, supply conditions, and weather can affect your rates. This unpredictability makes it challenging to manage costs and maintain profitability.
Organizing the logistics of freight shipments warrants its own job role. It involves coordinating with various carriers, handling documentation, and ensuring compliance with regulations.
This complexity can be a significant challenge, especially for smaller retailers that need more resources or expertise to manage logistics effectively.
Delays can occur for various reasons, from weather conditions to issues at port or customs. These roadblocks can hurt customer satisfaction and harm your business reputation.
Overseeing inventory is crucial to efficient freight management. You need to ensure you have sufficient stock to meet customer demand, but at the same time, you want to keep your capital manageable. Balancing these requirements can be a significant obstacle.
Without accurate, real-time tracking, it’s difficult to keep customers informed about the status of their orders. It also inhibits you from managing your inventory and planning for future shipments.
Ensuring product safety
The safety of your products during transit is a major concern for fulfillment in general. Goods can be damaged due to improper handling, accidents, or adverse weather conditions. This, then, results in financial losses and dissatisfied customers.
Compliance with regulations
Freight shipments have to comply with a myriad of regulations, both domestic and international. These rules can be complicated and frequently altered, making compliance a frustrating undertaking.
However, non-compliance can result in penalties and may disrupt your shipments.
When customers return products, you need to handle the reverse logistics, which can be complex and costly. You also need to inspect the returned products and decide whether you can resell them, which is time-consuming.
These points highlight the complexity of managing freight shipments and the need for significant expertise and resources. In this regard, Amazon Freight can be a game-changer. The service can help you avoid issues and streamline your shipping processes by providing a comprehensive solution for managing freight shipments.
The advantages of Amazon Freight
Amazon Freight has revolutionized the freight industry, offering a unique blend of efficiency, reliability, and cost-effectiveness. From small businesses to large corporations, many have found considerable value in adopting this service for their shipping needs.
With its extensive network, competitive pricing, and seamless integration with other Amazon services, there are many advantages that make this option worth considering.
Finding ways to cut costs and boost profit margins is critical as a retailer, and Amazon Freight can help you achieve those goals.
You enjoy discounted shipping rates thanks to Amazon’s extensive network and negotiated deals with multiple carriers. This perk yields considerable savings, making your shipping processes more cost-effective and expanding your bottom line.
Unlike other shipping services that might limit you to a particular set of carriers, Amazon Freight allows you to choose the one that best aligns with your requirements.
Be it price, transit time, or other considerations, you’re in the driver’s seat to select the most suitable shipping solution. That flexibility ensures your shipments arrive on time and at the most cost-effective rate.
Amazon Freight simplifies the organization and management of shipments by providing a unified platform for all your freight shipments.
You simply input your shipment details, and the service handles the rest. This convenience can free up your time so you can focus more on your business.
One of the standout features of Amazon Freight is its real-time tracking for all your shipments. This capability keeps you — and, in turn, your customers — up to date on the status of your deliveries, offering peace of mind for all parties.
In addition to savings and convenience, Amazon Freight also brings reliability to your logistical operations. Your shipments are secure throughout the transit process, and, using reliable carriers and strict security protocols, your goods arrive in perfect condition.
Looking for other ways to boost the resilience of your eCommerce logistics? Check out our article on how to build resilient fulfillment operations.
Amazon Freight’s features
To appreciate the full capabilities of Amazon Freight, let’s delve deeper into some of its key features:
- Competitive rates: Amazon Freight’s competitive rates are one of its most attractive features. Amazon negotiates rates with various carriers to secure lower costs, which they then pass on to users. This perk can result in significant cost savings, especially for businesses that frequently ship large quantities of goods.
- Customizable options: Amazon Freight provides a range of customizable options for your shipments. You can choose the type of service you need (full truckload or less than truckload), the type of equipment required, and even the transit time. This flexibility allows you to tailor your shipping solution to your specific needs.
- Simplified documentation: Shipping documentation becomes a breeze with Amazon Freight. The platform allows you to create and manage bills of lading, freight invoices, and other essential documents with ease. This capability reduces the time and effort involved in managing paperwork so you can focus on other aspects of your business.
- Efficient claims process: In case of any issues with your shipment, Amazon Freight provides a hassle-free claims process that lets you easily submit claims and track their progress. That transparency contributes to the quick and efficient resolution of any problems.
The MyFBAPrep advantage
As an invite-only partner of Amazon Freight, MyFBAPrep gives merchants access to all the benefits of Amazon Freight. That includes detailed tracking, a dedicated account representative, Amazon’s trusted service commitment, and more.
- Detailed tracking: Amazon Freight provides detailed, end-to-end tracking of your shipments to keep you up-to-date on the status of your goods at all times. This provides peace of mind and enables more strategic planning and management.
- Dedicated account representative: With MyFBAPrep, you receive support from a dedicated account representative. Your rep will help you navigate the complexities of freight shipping to maximize your Amazon Freight experience.
- Amazon’s service commitment: Leverage Amazon’s guaranteed exceptional service. With the platform’s robust systems and processes, you can rest assured your shipments are in good hands.
Amazon Freight FAQs
What can you ship?
Amazon Freight supports the transportation of most goods that can be shipped via 53-foot dry van equipment for immediate pickup and delivery.
However, there are certain exceptions, including hazardous materials (HAZMAT), items that need refrigeration, and other prohibited goods.
Where can you ship?
Amazon Freight boasts extensive coverage across thousands of lanes throughout the United States, specifically in regions where Amazon has an established presence.
Whether you need to ship inbound to Amazon, your own facilities, or third-party locations, Amazon Freight ensures reliability and top-notch performance. To better understand the U.S. coverage zones, you can view a map here.
The service also boasts coverage in several European countries, including Germany (excluding the North Sea and Baltic Sea islands), Poland, the Czech Republic, France, Italy, Spain, Belgium, the Netherlands, and Luxembourg. Coverage is also available across the United Kingdom, except for the Scottish Highlands.
How does Amazon Freight choose its carrier network?
Amazon Freight puts every carrier in its network through a rigorous screening process to comply with Amazon’s strict standards. The process encompasses aspects such as insurance, operational authority, and safety.
The service also continually keeps tabs on carriers’ punctuality records. Amazon regularly augments their network with new carriers to provide competitive rates regularly and broaden coverage.
Choosing a fulfillment provider on your own? Check out MyFBAPrep’s list of 10 critical questions to ask before choosing your fulfillment provider.
Can you track your shipments with Amazon Freight?
You can use Amazon Freight’s online tools and self-managed transportation system to oversee your shipments as needed.
Trailers come fitted with GPS technology, and, by using the Amazon Relay app, carriers and drivers can offer real-time visibility into the status of your shipments.
Wrapping up — Amazon Freight is a game-changer
Efficient and dependable shipping is vital in the competitive eCommerce environment. With Amazon Freight, you gain a shipping solution that provides significant cost savings, flexibility, convenience, and reliability.
By leveraging Amazon’s logistics expertise and vast network of carriers, you can feel confident your shipments will reach their destination on time and in perfect condition. The user-friendly platform simplifies the shipping process, allowing you to manage all your shipments from one place.
Add on the extensive benefits of MyFBAPrep, and you can further refine your shipping operations. From 24/7 tracking to a dedicated account representative, MyFBAPrep has the tools to help you make the most of the Amazon Freight service.
How to reduce your Amazon shipping costs
Shipping costs play a significant role in attracting and retaining eCommerce customers. By cutting your logistical expenses, you can increase your profits and differentiate your products from your competitors, which helps you stand out in a crowded market.
Read on to learn some top tips to reduce your Amazon shipping costs, from leveraging Amazon’s programs and services to negotiating with carriers and passing on costs to customers.
Mitigating Amazon FBA fee increases
Amazon recently introduced fee increases for FBA storage utilization ratios and inventory aging. These aim to address the inefficient use of Amazon’s warehousing for unsellable goods, which monopolize space and eat into working capital via holding costs. The most notable changes are summarized as follows:
- Sellers with a high inventory cube (which is the total available space they use expressed as a percent) relative to their recent weekly sales face a new storage utilization surcharge.
- Amazon has increased the surcharges applied to inventory stored for 271 to 365 days.
- Amazon introduced inventory surcharges for goods stored for 180 to 270 days, except for products in the apparel, shoes, bags, jewelry, and watches categories.
To minimize the impact of these fee increases, it’s essential to reduce your shipping costs. Review and incorporate the following strategies to lower your logistical expenses and stay ahead of Amazon’s wide-reaching changes.
To learn more about Amazon seller fees, check out MyFBAPrep’s Guide to Amazon Seller Fees.
1. Sign up for Amazon’s Seller Fulfilled Prime program
Amazon’s Seller Fulfilled Prime program enables you to fulfill orders and deliver them directly to domestic Prime customers from your own warehouse. Showcasing the Prime badge on your Amazon listings guarantees two-day delivery at no extra cost for Prime customers. This saves money on shipping costs and increases your sales by offering fast and free shipping. Additionally, Amazon provides the necessary transportation solutions to meet the high standards of Prime members.
This perk is exclusive to the Prime program though, so, if you aren’t already, consider signing up. To enroll, you must meet specific requirements, such as providing accurate tracking information and storing your products in a secure facility.
2. Enroll in Subscribe & Save
Amazon offers a shipping subscription program designed for eCommerce retailers who ship a high volume of packages. Sellers can enjoy several benefits through the program, including:
- Consistent sales: Regular purchases and 20% of annual revenue
- Customer loyalty: Repeat customers and increased consumer loyalty with minimal investment
- Engaged customers: Subscribers are more likely to purchase additional items
- Increased visibility and reach: Priority placement and enhanced custom search filters in a dedicated storefront
To participate in the Subscribe & Save program, sellers must meet the following eligibility requirements:
- Seller feedback rating of 4.7 or higher
- Well-performing FBA account with strong sales
- Active FBA account for at least three months
The discount you receive from participating in Subscribe & Sale will depend on the number of packages you ship, so be sure to research the program and compare its rates to those of other carriers.
3. Leverage Amazon’s Multi-Channel Fulfillment program
If you sell your products on multiple sales channels like Amazon, eBay, and your own website, Amazon’s Multi-Channel Fulfillment (MCF) program can help you save on shipping expenses and increase efficiency. It allows you to fulfill orders from various platforms through Amazon’s fulfillment centers.
Obviously, you’ll need a seller account on Amazon to participate in the program. However, you also have to meet certain criteria similar to those of Seller Fulfilled Prime, including providing accurate tracking information and ensuring your products are stored in a secure facility.
4. Ship your products in bulk
Shipping products in bulk enables you to take advantage of carrier volume discounts when you ship a large volume of products simultaneously. So, consider sending your products in large batches rather than individual ones.
When shipping in bulk, use sturdy packaging materials to ensure your products arrive at their destination in good condition.
5. Send larger packages
Larger packages let you leverage dimensional weight pricing, which slashes your fulfillment expenses because you pay based on the package size, not only its weight.
You should use larger boxes or pack your products to maximize the package’s size. Like with bulk shipments, use sturdy packaging materials to ensure your products arrive at their destination in optimal condition.
6. Capitalize on Amazon’s Buy Shipping discounts
Amazon introduced a Sponsored Discount option that allows you to purchase shipping labels through Buy Shipping at a discounted rate. You can access these cost savings by logging into your Seller Central account and navigating to the Buy Shipping page.
Look for the blue “Amazon Sponsored Discount” badge to find the shipping methods with discounted prices (they’re listed next to the badge).
The number of labels you purchase determines how large a discount you receive, so research the program as well as the rates of other carriers.
7. Take advantage of Amazon’s free shipping options
Research has shown time and time again that shipping costs are one of the biggest barriers to completing a purchase online. Approximately 28% of online shoppers will abandon their purchase if they encounter unexpected shipping costs during checkout.
Offering fast and free shipping can have a significant impact on your business:
- Increase conversions and reduce cart abandonment
- Boost customer satisfaction and loyalty
- Raise the average order value
If you don’t offer free shipping, there’s a good chance that customers will go to a competitor who does.
One of the easiest ways to offer free shipping to your customers is through Amazon FBA. With Amazon’s fulfillment program, you can offer fast and free shipping without having to worry about the logistics of shipping yourself.
8. Partner with regional carriers
Opting for regional carriers like FedEx and UPS is a cost-effective solution for your shipping needs, as they often provide lower rates than their competitors.
Be sure to compare the rates of regional carriers with those of larger ones to find the best deals. Further, regional carriers may have varying delivery times and coverage areas, so it’s crucial to evaluate your options carefully and select the one that meets your requirements.
9. Negotiate with carriers for better rates
Related to the previous strategy, you can often secure lower shipping rates by negotiating with carriers based on the volume of packages you ship, the size of your packages, and other factors.
For the most fruitful negotiations, contact carriers directly and discuss your shipping needs and goals. Or, you may consider using a third-party service to negotiate rates on your behalf.
10. Adopt flat-rate shipping
Flat rate shipping allows you to charge a fixed shipping fee, regardless of the weight or size of the package. Flat-rate boxes and envelopes take advantage of dimensional weight pricing to reduce your shipping costs.
This can be an effective measure to attract customers and increase sales, as many buyers are willing to pay a flat rate for shipping in exchange for the convenience and reliability it provides.
11. Utilize USPS Priority Mail
USPS Priority Mail is a cost-efficient solution for shipping packages with fast delivery times and competitive pricing.
Before embracing this service, however, be sure to research the delivery times, shipping restrictions, and other key factors to ensure it’ll accommodate your needs.
12. Assemble packages with Amazon’s supplied shipping materials
Amazon offers a variety of shipping supplies at a discounted rate, including boxes, envelopes, and packing materials. This can save on dunnage expenses, but be sure to look into the restrictions and guidelines for each carrier to ensure your packages are eligible for the discounted rate.
13. Pass on some of your shipping costs to customers
Having customers shoulder some of your shipping costs will reduce your logistical expenses and increase profitability.
You could consider charging a small shipping fee either as a flat rate or based on the weight of the package. When shipping costs are passed to customers, clearly communicate the prices and allow buyers to choose their shipping method.
Alternatively, you can offer free shipping for orders over a certain amount, which encourages customers to spend more.
14. Contract third-party fulfillment services
Third-party fulfillment services like Fulfillment by Amazon (FBA) can slash your shipping costs and boost efficiency. These providers handle the storage and shipping of your products, freeing up time and resources for your business.
When considering a third-party fulfillment service, research their fees, restrictions, and delivery times to locate the best one for your business.
Looking for ways to cut your FBA fees? Learn more in MyFBAPrep’s guide to understanding and reducing your Amazon FBA fees.
15. Choose the most economical shipping service
To find a cost-effective shipping service for your business, look into different shipping methods and compare their rates and benefits. Consider the delivery times, shipping restrictions, and other factors that affect your operations.
16. Analyze Amazon’s Seller Central shipping reports
Amazon’s Seller Central reports provide detailed information on your shipping expenses and help you identify opportunities to lower costs.
To use this tool, log in to your Seller Central account and access Shipping Reports. There, you’ll find valuable information such as the cost per shipment, the cost per unit, and your total shipping costs.
17. Make use of Amazon’s shipping credits
Amazon offers shipping credits to eligible sellers who meet specific criteria, such as providing accurate tracking information. Applying these credits can lower your shipping expenses and boost your profitability.
It’s essential to monitor the requirements for these shipping credits regularly to ensure you remain eligible and can take advantage of the cost savings.
How MyFBAPrep lowers Amazon shipping rates for sellers
MyFBAPrep can help sellers reduce Amazon shipping fees in several ways, such as:
- Optimizing shipping methods: MyFBAPrep finds the most cost-effective shipping methods for products by comparing rates among different carriers and advising on the best options.
- Managing inventory: MyFBAPrep tracks and organizes items in Amazon warehouses, reducing the need for additional storage space — and the associated fees.
- Reducing returns: By providing professional and efficient preparation services, MyFBAPrep can cut the number of returns, in turn significantly lowering shipping expenses.
- Bundling products: MyFBAPrep can bundle multiple products into one shipment, which lessens the number of packages that sellers have to ship.
- Offering competitive rates: MyFBAPrep enjoys access to bulk shipping rates and can pass on these savings to customers, helping sellers diminish their logistical costs.
Incorporating MyFBAPrep’s services can streamline your shipping processes, save on fees, and increase your profits in the long run.
Wrapping up — Take steps to slash your Amazon shipping costs
By taking advantage of Amazon’s programs and services along with the expertise of a third-party fulfillment service, you can improve your logistics and increase customer satisfaction to drive your business forward.
Reducing your Amazon shipping rates is essential to boost efficiency and grow your brand. So, take the time to research your options, find the best solutions for your business, and start paying less for your Amazon shipments.
Common Challenges With Amazon MCF & How to Overcome Them
Amazon is a major player in the eCommerce industry, providing online sellers with a massive platform to reach millions of customers across the globe. One of its most popular services is Amazon Multi-Channel Fulfillment (MCF), which allows sellers to take advantage of Amazon’s vast fulfillment network to complete orders from other sales channels.
Amazon MCF helps merchants streamline their fulfillment processes and improve customer satisfaction. However, like any eCommerce service, it also comes with a set of challenges that can impact a seller’s bottom line, reputation, and overall operations.
In this article, we’ll explore some of the most common obstacles sellers face with Amazon MCF and provide tips on how to navigate and overcome them. By understanding these challenges and implementing best practices, you can effectively leverage the power of Amazon MCF to improve your operations, boost customer satisfaction, and increase profitability.
Common MCF challenges
These are common issues merchants encounter when using Amazon MCF:
- High costs: One of the biggest challenges with Amazon MCF is its high service cost. Amazon charges fees for storage, handling, and shipping, and these expenses can add up quickly, particularly for sellers with large or heavy items. Additionally, the cost structure for MCF can be complex, making it challenging to calculate costs and profit margins accurately.
- Limited inventory visibility: Amazon MCF provides limited visibility into inventory levels and locations, making it difficult for sellers to manage their stock efficiently. This can lead to overstocking or understocking, which in turn can result in lost sales or wasted inventory.
- Shipping delays: Although Amazon has an extensive fulfillment network, shipping delays can occur due to a variety of factors, such as natural disasters, weather conditions, or other unforeseen events. Such delays can negatively impact a seller’s reputation and customer satisfaction, particularly if the merchant fails to provide accurate tracking information or timely updates.
- Limited customization options: Amazon MCF offers limited customization options for packaging and branding, which makes it challenging for sellers to differentiate their brand and create a unique customer experience. This is a major drawback in crowded markets or for merchants with highly personalized products.
- Poor customer service: Some sellers have reported issues with Amazon’s customer service, including slow response times and a lack of personalized support. This can be frustrating, especially if merchants encounter issues with their MCF orders or need assistance navigating the platform.
Overcoming these challenges
Despite these issues, there are several strategies sellers can use to overcome them:
- Negotiate rates with Amazon: To reduce MCF costs, you can negotiate rates. This involves working with Amazon’s customer support team or using an Amazon-approved third-party service to explore opportunities to reduce fees and optimize fulfillment costs. Additionally, Amazon provides a fee calculator to estimate your costs and identify areas to cut expenses.
- Adopt inventory management software: To manage inventory levels more effectively, look for inventory management software that integrates with MCF. These tools provide real-time visibility into your inventory levels and locations, which helps optimize your inventory levels and avoid stockouts. Some inventory management software can also automate inventory forecasting and replenishment so you can stay on top of your inventory needs more easily.
- Work with third-party logistics providers: To improve shipping times and lower fulfillment costs, consider working with a third-party logistics provider (3PL). 3PLs can provide additional warehousing and fulfillment support to expand your reach and reduce shipping costs. By leveraging a 3PL’s expertise and infrastructure, you’ll enjoy the benefit of their fulfillment speed and accuracy while freeing up resources to focus on other aspects of your business.
- Maintain open communication: When shipping delays and other issues inevitably occur, communicate the situation to your customers. This includes providing accurate tracking information, sending automated updates, and offering clear and timely responses to their inquiries. You can also leverage Amazon’s built-in communication tools, such as messaging and feedback, to stay in touch and address any issues or concerns.
- Provide excellent customer service: To maintain customer satisfaction and avoid the headache of Amazon’s customer service, provide your own exceptional customer support. Similar to the previous point, clear and timely communication, accurate product information, and addressing customer concerns promptly are important components here as well. By catering to consumer needs, you’ll improve your reputation and drive repeat business.
Implement these strategies and stay proactive in managing your MCF operations to maximize its benefits for your business and achieve long-term success.
Best practices for Amazon MCF
To optimize your use of Amazon MCF, here are some of the most effective best practices to follow:
- Streamline your fulfillment process: This can involve refining your packaging, labeling, and shipping procedures, as well as using automated tools and software to manage orders and inventory. By streamlining your fulfillment process, you reduce errors and speed up shipping times.
- Implement quality control measures: Quality control measures ensure your products are delivered to customers in good condition. You can employ secure and reliable packaging materials, perform quality checks on products before they ship, and track products throughout the fulfillment process to identify potential issues. These actions lower the risk of returns, improve customer satisfaction, and protect your reputation.
- Stay on top of Amazon’s rules and policies: Amazon has strict rules and policies for sellers who use their fulfillment services. They cover everything from product packaging and labeling to shipping methods and handling procedures. To avoid penalties and maintain smooth operations, make sure you learn and follow these regulations.
- Take advantage of Amazon’s technology: Amazon MCF offers numerous tools and resources designed to help sellers optimize their fulfillment. These include automated order processing and inventory tracking, advanced analytics, reporting tools, and more. Take advantage of these resources to gain valuable insights into your business and make informed decisions to strengthen its functionality.
- Partner with third-party experts: Realize the full potential of Amazon MCF by partnering with third-party vendors who can streamline your business. Vendors like MyFBAPrep can provide additional warehousing and fulfillment support, helping you expand your reach and cut shipping costs. Additionally, many offer specialized services like kitting and bundling so you can create unique product offerings and stand out in a crowded market.
- Monitor and optimize your performance: Regularly measure your Amazon MCF performance and make adjustments where needed. This entails analyzing your shipping and fulfillment metrics and tracking your inventory levels. Stay on top of your performance metrics to identify issues and opportunities to improve your fulfillment.
Following these best practices and proactively managing your Amazon MCF operations will help you optimize your business operations, reduce costs, and improve customer satisfaction.
Wrapping up — Work smart, not hard with Amazon MCF
Amazon Multi-Channel Fulfillment offers numerous benefits to eCommerce sellers, allowing them to expand their reach, improve their customer satisfaction, and streamline their fulfillment operations. However, the service has its drawbacks, like high costs, restricted inventory visibility, shipping delays, limited customization options, and poor customer service. However, you can overcome these challenges by implementing strategies like negotiating rates with Amazon, utilizing inventory management software, working with 3PLs, communicating with buyers, and providing excellent customer service.
Follow these best practices, and you’ll make the most of Amazon MCF while reducing costs, improving operations, and driving long-term success for your eCommerce business. You’ll also stay informed on changes to the platform and identify opportunities to optimize your fulfillment operations.
Carrier contract negotiation: How to negotiate with FedEx and UPS
This is a guest post from Refund Retriever President Brian Gibbs. Brian founded Refund Retriever in 2006 while running his first eBay-based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever’s primary focus is FedEx and UPS parcel invoice auditing. Gibbs has been featured in Forbes, Entrepreneur, and other publications discussing parcel auditing, shipping, eCommerce, and more.
FedEx and UPS are vital partners for your business, but unfortunately, fulfilling through them is only becoming more expensive and problematic. That’s why it’s essential to negotiate your carrier contracts to your benefit so you can continue selling your product. (As an owner, you should know well how much the cost of shipping affects your business.)
Introducing more strategic planning into your parcel contract negotiations can enable you to optimize shipping expenses, counterbalance rate increases, and fulfill your customers’ demands more efficiently. For most retailers, shipping and transportation costs account for at least one-third of their budgets, so it’s imperative to research and understand all aspects of carrier agreements before signing to ensure you maximize your savings.
What do carrier contract negotiations entail?
During carrier contract negotiations, each party discusses and agrees upon the details of their partnership. Then, the carrier creates a shipping contract that includes the terms and conditions of said relationship.
The carrier will then issue a proposed agreement for the shipper to sign electronically. Once the proposed contract goes into effect, future shipment pricing will abide by these terms.
Contract carriers want to maximize their profit margins, not yours, and their aggressive tactics reflect this mindset: Pre-negotiated shipping rates are expensive, and your post-negotiation rates will usually be inconsistent with similarly sized shippers. The harsh reality is, parcel carriers operate under a duopoly — two major carriers (FedEx and UPS) control the industry rates.
Understanding UPS contracts
UPS contracts usually feature individual sections for specific pricing items, including accessorial fees, refunds, surcharges, and incentives. The carrier issues a new rate proposal based on the shipper’s volume every time a new shipping contract replaces an older one. This means any price changes at the time of contract renewal will affect all UPS service levels.
The initial pages of a UPS contract outline general information related to UPS customers and the term duration and termination clause.
Under Addendum A of your UPS agreement, you’ll find information about customers’ shipper accounts and commodity tiers. Addendum B is most shippers’ focus during the contract negotiation process, as it includes terms related to portfolio tier incentives, minimum charges, guaranteed discounts, applicable DIM weight factors, and fee adjustments. Fee adjustments relate to accessories like additional handling, residential, and delivery area surcharges.
Understanding FedEx contracts
FedEx agreements are separated into subsections for the Ground and Express service levels. Make sure you have all current carrier agreements on hand before reviewing parcel shipping rates.
The first few pages of FedEx contracts discuss the general terms and agreements (i.e., automation, unexpected volume, and confidentiality) between the carrier and the shipper. Next are separate pricing pages for domestic and international shipping. They include information about shipping volume and applicable discounts based on your total shipping spend over the last 52 weeks.
Other notable terms are minimum transportation charges on domestic shipments and discounts offered on international shipping under domestic pricing or based on shipping volume.
Towards the end of your FedEx agreement, you’ll find accessorial and dimensional weight concessions terms, including applicable discounts on FedEx Ground, Express, Air, and other service levels. Accessorial fee reductions have term limits, which expire and will cause your shipping to increase if missed.
How to negotiate with FedEx and UPS
The foundation of a successful carrier contract negotiation is leveraging your data and established relationship. When planning how to haggle rates with carriers, remember that your carrier wants to retain your business.
1. Minimum charge impact
All service levels have a minimum charge for each package. The standard minimum charge is usually a Zone 2, one-pound package. For 2023 FedEx and UPS ground, this is a charge of $10.10; no matter your discounts, you’ll pay a minimum of $10.10 for that shipment, so it’s important to know how many of your packages hit this mark. Then, determine how much discount to obtain on the minimum charges.
2. Properly structure earned discount tiers
Many shippers aren’t aware of this, but carrier contract negotiations can occur at any time. While earned discount tiers can be beneficial in providing further incentives, you want to monitor your gross spending and understand the entirety of your contract, including your discount tiers. These tiers and the discounts associated with them are negotiable.
3. Beware of Guaranteed Service Refund (GSR) waivers
Some carrier agreements will incorporate a GSR waiver, so it’s imperative that you read the details of your contract. Never sign an agreement that precludes you from receiving refunds when you deserve them. In many cases, this will be a last-minute addition from the carrier to increase their margins. When performing a thorough audit of your FedEx or UPS invoice, we typically see anywhere from a 1%–4% return on total spend when filing claims for late deliveries, manifested-not-shipped mistakes, erroneous residential charges, etc.
4. Know your shipping data
It’s vital to study your shipping history before every carrier contract negotiation. Being unaware of factors like parcel expenses, shipping zones, package weights and sizes, and dim divisor places you at a disadvantage. When your carrier knows your shipping data more intimately than you, it’s nearly impossible to negotiate a better deal. In many cases, hiring a professional audit firm like Refund Retriever that has powerful reporting can provide the information needed to gain leverage over FedEx or UPS.
When to negotiate with FedEx and UPS
Any time you see a significant increase or decrease in your shipping volume, reevaluate your agreement. You could be losing valuable tier-level discounts or missing out on additional volume discounts. Further, FedEx accessorial fee discounts have a term limit; when the time expires, FedEx will charge full price for accessorial fees, so know how long your agreements last.
Navigating shipping contracts can feel intimidating and time-consuming, and contract management, negotiation, and renegotiation tend to be long processes. However, most customers think they’ve already negotiated the lowest price and so sign contracts without calculating savings.
FedEx and UPS carrier contracts contain confusing language, underlying clauses, and other subtle details that often go overlooked, including yearly rate increases, overcharges, shipment exceptions, and late deliveries — all of which hurt your bottom line. Further, poorly implemented shipping and pricing agreements can generate additional excessive overspending. Negotiation is thus essential to control your business’s shipping costs.
As a valued customer, you can review and renegotiate with your provider to continue enjoying the best prices, and Refund Retriever’s carrier contract negotiation experts can help with every stage of the process.
eCommerce 3PL Data and Seller Insights: 2023 Survey Results
As customer expectations evolve, eCommerce retailers must adapt by implementing advanced solutions that cater to their clientele’s growing demands. One aspect that plays a vital role in achieving this is logistics management, with third-party logistics (3PL) providers emerging as indispensable partners for online merchants.
To better understand eCommerce sellers’ current priorities, challenges, and objectives, we conducted an extensive seller survey, gathering insights from business owners across various channels and industries.
Our survey provides a comprehensive overview of the online retail landscape in 2023, highlighting the ever-increasing importance of logistics and 3PLs for eCommerce merchants as they navigate the digital road to success. Read on and dig into some of the most interesting eCommerce 3PL data we uncovered.
The role of logistics and 3PLs for eCommerce merchants
Logistics and 3PL providers are integral for robust eCommerce operations, as they encompass everything from inventory management and order fulfillment to shipping and returns.
Logistics management directly impacts customer satisfaction and the overall shopping experience. By streamlining that process, businesses can ensure timely delivery, maintain adequate inventory levels, and offer exceptional customer service.
This is where 3PLs come into play. Outsourcing logistics to a 3PL allows eCommerce retailers to leverage the expertise and resources of seasoned professionals, enabling them to focus on their core competencies.
With a 3PL, eCommerce merchants can connect to a wide network of distribution centers, carriers, and other resources. This results in lower shipping costs and faster delivery times. 3PLs also offer the flexibility to scale operations up or down, depending on the business’s needs, ensuring optimal efficiency. Additionally, 3PLs often employ cutting-edge technology to help businesses optimize their supply chains and streamline the fulfillment process.
However, the journey to successful logistics management has its challenges.
eCommerce merchants often face obstacles such as finding the right 3PL partner, overcoming integration difficulties, and ensuring seamless communication between all parties involved.
Navigating these challenges is critical to effective logistics management. It lays the foundation for a fruitful partnership with a 3PL provider, ultimately driving growth and success for eCommerce businesses in the long run.
Interested in other results from our 2023 Seller Survey? Check out MyFBAPrep’s Seller Survey Insights 2023.
Most common 3PL partners among eCommerce merchants
Selecting the right 3PL partner is a crucial decision that significantly impacts a business’s growth and success. According to our recent survey, the most common 3PL partners that eCommerce merchants contract with are:
- FedEx (58.9%)
- UPS (43.9%)
- Amazon FBA (43%)
- Amazon MCF (35.5%)
- USPS (29%)
These industry giants have established themselves as reliable and efficient logistics providers, making them popular choices among eCommerce retailers.
But how do merchants find their ideal 3PL partner?
How eCommerce merchants choose a 3PL partner
Our survey revealed the most common ways to find a 3PL partner are referrals, social media, online ads, and industry events:
- Social media (39.2%): Social media platforms are a valuable resource for discovering and researching 3PL providers. Many 3PL companies maintain a presence on popular social media channels such as LinkedIn, Facebook, Twitter, and Instagram to showcase their services, share industry news, and engage with prospective clients.
- Referrals (15.9%): Many merchants rely on word-of-mouth recommendations from their peers or industry contacts. This approach leverages firsthand experiences and insights, which can help businesses identify a partner with a proven track record of success.
- Ads outside of social media (12.2%): You can often find ads for 3PL providers on various digital platforms, search engines, and industry-specific websites. These spotlight potential 3PL partners and educate sellers about their services and offerings.
- Industry events (11.2%): Attending conferences, trade shows, and other industry-specific events can be an effective way to meet 3PL providers and learn about their offerings. These events often feature presentations and panel discussions that reveal valuable insights into the latest trends and best practices in logistics management.
Take advantage of these portals to find and select a 3PL partner that aligns with your unique needs and objectives.
What merchants consider when choosing 3PLs
When selecting a 3PL partner, eCommerce merchants consider several factors to ensure their chosen provider meets their unique needs and objectives.
According to our survey, the most crucial aspects that influence their decision-making process are:
- Price (56.6%): Cost is a top concern for eCommerce retailers. They look for competitive pricing structures and strive to balance affordability with quality service. Pricing encompasses warehousing, order fulfillment, shipping costs, and any additional fees.
- Delivery speed (46%): Fast and efficient delivery is mandatory to meet customer expectations and enhance the overall shopping experience. Merchants prioritize 3PL providers that offer quick turnaround times and efficient same-day, next-day, or two-day shipping options.
- Reliability (45.4%): Online sellers need a 3PL partner who consistently delivers on their promises. Reliability includes meeting delivery timelines, maintaining accurate inventory levels, and minimizing errors in the order fulfillment process.
- Ease of use (40%): A user-friendly and intuitive interface is essential for seamless integration and efficient management of logistics operations. Merchants prefer 3PL providers with simple and straightforward systems that remove the complexity of managing inventory, tracking orders, and handling returns.
- Customer service (33.2%): Responsive and proactive customer support is foundational to a successful 3PL partnership. Sellers value providers that offer dedicated account managers, timely issue resolution, and regular communication to ensure smooth logistics operations.
- Services (30.4%): A 3PL provider’s range of services can be a decisive factor for eCommerce merchants. Businesses look for partners catering to their specific needs, such as kitting and assembly, customized packaging, or international shipping.
Consider these factors carefully to identify a 3PL partner who aligns with your requirements and streamlines logistics operations.
Your business may benefit from a 3PL partnership. Read our blog on why you should outsource your eCommerce logistics.
Most common concerns when partnering with 3PLs
Despite their advantages, 3PLs have a few concerns that cause eCommerce sellers to hesitate. Identifying and addressing these concerns is crucial for fostering a successful and lasting relationship.
According to our survey, the most common concerns include:
- Shipping mistakes (42%)
- Expensive shipping costs (37.2%)
- Poor communication (28.2%)
- Inventory loss, theft, or breakage (27.2%)
- Lack of services (23.2%)
- Inaccurate receiving (20%)
To address these issues and ease merchants’ worries, 3PL providers are taking proactive steps like:
- Investing in internal processes: Implementing robust quality control measures, investing in advanced technology, and providing continuous training for staff can help reduce shipping errors. Scheduled audits and performance evaluations also ensure 3PL providers maintain robust operations.
- Cutting shipping costs: This includes transparent and flexible pricing structures, negotiating better rates with carriers, and providing access to a wide network of shipping options. Regularly reviewing and optimizing shipping strategies can yield cost savings for merchants.
- Strengthening communication: 3PLs now focus on establishing clear lines of communication, offering dedicated account managers, and adopting efficient communication tools to improve the flow of information between them and their clients. Regular updates on order status, inventory levels, and other logistics-related matters also build trust and enhance the partnership.
- Protecting inventory: To reduce theft, loss, and damage, providers are implementing stringent security measures, investing in warehouse management systems, and conducting regular inventory audits.
- Expanding services: As eCommerce needs increase in complexity, fulfillment providers see the need to expand and diversify their service offerings, stay abreast of industry trends, and customize solutions to cater to the unique requirements of eCommerce merchants. This enables 3PLs to become versatile partners capable of adapting to the evolving demands of their clients.
- Refining receiving processes: This involves streamlining the receiving process, utilizing barcode scanning technology, and ensuring accurate documentation. 3PLs also run regular audits and staff training to improve the accuracy of their inventory-receiving processes.
By addressing these concerns and demonstrating a commitment to excellence, 3PL providers can instill confidence in eCommerce merchants and establish themselves as trusted partners in the online retail ecosystem.
Wrapping up — Learn from our eCommerce 3PL data
A robust logistics strategy with the support of a reliable 3PL partner can significantly impact your business’s overall success and growth.
As customer expectations evolve, effective logistics management becomes even more critical in ensuring a seamless shopping experience and, ultimately, higher customer satisfaction and loyalty.
Diligently assess your business’s unique needs and objectives and conduct thorough research on potential 3PL partners to secure a logistics solution that streamlines your operations and propels your eCommerce venture to new heights.
Best fulfillment companies: The best 3PLs and 4PLs for eCommerce and retail brands
Customer expectations for shopping experiences are higher than ever. Fast, reliable, and trackable deliveries are just some of the perks customers assume as standard. These assumptions have become so mainstream that 42% of shoppers leave their carts due to issues with the estimated delivery date, while 24% abandon orders due to no delivery date provided.
As you step into your next growth phase, having an extra pair of hands can ensure your fulfillment and supply chain run smoothly. That’s where 3PLs and 4PLs come in. We’ve compiled a list of top-performing providers for eCommerce and retail brands to help you find your business match. Before we dive in though, let’s clear up some definitions.
What’s a 3PL?
A third-party logistics (3PL) provider handles fulfillment-related tasks that eCommerce brands outsource, including warehousing, inventory management, picking and packing, shipping, and returns.
What’s a 4PL?
A fourth-party logistics (4PL) provider covers the same tasks as a 3PL but also takes care of the entire supply chain, including freight booking, legal and customs clearance, reverse logistics, and other tasks.
First impressions count. Partner with MyFBAPrep to build a stellar post-sale experience.
3PLs vs. 4PLs
The difference between a 3PL and a 4PL lies in the tasks they handle within a supply chain. A 3PL is limited to a set list of duties so the eCommerce business maintains most of the control over their supply chain. With a 4PL, the company hands over the responsibility for managing their entire supply chain.
(If you want a breakdown of the benefits of working with a 3PL, check out our blog post on the topic here.)
XPO is a large-capacity logistics provider specializing in Truckload (TL) and Less Than a Truckload (LTL) shipments. They use cutting-edge technology to formulate optimal carrier volume and capability. XPO also offers services such as truck brokerage, last mile, expedited, and global forwarding.
Service highlights: TL, LTL, and temperature-controlled shipping
Best for: Businesses requiring road transportation
APL Logistics prides themselves on simplifying complex fulfillment processes and making them seamless. Through services such as global shipping, distribution, and order management, plus visibility through analytics, they build streamlined systems to move goods from point A to point B efficiently.
Service highlights: End-to-end fulfillment solutions, socially responsible practices, global offices in more than 60 locations, over 100 years of experience
Best for: Brands with complex supply chains and fulfillment requirements
Some fulfillment providers shy away from transporting fragile, temperature-controlled items, but Americold takes the task head-on. During their 120 years in business, Americold has mastered the art of shipping and storing specialized goods safely, sustaining them with purpose-built transportation, warehousing, and integrated technology. So, whether you’re a retailer, producer, or food service provider, Americold has what you need for worry-free logistics.
Service highlights: Temperature-controlled warehousing and transport, storage for fragile items
Best for: Businesses selling perishable goods
Shipping goods across Africa? Partnering with Imperial Logistics could be a wise move.
Tap into the company’s growing strategic partnerships and geographies. What’s more, Imperial Logistics also offers a unified route-to-market solution for their clients that incorporates shipping, warehousing, distribution, and supply chain management.
If you’re looking for a team to take the stock purchasing process off your hands, Imperial Logistics can execute this for you as well. Fulfillment with a purpose is important to this 3PL provider, so you can pride yourself on partnering with a company that regularly donates resources to charitable causes around the globe.
Service highlights: Diverse industry experience, comprehensive fulfillment, and supply chain management services for Sub-Saharan Africa
Best for: Brands with cross-border sales from or stores in Africa
Living up to their name, Landstar is a widely connected, safety-focused shipping company specializing in land transportation. Boasting an extensive workforce of 1,200 agents, 11,000 leased-owner operators, 18,000 trucks, and 90,000 approved trailer capacity providers, Landstar has everything you need to transport goods overland securely. They also offer land shipping services globally.
Service highlights: Flexible logistics, integrated transportation, safety-first practices
Best for: Businesses with fragile and high-value goods
Shipping goods that require refrigeration or freezing? Consider partnering with Penske. They have extensive experience hauling food and boast state-of-the-art technology to back it up.
Penske remains competitive in their offering too. From contract carriage and supply chain management to transport management and freight brokerage solutions, Penske maintains an impressive supply of services to keep your inventory cold.
Service highlights: Vast service capabilities, tech-enabled, data-backed supply chain management
Best for: Businesses selling perishable items
Global logistics provider Mainfreight is on a mission to help their customers construct dependable and efficient supply chain logistics. Combining air, ocean, and land shipping with warehousing and technology, Mainfreight provides effective, complete logistics.
The company is a visionary, relying on a 100-year strategy that shapes everything from their recruitment and culture to their growth tactics.
Service highlights: Large workforce with over 11,000 team members, 44 years in business, ships to 26 countries, end-to-end supply chain management, 315 branches globally
Best for: Businesses that want to outsource control of their supply chain management
ShipBob is an omnichannel fulfillment provider specifically for e-tailers and retailers.
So, if you ship orders from Canada, the UK, the U.S., or Australia, look into ShipBob’s global network to fuel your cross-border expansion.
The company offers various services to help brands scale their fulfillment capacity with their growth. These include receiving goods, pick-and-pack capabilities, and order customization.
ShipBob also provides apps and APIs for smooth integration to help you build a powerhouse tech stack.
Service highlights: Custom pricing, extensive shipping territory (to over 220 countries), strategic integrations, proprietary apps, and APIs
Best for: eCommerce startups ready to scale
From freight forwarding to distribution and storage, Omni Logistics steps up to the plate with a diverse range of services spanning the entire supply chain. Whether you need help with trade show logistics, white glove logistics, relocation, customs, or compliance, Omni Logistics’ flexible approach to fulfillment makes them a solid candidate.
They also have expertise in many industries and can customize solutions for retail, eCommerce, tech, healthcare, and more.
Service highlights: Flexible approach to fulfillment, a diverse range of offerings, customizable services, cost-effective
Best for: Brands needing specialized fulfillment or those that want customized fulfillment solutions
Red Stag Fulfillment
Shipping large orders cost-effectively, safely, and quickly can be challenging for even the most experienced shipping company. But for Red Stag, their services allow them to excel at it.
Red Stag understands the importance of creating a fantastic customer experience through your fulfillment and is dedicated to providing seamless service to keep those almighty five-star reviews rolling in. Their services include warehousing, kitting and assembly, and pick and pack, and Red Stag integrates with many major eCommerce platforms as well.
Service highlights: Specialization in shipping heavy and bulky items, accommodation for goods that need special attention and handling, cloud-backed solutions, omnichannel fulfillment
Best for: B2B and B2C retailers and eCommerce brands selling wholesale or large items
ShipNetwork (formerly Rakuten) offers fast ground shipping (as quick as one to two days) at low rates for 98% of the U.S. Pick from a host of 3PL services, including freight, one-day order fulfillment, returns management, and kitting, as well as specialized services like temperature-controlled shipping.
ShipNetwork cares about doing the job right — so much so, they guarantee 100% accuracy along with U.S.-based support to keep fulfillment on track.
Service highlights: U.S.-based fulfillment services, fast shipping
Best for: Brands that sell only in the U.S.
Great customer experience through fine-tuned logistics is Radial’s specialty. This fulfillment expert offers tailored solutions for eCommerce solutions that scale with your brand.
Services span transport and fulfillment management. Some of the perks you receive as a Radial client include extended holiday cutoffs, actionable reports and analytics, and an expansive carrier network to simplify management.
Service highlights: Personalized eCommerce fulfillment, customer-centric services
Best for: Growth and customer-focused eCommerce brands
Shipwire isn’t just another fulfillment provider focused on shipping products; they care about their customers’ growth and actively support it. On top of logistics and warehousing services, Shipwire offers a cloud-based order and inventory management platform, live intelligence tools, and customizable reporting.
Clients can also integrate with popular sales channels, and hands-free parcel routing for each order ensures optimal shipping times (all of which the system manages).
Service highlights: Full-service fulfillment, insight-backed approach, global shipping
Best for: Retail and eCommerce brands
AFS’ secret to success lies in their data: Having managed $11 billion in transportation transactions, they’ve transformed the insights gleaned from this experience into actionable strategy. Their data-led approach has also enabled AFS to secure $183 million in savings for their clients.
This 3PL provider can help you with LTL, TL, express, and ground shipping, as well as parcel and freight audits. If your company prioritizes insights, AFS could be a strong match.
Service highlights: Cost-effective services, transportation management solutions, parcel and LTL solutions
Best for: Data-focused brands and businesses looking for a complete suite of supply chain services
AIT Worldwide Logistics
AIT is a global freight forwarder offering flexible and cost-effective fulfillment services like intermodal, ground distribution, and warehouse management. Sustainability is important to AIT, so they pursue shipping options with less of an environmental impact. If you need help balancing the books for your supply chain, the company also provides lending assistance.
Service highlights: Supply chain finance and auditing, fulfillment, warehousing, chain cold transportation, import/export customs assistance, reverse logistics, green logistics
Best for: Brands looking for flexible and environmentally friendly fulfillment options
Capacity focuses on helping brands pick, pack, and ship goods. This commerce-focused 3PL has value-added services and efficient transportation options, as well as warehousing within carriers’ commercial zones across Europe and the U.S. for swift collection.
Service highlights: eCommerce and retail specialization
Best for: Retail and eCommerce startups
This 3PL eCommerce provider boasts strong warehousing and distribution. Fulfyld helps budding online stores streamline their order fulfillment and back-end processes for a two-day delivery window that’ll delight customers.
The 3PL also offers specialized services such as omnichannel fulfillment, B2B distribution, Amazon SFP and FBA Prep, crowdfunding fulfillment, and subscription box management. As a bonus, Fulfyld assigns a dedicated account manager to each client.
Service highlights: Two-day delivery guarantee, extensive range of fulfillment types, returns management, subscription box management
Best for: eCommerce businesses of all sizes
If you need flexible fulfillment assistance for your in-house operations, FedEx can help. Offering efficient packaging options, an accommodating pickup schedule, and delivery seven days a week, you’ll quickly gain a handle on your back-end operations.
FedEx’s global coverage and affordable rates also make cost-effective freight accessible for even the smallest of operations.
Service highlights: Global shipping, seven-day home delivery fulfillment, extensive knowledge bank
Best for: Startups with in-house fulfillment setups, fluctuating order volume, and global following
C.H Robinson is a 3PL and Fortune 200 company that combines robust logistics solutions and high-spec technology to create optimized supply chains. Their longstanding carrier relationships and global network allow them to achieve competitive rates up to 15% less than what’s offered on the market.
C.H. Robinson excels in helping businesses digitally transform their back-end operations, leading to the provider being named in two Gartner® Magic Quadrant™ reports for TMS and live visibility platforms.
Service highlights: Proprietary bidding system, on-demand freight services, transport management, and brokerage, freight forwarding, and live tracking systems, plus over 85,000 carriers and 100,000 customers
Best for: Established eCommerce and retail brands
Fourth-party logistics companies (4PLs)
MyFBAPrep is a flexible fulfillment provider offering a full suite of fulfillment services for DTC, marketplace, and omnichannel brands, including picking, packing, shipping, and returns.
For value-added services, MyFBAPrep has you covered, with solutions including product kitting, pallet bagging, sorting and segregation, subscription box creation, and co-packing. Also, through their proprietary inventory management, Preptopia, MyFBAPrep helps their clients spot both problems and opportunities while establishing direct communication with their warehouses. MyFBAPrep also works as a partner for 3PLs and 4PLs.
Service highlights: Expansive warehousing (over 50 locations globally), value-added services, transparent and fair pricing
Best for: Scaling eCommerce and omnichannel brands, 3PL and 4PL partnerships
Want to level up your fulfillment process? Learn how MyFBAPrep can help.
Maersk is a world-renowned integrated container shipping and logistics provider. Their digital approach to supply chain management, extensive industry experience, and global service has allowed them to build an impressive reputation in the transport and logistics industry.
You can also secure instant prices and custom quotes through their website. In addition to digital and transportation solutions, Maersk provides risk, insurance, and payment solutions.
Service highlights: Integrated container logistics and supply chain services, digital supply chain and customer order management, financial services
Best for: Established brands going global
XPO is a 4PL provider specializing in TL and LTL road shipping. Focused on efficiency, this service employs advanced technology to streamline processes and make tracking deliveries easy. Services include expedited global forwarding, last mile, and managed transportation. If you’re ready for your goods to hit the road, give XPO a call.
Service highlights: Trucker brokerage, LTL, and TL transporting
Best for: Companies looking for road transportation of goods
An experienced 4PL provider, Kuehne+Nagel combines cutting-edge technology with their extensive supply chain expertise to drive efficiency and cost-savings for their clients.
Services include sea, land, and air freight forwarding, as well as contract logistics. Data guides Kuehne+Nagel’s every move, and IT architecture integrates with more than 40 technological solutions for seamless insight sharing and supply chain visibility.
The company’s efforts have paid off, earning the title of “most visionary leader” in Gartner’s Magic Quadrant for 3PL Logistics in 2022.
Service highlights: End-to-end supply chain management, including transportation, order management, and fulfillment consulting
Best for: Brands needing to simplify and digitize their entire supply chain
ShipHero is a modern 4PL focused on making shipping easier for eCommerce brands. Whether you opt to outsource your entire supply chain or want to cherry-pick fulfillment solutions, ShipHero can support your business needs.
They offer a wide range of fulfillment services, including mobile pick and pack, B2B order fulfillment, putaway, order and return management, and inventory management. ShipHero has warehouses across the U.S. and provides a warehouse management system clients can subscribe to for end-to-end visibility.
Service highlights: Expansive carrier network, experienced eCommerce fulfillment providers, tech-backed
Best for: DTC eCommerce brands
As a growth-focused 4PL provider, DSV helps brands large and small scale sustainably with their 75,000-strong team. DSV offers global transport and logistics by road, air, sea, and rail freight, plus solutions like warehouse management, purchase order management, and distribution.
One feature that sets DSV apart is their self-service tool: Aside from requesting quotes, you can manage POs, book shipments online, track and manage products in your business ecosystem, and more. So, whether you’re looking for a 4PL to take over the entire supply chain management process or want to manage everything yourself, DSV can help.
Service highlights: Self-service tools, large skilled workforce, accommodations for various growth stages
Best for: Retail and eCommerce businesses of all sizes
Boasting 739 locations in over 49 countries and regions, Nippon Express has the connections and infrastructure necessary to ship goods internationally without breaking the bank. Choose from air, sea, rail, or road freight or a combination to create your optimal shipping journey.
This 4PL provider also boasts specialized transportation such as fine arts moving, cross-border fulfillment, and heavy goods, construction, and halal logistics.
Nippon Express caters to many industries spanning fashion and retail to food and electronics. So, if you need supply chain management, global transport services, and warehouse and distribution solutions rolled into one, Nippon Express is a great option.
Service highlights: International coverage, specialty shipping, extensive industry-type experience
Best for: Brands needing global supply chain services or having special shipping requirements
Schneider is committed to helping their clients “get and stay ahead” by offering one of the largest ranges of logistics services. This 4PL serves both shippers and carriers through services such as dry van truckload, intermodal, bulk, refrigerated, flatbed, and LTL shipping.
They also provide a trademarked online marketplace where businesses can find carriers and services, obtain instant quotes, and access shipping documents on demand.
Service highlights: TL, intermodal, cross-border freight, brokerage, cross-dock logistics, supply chain management, and port logistics
Best for: Brands that want more control over managing logistics
Dubbed a 21st-century logistics company, Logistics Plus focuses on executing tasks with precision to drive customer satisfaction. The 4PL provider maintains a broad range of services covering transportation, global freight forwarding, customs and compliance, Importer of Record services, warehousing, and 3.5PL and 4PL. Their dedication is recognized in the industry, with Inbound Logistics magazine naming Logistics Plus a 2022 Top 100 3PL.
Service highlights: Specialized shipping setups, warehousing, international, project cargo, supply chain solutions, warehousing, fulfillment installation
Best for: Brands anticipating high growth
Hellmann Worldwide Logistics
Hellmann Worldwide Logistics is an experienced fulfillment provider that’s been in the industry for 150 years and counting.
Their services span rail, road, and sea freight, as well as contract and perishable logistics, special services, and customs brokerage. If you need specific industry experience, there‘s a strong chance Hellmann has it. Some of the industries they serve are fashion, consumer goods, and perishable items.
Service highlights: CEP services, customs brokerage, perishable goods logistics
Best for: Brands needing various shipping types and fulfillment services
Hub Group is a technologically advanced trucking 4PL with strengths in eCommerce and B2B. They offer end-to-end supply chain services and a strong omnichannel fulfillment network. Hub Group will partner with you to customize your solutions and provide tech tools to establish supply chain visibility.
This 4PL is all about trucking, so their shipping solutions include intermodal, dedicated trucking, and truck brokerage.
Service highlights: eCommerce and B2B omnichannel fulfillment network, supply chain management, tech-backed, consolidation, final mile fulfillment
Best for: Brands seeking a straightforward fulfillment option
4PL J.B. Hunt empowers their clients to win with a tech-, people-, and capacity-focused approach. Utilizing self-service and done-for-you solutions, J.B. Hunt creates supply chain strategies that give their customers a competitive edge.
Aside from their catalog of fulfillment services, clients can access the company’s Shipper 360™ and Shipper 360™ purpose-built shipping solutions, which simplify the ordering process and provide transparent supply chain visibility.
Service highlights: Intermodal, flatbed, temperature-controlled, international, and expedited shipping, plus managed logistics
Best for: Brands focused on digital transformation
LynnCo takes supply chain management best practices seriously. Leveraging technology, their experienced task force, and innovative strategies, they craft and execute procedures for well-oiled operations.
The 4PL helps customers identify the source of disruptions in their supply chains to construct tailored solutions and strategies for optimal performance.
The hands-free nature of their services combined with their great track record make LynnCo a great match for enterprises hoping to offload all their supply chain management tasks.
Service highlights: Supply chain management, digitization, and consultation
Best for: Enterprises that want to outsource supply chain tasks entirely
Formerly DSC Logistics, CJ Logistics isn’t your average fulfillment provider. They feature engineering and consulting services to help their clients build well-optimized supply chains and customized operations.
To set their customers up for long-term success, this 4PL offers supply chain packaging, greenfield warehouse execution, warehousing engineering and automation, and other critical services. CJ Logistics also has experience with managing eCommerce and omnichannel fulfillment, so you’ll feel confident they know what they’re doing.
Service highlights: Supply chain engineering, intermodal and integrated logistics
Best for: Brands seeking customized supply chain solutions
In their 190 years of operation, CSX has been through many transformations, from horse-drawn rail cars to their present-day fast, brand-owned railroading. At their core, CSX has always maintained a commitment to improving customer service, controlling costs, optimizing asset utilization, and making a positive impact on the community.
These days, CSX focuses on helping their clients transport goods efficiently in North America, Canada, and, soon, Pan America by rail. So, if you’re looking for experts in rail transport, CSX could be your match.
Service highlights: Rail-to-truck, intermodal, and rail logistics
Best for: Brands seeking pureplay rail transportation
Wrapping up — Find your right fulfillment partner
Bookmark this article as your go-to list of 3PL and 4PL providers for eCommerce and omnichannel businesses. With our trove of recommendations, streamlined fulfillment is within your grasp. Research the options in this list and decide whether a 3PL or 4PL is right for your business needs. Then, dive deeper into the providers that fit your requirements and set up meetings to start your move.
Let us know what 3PL and 4PL options you would add to this list and why.
An introduction to cold chain shipping and how it’s revolutionizing the supply chain
This a guest post from Maddie Horton, product marketing manager at Smart Warehousing. She helps brands find the right fulfillment solution through email communication, case studies, and more. Outside of work, she enjoys spending time with her dog and exploring new restaurants.
As more consumers use online ordering to tether themselves to brands, companies are increasingly shipping their products across state and country lines. In the last few years, we’ve seen a large uptick in food subscription boxes and other temperature-sensitive items alone. As the demand for such items grows, so does the need for robust logistics. To keep up with this trend, more and more brands will have to master their cold chain shipping.
What is cold chain shipping?
Cold chain logistics is the transportation of temperature-sensitive products at a consistent temperature and humidity level. It’s an integral part of the distribution of perishable food and supplies to ensure they maintain their quality.
It’s commonly used in the pharmaceutical, food and beverage, and cosmetics industries, as temperature-sensitive goods must remain within a certain temperature range to ensure quality, freshness, and safety.
Often, perishable products require frequent deliveries to locations while avoiding long travel times. As such, a reliable cold chain shipping strategy is essential for maintaining product integrity. In this guide, we’ll walk you through the advantages of cold chain shipping and its impact on supply chains and related technology.
Advantages of cold chain shipping
The rise in global trade and demand for perishable goods has increased the importance of reliable cold chain shipping in recent years. It’s essential to ensure perishable products are delivered safely and on time. Shipping temperature-sensitive goods has a number of advantages over traditional shipping methods, including improved safety, extended shelf life, reduced waste, and, sometimes, cost savings. Most importantly, it reduces the risk of spoilage due to temperature fluctuations, which can cause serious health issues or even product recalls.
By controlling the temperature and humidity of the product environment, cold chain shipping allows items to be transported over longer distances without compromising quality. This helps businesses maintain inventory levels more effectively, as well as ensures products reach their destination on time and in perfect condition.
Typically, the cold chain process operates based on the following aspects:
- Variations in demand: Demand variability considers the product’s arrival time and state upon arrival. If certain goods are in demand, companies may request them as needed.
- Load integrity: Load integrity requires technology to determine and maintain shipment temperatures.
- Transport integrity: Transport integrity requires staff and technology to ensure transportation temperatures.
How cold chain shipping is redefining supply chain management
Shippers and third-party logistics (3PL) providers continuously adapt to consumers, and that includes cold chain shipping: NTT Data’s 2023 27th Annual Third Party Logistics Study found 67% of shippers and 72% of 3PLs are expanding their cold chain capabilities and capacity over the next three years. It’s anticipated that, by 2030, the global chain logistics market will reach about $801.26 billion and grow at a CAGR of 14.07% from 2022 to 2030.
Two increasingly influential industries, grocery delivery and micro-fulfillment, are contributing to this expansion as they broaden their logistical capabilities to include cold chain shipping.
Due to the Covid-19 pandemic, eCommerce and online grocery services have gained a larger share of the cold chain industry. Over the next five years, online grocery sales will see a compound annual growth rate (CAGR) of 11.7%, bumping e-commerce’s share of overall grocery spending from 11.2% in 2022 to 13.6% in 2027. This trend will continue as customers are now used to the convenience and time savings of grocery delivery. Moreover, eCommerce is predicted to account for 20% of the U.S. grocery market by 2026.
While this growth is exciting, grocery retailers feel pressured to deliver products to customers quickly and while meeting increasing demands. To support service deliveries and operations, brick-and-mortar stores now look to cold chain shipping for guaranteed food freshness.
Micro-fulfillment involves establishing smaller-scale warehouses in populous urban or suburban locations. By shortening the physical distance between consumers and goods, businesses reduce their last-mile delivery time. This is especially important to the cold chain, as it improves supply chain efficiency and lowers the costs and risks associated with temperature-sensitive shipments.
Micro-fulfillment centers typically carry enough inventory to last a few days’ worth of orders. They rely heavily on inventory management software and customer-driven analytics to determine what SKUs are most often purchased, by which customers, and in what geographic area. This ensures product availability and eliminates wasted storage and stagnant inventory.
The technology driving change in cold chain logistics
The first documented use of cold chain technology dates back to 1797, with British fishers using ice to preserve their catch. It’s continued to evolve since then, with its present-day incarnation allowing companies to track shipments in real time and guarantee products are stored and transported at optimal temperatures throughout their journey.
Advancements in artificial intelligence and machine learning have led to analytics tools that can dive into data points to deliver actionable insights, like predicted inventory, transportation time, consumer demand, and spoilage probability.
Software products as well can monitor the trailers used during transportation between distribution centers to ensure temperatures remain consistent. Previously, cold chain shipping employed passive temperature sensors. These often battery-powered thermometers would monitor the food containers rather than the trailers. However, new technologies now allow products to ship in ideal temperature conditions as well as provide real-time data on temperature fluctuations.
Adopting Bluetooth Low Energy (BLE) trackers, for example, enables users to monitor the temperature and climate of transportation containers remotely with real-time insights like temperature, humidity, movement, data entry, and analytics. This reveals any issues concerning suboptimal conditions that businesses can improve with GPS, RFID, and barcodes (to track items in real time).
If goods arrive spoiled, it can be difficult to pinpoint where the breakdown occurred without sophisticated software. Advanced tracking systems continuously track temperature and humidity to alert users if pre-configured limits are breached, thus proactively preventing damage. Often, location-based insights like GPS will inform you where the goods are when they’re harmed. This helps you trace the timeline back to ensure accountability and avoid repeating these mistakes.
What are the challenges of cold chain shipping?
Cold chain shipping is a complex process, as you have to maintain the temperature of the product, ensure timely delivery, and manage costs associated with this type of shipping. Perishable goods are sensitive to temperature changes; even the slightest variation can spoil or damage products.
To ensure items remain in good condition and hold steady at a safe temperature, cold chain shipping requires products to have storage units. A storage unit can be anything from a refrigerator to an insulated box and is crucial for transporting these goods at their original temperature.
Cost can be another major challenge for companies, as cold chain logistics is more costly than ambient. Its expenses include specific packaging and some kind of coolant, and you usually have to pay for expedited shipping to ensure the product arrives quickly and doesn’t spoil en route to its destination. All of these elements increase your overall costs, so finding ways to lower them is essential for businesses shipping temperature-sensitive items. One way to do so is to outsource this process to a 3PL.
Cold chain shipping best practices
It’s easy for problems to arise in cold chain shipping. To avoid headaches and ensure well-oiled operations, cold chain shippers must adhere to best practices.
- Packaging: When packaging, include an inner layer and vapor barrier or plastic film to maintain a consistent temperature for products during transportation and to maximize their shelf life. This prevents any outside air, humidity, or environmental factors from sneaking into your containers, as well as protects against leaking. A reliable protective barrier between your packaging and your products avoids outside contamination.
- Coolants: Use the right coolants and in the correct amounts. Once you have your insulated packaging, add gel packs, dry ice, or another coolant to keep your item frozen or cold while it’s transported. How much coolant you need and which type will depend on the distance and length of time the package is traveling and the temperature it needs to maintain throughout its journey. When using dry ice, you also need to be aware of and abide by the restrictions associated with it.
- Transport speed: Fast transportation is another best and necessary practice for businesses that employ cold chain shipping. Most times, you’ll want next-day air or two-day shipping to make sure your product arrives quickly at its destination. Also, avoid shipping your product toward the end of the week or near a holiday; you don’t want it to sit at a shipping center over a (long) weekend. Planning ahead and choosing the fastest shipping option available is imperative for your product to arrive in pristine condition.
Leading solutions and service providers
With cold chain shipping increasing in use, 3PLs are also expanding their cold chain management services. As such, more and more retailers want to outsource their cold chain warehousing and distribution to encourage their business growth. Because it requires specialized labor, warehousing, and transportation, a 3PL with experience and expertise in managing sensitive products can save brands significant costs.
When looking at 3PL providers, it’s important to evaluate:
- Shipping times and on-time deliveries: A 3PL provider must be able to provide one- to two-day shipping to avoid products melting or becoming spoiled in transit.
- Omnichannel capabilities: If you manage multiple channels, you need a 3PL provider that can handle omnichannel selling so you don’t have to worry whether your logistics can keep up with your business growth.
- Nationwide coverage: With nationwide coverage, you can employ a distributed inventory model. This means your products spend less time in last-mile delivery transit.
Wrapping up — Moving forward with cold chain shipping
When you’re ready to scale your brand, first look at what elements are most important to achieve your goals. Which ones can you handle internally and which can you outsource? If your brand’s growth is dependent on incorporating great cold chain shipping, you need to dedicate time and energy into either perfecting your logistics processes or finding a great 3PL partner to handle it for you. Cold chain shipping will continue to corner the market as consumer preferences fluctuate due to the introduction of new products and brands. Take advantage of this growth to expand your brand and achieve greater success (and revenue).
Amazon multi-channel fulfillment: Benefits & drawbacks of MCF
If you’re an eCommerce business owner, you’ve probably heard rumblings about Amazon Multi-Channel Fulfillment (MCF) and how it can help you grow your business. But you might be wondering, What exactly is Amazon MCF, and how can it benefit my business? In this blog post, we’ll answer those questions and more.
Don’t have time to dig in? Here’s the short version:
TL;DR –> MCF
MCF is a fulfillment service that lets businesses fulfill orders from multiple sales channels, including Amazon, their own website, and other third-party platforms. The service has been in beta testing for almost a year and opened on January 31, 2023 to all eligible U.S. merchants.
So, how does MCF work?
Essentially, MCF uses pooled inventory stored in Amazon warehouses to fulfill orders via channels outside of the Amazon platform. So, if you’re a business owner who sells products on multiple platforms, MCF lets you streamline your fulfillment process, saving time and money.
One of the biggest advantages of this service is that it allows you to leverage Amazon’s extensive fulfillment network to fulfill orders quickly and efficiently. This is particularly beneficial for businesses that experience high levels of demand.
For brands already selling on the marketplace, MCF can simplify their fulfillment operations: Businesses can manage all their fulfillment needs from a single platform, improving the efficiency of their operations.
It also lowers the cost of fulfillment and shipping. Amazon leverages its massive logistics infrastructure to compete with large shipping carriers like FedEx, UPS, and USPS, which drives down shipping costs and provides a cheaper alternative to these big names.
Granted, there are some disadvantages to using MCF. For one, Amazon’s storage fees change frequently, and picking, packing, and shipping fees can be unpredictable. This can make it difficult for businesses to estimate their fulfillment costs.
Businesses must also meet certain eligibility requirements to qualify for MCF. One such criterion is maintaining minimum inventory levels in Amazon’s fulfillment centers, which can be challenging for businesses just starting out or that have limited resources.
Want the full details? Dig in below.
What is Amazon MCF?
The Amazon Multi-Channel Fulfillment service allows sellers to take advantage of the conglomerate’s fulfillment network to fulfill orders from external channels, such as their eCommerce websites or other marketplaces. MCF’s first-class fulfillment and shipping capabilities ensure customers receive their orders quickly and efficiently, regardless of where the orders are placed or sent.
The service works by integrating the seller’s non-Amazon sales channels with Amazon’s fulfillment network. When a seller receives an order from their eCommerce website or another marketplace, it’s passed to MCF, which then picks, packs, and ships the order to the customer. This eliminates the need for the merchant to manage their inventory or shipping processes, freeing them to focus on other aspects of their business.
MCF is particularly beneficial for sellers who have seasonal spikes in demand or who want to expand their sales channels without adding significant operational overhead. It also provides a consistent customer experience, as Amazon’s fulfillment network is known for its fast, reliable shipping and order handling.
To use MCF, sellers first need to set up their inventory in Amazon’s fulfillment network, either by sending their stock to an Amazon fulfillment center or by using Amazon’s FBA (Fulfillment by Amazon) service. Once there, sellers can then adopt MCF to fulfill orders from their other sales channels.
Sellers are charged a fee for the service that includes the cost of picking, packing, and shipping orders, as well as storage fees to store their stock in Amazon’s fulfillment centers. However, the savings in time and resources merchants would otherwise have spent managing their fulfillment and shipping processes offset these costs.
How do MCF and FBA differ?
The main difference between Amazon MCF and FBA is the sales channels they support: The former allows merchants to sell products on marketplaces other than Amazon (primarily their eCommerce websites) while still leveraging Amazon warehouses for fulfillment. Meanwhile, FBA only fulfills orders from the Amazon marketplace.
This is huge for eCommerce professionals looking to grow their web presence and diversify their sales channels — especially those with unique product offerings on each channel.
Benefits of Amazon MCF
Amazon MCF’s greatest advantage is that it allows businesses to leverage the marketplace’s extensive fulfillment network, which improves the speed and reliability of their order fulfillment. This can be a lifesaver for businesses that experience high demand and need to guarantee prompt and efficient delivery.
For brands that already sell on Amazon’s platform, MCF can save time and reduce the complexity of their fulfillment operations. Businesses can manage all their logistical needs from a single platform, simplifying these processes.
For small to medium-sized sellers, Amazon MCF also cuts costs on fulfillment and shipping. Amazon leverages their massive logistics infrastructure to compete with large shipping carriers like FedEx, UPS, and USPS and drive down shipping costs.
Drawbacks of Amazon MCF
While there are many benefits to using Amazon MCF, there are also some downsides to consider. For instance, Amazon’s storage fees change often, and picking, packing, and shipping fees are known to be unpredictable, meaning costs can add up quickly.
Merchants may also be required to meet minimum inventory levels in Amazon’s fulfillment centers, which can be challenging for businesses just starting out or that have limited resources. Additionally, there’s little to no access to your inventory, and Amazon may move it without notice.
Lastly, Amazon doesn’t offer customization options for packaging, which can be a major deterrent for brands wanting to make an impression on their customers.
Who should use MCF?
Amazon (MCF) is a valuable service that can benefit a wide range of sellers who want to streamline their fulfillment processes and expand their sales channels, such as:
- Ecommerce retailers: If you have your own eCommerce website, using Amazon MCF can help you scale your business and reach a wider audience without having to build your fulfillment and shipping infrastructure. By integrating your website with Amazon’s fulfillment network, you can offer your customers fast, reliable shipping and handling, which improves their overall buying experience and increases customer loyalty.
- Multi-channel retailers: If you sell products on multiple marketplaces or channels like eBay, Walmart, and Shopify, you can streamline your fulfillment processes and manage all your sales channels from one central location on Amazon MCF. This helps reduce errors and shipping costs, as well as optimizes inventory management and order tracking.
- Seasonal sellers: For those who sell seasonal products or experience fluctuations in demand, Amazon MCF can help manage inventory more efficiently and avoid the costs of maintaining an internal fulfillment and storage infrastructure. Using Amazon’s fulfillment network, you can quickly ramp up or scale down your inventory as needed, without worrying about warehouse and shipping overhead.
- International sellers: Amazon MCF is highly beneficial for merchants who sell products to customers in different countries, as it reduces shipping costs and provides a better customer experience. Amazon has a global network of fulfillment centers so you can store your inventory closer to your customers and cut shipping times and costs. As a result, you’ll compete better with local sellers and improve your international sales.
- High-volume sellers: If you sell a large amount of products, Amazon MCF enables you to automate and streamline your fulfillment processes, which reduces errors, saves time, and improves customer satisfaction. Outsourcing your fulfillment to Amazon frees you to focus on other aspects of your business, such as marketing, product development, and customer service, while leaving the logistics to the experts.
- New sellers: News sellers just starting out can leverage Amazon MCF to gain momentum quickly with no significant up-front investment in fulfillment and shipping infrastructure necessary. By capitalizing on Amazon’s world-class fulfillment network, you can build your brand and gain a foothold in your market faster than it would normally take.
Whether you’re a small eCommerce retailer or a large multi-channel seller, Amazon MCF can reduce your overhead, improve customer satisfaction, and scale your business more efficiently. If you’re interested in learning more about Amazon MCF, visit the Amazon Services website.
Wrapping up — Hone your logistics with Amazon MCF
Amazon Multi-Channel Fulfillment is a great option to improve the efficiency and reliability of your fulfillment operations. However, first consider the potential costs and requirements associated with this service to determine how profitable it could be for your business. If you’re a U.S.-based merchant wanting to expand your sales channels and streamline your order fulfillment process, Amazon MCF might be the solution to take you to new heights.
How To Write a Killer Return And Refund Policy
Imagine you’re standing in line at a store preparing to purchase an item and you have some doubts in the back of your mind. Perhaps you’re worried it won’t match the color scheme of your home, or maybe it’s an article of clothing that, once you try it on later, doesn’t flatter the way it did in the fitting room. As you prepare to check out, you ask the cashier about the return policy — specifically, about getting your money back. The clerk explains the policy, circling it on your receipt so you know what to do if you want a refund.
In eCommerce, customers have no opportunity for this type of conversation at checkout. As such, it’s important to ensure your returns and refund policies are clear and easy to find on your website. This critical piece of information can help you reduce returns, avoid refunds, and improve the customer experience.
While it may seem like a hassle to deal with returns and refunds, they’re an important part of doing business online. Even if you strive to provide top-notch products and excellent customer service, there will nevertheless be times when a customer wants to return a product or request a refund. When this occurs, your well-honed refund policy will be your lifesaver to navigate the process smoothly, and we’ll explain how to draft one that fills both you and your customers with confidence.
Why you need a strong refund policy
A refund policy outlines the rules for receiving refunds for purchased goods and/or services. It details the eligibility requirements for returns, what types of refunds are given, the time frame, and the return process, giving you and your team a rule book to follow when processing returns and refunds. This is especially important as you grow your business when you’ll likely begin to receive more returns as your sales increase, making a one-off or ad-hoc returns too cumbersome to manage.
The document lets customers know what to expect before they buy, which reduces the likelihood of dissatisfaction and avoids additional returns on your end. Clearly defining your policy and laying out the terms for customers in a concise manner act as insurance for your sales. For example, if you only offer refunds on regular-priced merchandise, customers know they can’t get their money back on sales items.
You should also aim to be fair and reasonable with your policy. It’s understandable you don’t want to give refunds for products that have been used or heavily worn, but you should also consider the unique circumstances of each request. If a customer has a legitimate complaint about something they’ve purchased, it’s in your company’s best interest to resolve the issue as quickly and amicably as possible.
How to write and launch an appealing return policy
Every return policy is unique to the individual business, and different products might require different eligibility terms. However, there are certain core elements that every document should include. Approach your writing thoughtfully and consider how to accommodate your and your customers’ best interests.
Determine a reasonable time frame
Firstly, choose a time frame during which your customers are eligible to request a refund. This can be whatever range you prefer, whether it’s 10 days or 365.
Decide when you’ll start the clock as well. Does the refund period open when the purchase has been completed (the date on the receipt), when the order was fulfilled (sent from your warehouse), or when the order has been delivered (as noted in the tracking information)?
You might opt to build your policy around a “try before you buy” approach, letting your customers use the product for a predetermined amount of time, such as one month, so they have the opportunity to change their minds with less hassle. These types of guarantees are attractive to shoppers, but they also benefit you.
Outer, for example, is a furniture company with a generous and unique return and refund policy: They’ll refund 100% of the cost of an order if the request comes within 14 days, but customers can receive an 80% refund up to one year after buying Outer products. This allows customers to test an item for an extended period of time. However, Outer doesn’t offer free returns outside of the 14-day window.
Longer time frames — those greater than the standard 10 to 14 days — allow your customers to become familiar with and fall in love with your products. When customers are not bound to a tight refund window, such as a 10-day limit, they may put off submitting a return, which could result in them missing it altogether.
Establish acceptable item conditions
Depending on your product type, you can have an array of requirements concerning the condition of items eligible for refunds. Regional laws where you do business can also dictate (or at least influence) these terms as well. For instance, in some countries, baby items like carriers, strollers, breast pumps, and larger toys can only be returned if the box is unopened.
If you adopt a “try before you buy” approach, you’ll need to be comfortable accepting items in varying degrees of a used condition, but that doesn’t exclude you from having strict requirements for the condition. For example, if you allow customers to test a product for 14 days, you can still require the item to be in a gently used, undamaged condition.
As a concrete example, Allbirds, a popular lifestyle company that sells footwear and other products, have different requirements for returns and refunds based on the products offered. They’ll happily take back any product within 30 days, but underwear and socks must be in unopened packaging; however, shoes can be worn.
List the steps for refunds to be processed
Once you’ve determined a time frame for refunds and the condition required for an item to be eligible for a return, detail the steps for the refund process.
Depending on your company and processes, you may have an online request form that customers can fill out, or buyers may need to contact you directly. The request may include:
- Proof of purchase (order number)
- Proof of condition (photos)
- Complaint or reason for refund request
Whether or not to offer free product returns is up to you, but there’s considerable evidence that free returns boost sales. While free returns will cut into your profits, a 2012 report demonstrated how free returns can increase sales by a whopping 357% — proving it’s a worthwhile investment.
The next step in offering returns is to verify the return package has shipped. Some large retailers like Amazon (particularly through FBA) simply wait for tracking to start before processing a refund, with funds deposited to the original form of payment within a few days. But many other retailers require the returned products to be delivered in acceptable condition before the refund is issued.
In some cases, returned products may only be fit to be used for parts, or you might be able to resell them at a discount with an “open box” label. Keep this in mind when you decide on the item conditions you’re willing to accept.
It goes without saying that defective products — that is, those with manufacturing issues or that arrived at their final destination damaged — should be refunded or replaced as quickly and seamlessly as possible.
Finally, you may choose to offer refunds on products without requiring your customer to send the item back (although this practice is less common).
BLK & Bold is a coffee and tea beverage company with a focus on supporting youth initiatives. They offer in-store and online purchasing options, including subscription programs, and customer satisfaction is a main focus for them. They’re committed to excellence in that regard, and it’s reflected in their refund policy: The company doesn’t require products to be returned. However, refund requests will only be processed within 30 days of purchase.
Clearly display your policy
Your returns and refund policy should be readily visible and easy for your customers to find. Some retailers have gotten creative to make it easy for shoppers to see. TenTree, for instance, includes their return policy directly on their product pages, located in a handy accordion that can expand. Although their policy is somewhat generic, costing customers a flat $10 within 30 days of purchase, its visibility, and simple language ensure zero confusion.
Employ a service to handle your returns
Services exist that can support your return and refund policy by handling every step of the process for you.
For example, TenTree (mentioned above) uses a platform called Returnly, while Allbirds uses Loop. Meanwhile, Amazon sellers who use Fulfillment by Amazon (FBA) can rely on FBA to take care of all aspects of customer service, including returns and refunds.
These are but a few services that manage the reverse logistics of returns and refunds to ensure seamless customer experiences.
Choose between a refund or store credit
Another important decision you’ll have to make is whether to offer refunds or store credit for returned items.
One advantage of refunds is that customers can choose how they want to handle the returned item. This is appealing to buyers who are unhappy with the product or who changed their mind about the purchase.
On the other hand, offering store credit allows consumers to purchase a different item from your store, which is an effective way to retain their business. It can also be less burdensome administratively for your business, as you don’t have to process a refund.
You can make refund methods time-sensitive, such as offering a full refund within X days, or they can vary by product — for example, offering only store credit when a product was purchased on sale. However you decide to proceed, communicate whether items are eligible for refunds and/or store credit (and if any items will be labeled as “Final Sale”).
Keep the language simple and to the point
The language in your refund policy must be clear, concise, and easy to understand. This helps ensure customers understand their rights and options when it comes to returning a product or requesting a refund. If the policy language is too complex or difficult to comprehend, it can cause confusion and frustration for customers, which could lead to negative experiences and potentially damage your reputation as a merchant.
By implementing clear verbiage, you effectively communicate your policy and resolve customer issues in a timely and efficient manner — often before they purchase, which reduces the number of refund requests you receive. Additionally, an open and simplistic refund policy can build trust and confidence in your company by demonstrating transparency and fairness in your dealings with customers.
Disclose any associated fees
Returns can be a necessary but expensive evil in an eCommerce business. With shipping costs rising around the world, it’s understandable some merchants choose not to offer free returns on products. If you decide to follow suit, it’s imperative you outline any fees associated with a return.
Two companies we’ve previously mentioned clearly define the costs accompanying any returns:
- TenTree has a flat $10 rate on all returns to cover the cost of postage.
- Outer offers free returns within 14 days. Past that date and up to 365 days post-purchase, they require customers to cover the cost of return shipping.
In general, the cost of returns is subtracted from the total refund offered.
Leverage tools to generate a policy for you
Crafting a full returns and refund policy can be overwhelming, and if you dislike writing, it can be downright unpleasant.
MyFBAPrep offers a DIY solution to generate your refund policy that takes the heavy lifting out of policy creation. The Refund Policy Generator takes only minutes and provides an easy-to-read policy that clearly details your company’s approach to returns and refunds.
Download it below!
Answer the form above, fill out your company information, and make any necessary edits. From there, you can copy and paste the generated policy onto your eCommerce store and begin promoting.
*Note that this is not professional legal council. Every store’s policy will be unique, so please review the generated policy before adding it to your store.
Promote your policy
A strong refund policy also provides a great marketing opportunity for your business. Show off your generous refund policy to build trust with prospective customers. As long as you adhere to it, your policy can breed customer loyalty by showing them you’ll do what it takes to make things right for each issue.
Take Il Makiage, an eCommerce brand that sells cosmetics and skincare products, for example, much of their marketing leans on their Try Before You Buy approach while also highlighting their unique “shade finder” tool and other products. They allow customers to use the product for up to 14 days, and at any time during that period, dissatisfied customers may request a refund — no questions asked.
Not sure where to begin? Keep the following key tips in mind:
- Include your refund policy on product pages.
- Highlight your returns and refunds policy on your home page.
- Work your refund policy into your marketing messages.
- Link to your returns and refunds policy in every post-purchase communication, from the success page to your retargeting emails.
Wrapping up — Create an awesome return and refund policy to set expectations
Having a clear and concise refund policy not only protects your business but also builds trust and credibility within your customer base. It’s also a fantastic marketing tool for your business when displayed strategically.
It shows potential customers you’re a professional and reliable company that stands behind its products. A generous refund policy also encourages customers to shop with confidence, knowing they have recourse if they’re dissatisfied with their purchase.
The Ultimate eCommerce Glossary for Online Sellers
If you’ve been in the eCommerce world for a while, you know the space comes with its own terminology, methodologies, strategies, and tactics. There are many to learn, understand, and implement to ensure your eCommerce business reaches its full potential. So, to get you up to speed, we’ve put together a comprehensive eCommerce glossary. Let’s dive in.
Bundling: The process of grouping products together for sale. A brand can create a bundle by packing multiple quantities of the same item into one offer, varying products, or both.
Product kitting: The procedure of taking individual items in any state and turning them into a bundle or kit, typically via packaging.
Variety packs: An offer created by packaging different items or variations of a product together, e.g., multipack chips.
Product kits: Singular items grouped together to form a new product offer. Kits can also be customized to customer specifications per order. A kit usually has a purpose, like simplifying and systemizing a process.
Listing: An online page created on a website or eCommerce marketplace to display products. It holds crucial assets like product descriptions, images, videos, and reviews. It can also act as a landing page for marketing campaigns.
Product descriptions: Text written to highlight the key feature of a product for sale. Weight, measurements, materials.
Minimum Order Quantity (MOQ): A figure that represents the lowest unit quantity you can purchase from a supplier or manufacturer, e.g., 100 boxes.
Economic Order Quantity (EOQ): The order size you need to minimize risks and costs such as holding/storage, shortage, order processing, and waste.
Hazmat: Short for hazardous materials. It’s an umbrella term for liquids and substances that can be flammable, toxic, carcinogenic, corrosive, or dangerous. For example fertilizers or cleaning solutions.
Inventory turnover: Reveals how quickly a business sells through goods. Inventory Turnover is calculated using the formula Cost of Goods Sold / Average inventory value during a specified period.
Auto-replenishment: A subscription model that sends refills to clients on autopilot using machine learning to gauge when customers need to top up their products. It’s also used as a sales and marketing selling convenience and timesaving.
Anticipatory Stock: Inventory purchased and stored in advance of a Season change or major Sale
Beginning Inventory: The value of stock items a the start of a specific accounting period
Ending Inventory: The value of stock items at the end of a specific accounting period; this is also the Beginning Inventory for the next account period
Cycle Counting: A method of periodic inventory taking where only certain portions of stock are counted at a time. This eliminates the need to close entirely to take inventory.
Periodic Inventory: Physically counting items to ensure counts are accurate with digital records; often the business needs to close while this is underway
Cycle Stock: Also known as working stock; the amount of inventory kept to fulfill anticipated orders for a specific period of time. This is replenished as soon as it is sold.
Demand Forecasting: Using various data points to anticipate demand and help make business decisions such as new products or working relationships.
Digital Inventory: Number of items in stock based on data from software and digital scanners. Physical Audits should be done periodically to ensure accuracy.
Physical Inventory: The amount of physical items in stock as confirmed by a person; can be used to confirm Digital Inventory
Pipeline Inventory: Items purchased that are not yet in-hand; may be in-transit or still being manufactured.
Excess Inventory: Raw materials that are past their expiration dates, unsold items, or otherwise unsellable stock
Psychic Stock: Inventory used for marketing, that is not for sale
FIFO (First In, First Out): an inventory and accounting method that works on the assumption that items are being sold in the order in which they were purchased.
LIFO (Last In, First Out): An inventory method based on the newest inventory being sold first.
Finished Goods Inventory: Items that are packaged and ready for sale; also referred to as Merchandise inventory
Out of Stock: No inventory available, without an anticipated restock date
Reorder Point (ROP): A predetermined inventory point at which specific SKU’s are reordered to maintain stock
Safety Stock: Additional inventory kept on hand for use in case of increased demand or supply issues
Stellar products need stellar fulfillment. Learn how MyFBAPrep can give your business the upper hand.
Marketing and sales-related terms
Sustainability: The process of meeting human needs without hindering the progress of future generations or the globe. There are 4 pillars of sustainability: social, human, economic, and environmental.
Social proof: A psychological and social occurrence in which people are influenced by others and, as a result, copy their actions in a situation. Brands use social proof to convince shoppers to buy based on other buyers’ actions.
User-Generated Content (UGC): Content created by your customers and influencers displaying your products. It can take many forms, including short and long-form videos and images.
Landing page: An individual web page set up for people to “land” on after clicking on an ad or link. It can be created on a website or hosted via landing page software.
Influencer marketing: Promoting your brand and products by collaborating with content creators.
SMS marketing: Outreach method to a phone number lead list using text messages. Due to legalities, shoppers often need to opt-in to receive communications and have an opt-out option.
Content marketing: A marketing strategy that involves attracting, nurturing, and closing leads through various content assets like blog posts, case studies, and eBooks.
Email marketing: A marketing strategy executed via email campaigns. The emails educate, build relationships, and drive sales. They include newsletters, nurture sequences, and win-back campaigns.
Affiliate marketing: A marketing method that involves promoting products through influencers and industry experts known as “affiliates”.
Split testing: Also known as A/B testing, split testing is a conversion rate optimization method that involves testing different variations of an element against each other to determine which feature performs best.
Content management system: Software, also called a CMS, centralizes content assets, allowing you to create, edit and manage them across your business ecosystem.
Presale: The sales strategy of selling goods to customers before they’re manufactured.
Giveaways: A marketing strategy involving giving away products via a competition to raise brand or product awareness and increase engagement.
Referral program: A reward system that incentivizes customers to introduce their network to a business.
Customer loyalty program: A program designed to reward customers for repeat purchases and visits.
Customer retention rate: A metric that measures how many of your buyers remain your customers over time.
Bounce rate: A metric that calculates how many visitors go to a webpage and leave without taking action. The formula is: single-page sessions / total sessions.
Conversions: When a prospect or customer sees marketing material and takes action. E.g., a link click, email signup, or purchase.
Average Order Value (AOV): The typical amount a customer spends in your store. AOV is calculated by the formula total revenue / total orders.
Customer Lifetime Value (CLV): How much a buyer is worth to your company on average over the time they spend as your customer.
Pay-per-click (PPC): An advertising vehicle that is used to drive traffic to a website or landing page. The users typically pay for the advertising through impressions and/or clicks generated.
Advertising Cost of Sales (ACoS): A metric that reveals how much you spend on PPC, e.g. (Amazon PPC) to generate revenue. The ACoS formula is (Ad spend / ad revenue) x 100.
ROAS: A KPI which shows how much revenue is generated per $1 spent on advertising. ROAS is calculated by the formula revenue / ad spend.
Cost per click (CPC): Refers to how much you pay as a bid per click. You can set maximum bids to control costs.
Conversion Rate Optimization (CRO): The process of improving your website or landing page to increase the percentage of conversions it generates.
Cart Abandonment Rate (CAR): The percentage of carts users add items to and “abandon” before completing a purchase.
Return on Investment (ROI): A ratio that displays the net income to capital invested over a specified period.
Click Through Rate (CTR): A metric that shows how many people view your ad and click on it compared to how many times it’s shown.
Presale: A sales initiative in which goods are sold (normally at a reduced price) before they’re manufactured.
BFCM: Stands for Black Friday and Cyber Monday and represents two of the most significant final-quarter shopping events in many countries.
eCommerce personalization: The continuous act of providing tailored experiences and communication to shoppers on your website, including personalized offers and product suggestions.
eCommerce landing page: A standalone page built to market eCommerce products and services.
Post-purchase survey: A survey sent to a customer after they’ve made a purchase to gauge satisfaction with their experience.
Checkout optimization: The practice of improving an online store’s checkout process to increase its conversions.
Customer-first data: Insights gathered from prospects and customers with their permission and explicit consent.
Augmented Reality (AR): A technology that creates images and overlays them on the user’s view of the real world, altering and enhancing their view.
Virtual Reality (VR): Technology that creates 3D image simulations. They are used in retail and eCommerce to help shoppers visualize products in their environment or on their person.
Omnichannel eCommerce: a type of selling that aims to make the customer seamless regardless of where they start and finish their buying journey.
Multichannel selling: Selling goods on multiple channels simultaneously. Multichannel selling includes online and offline channels.
3D Secure (3DS): A security protocol built to provide additional security for debit and credit card transactions.
Headless commerce: An eCommerce solution in which the front end is decoupled from the backend. E.g., the customer-facing shopping interface is split up from the background tools and operating systems.
Cross-border eCommerce: The act of selling and fulfilling goods online internationally.
Platform migration: The process of moving from one eCommerce or web platform to another. E.g., switching from Shopify to Magento.
Amazon Seller fees: The charges Amazon levies on sellers. It includes a referral fee, a selling plan subscription, and fulfillment fees (if you fulfill via Amazon).
Live shopping: A marketing initiative in which brands sell goods through a live-stream broadcast.
Amazon seller account suspension: When Amazon removes the selling privileges of a seller account holder. The suspended seller will need to appeal with a Plan of Action to request reinstatement.
Amazon aggregator: A business model which acquires Amazon brands. They optimize the brand’s marketing and backend operation to scale and make a positive ROI.
Amazon Inventory Performance Index: A metric between 0-1000 Amazon assigns stores which measure how effectively a store manages its inventory.
Shopify Audiences: A marketing solution that helps users find and close new customers by creating an audience list of engaged buyers from ad platforms like Facebook and Instagram.
Section 321: A US law issued by the US Customs and Border Protection (CBP) permits low-value shipments to be cleared through customs without imposing taxes and duties and with less paperwork.
Retail Arbitrage: The business model of buying goods from a physical store and selling them with a markup on marketplaces like Amazon and eBay.
Fulfillment and logistics-related terms
Distributed order management system: A rule-based system that helps users manage and fulfill customer orders while keeping costs low and maximizing fulfillment operations and actions.
Inventory management: The process of managing stock levels and flow in a business.
Direct-to-customer (DTC): A business model which involves selling goods to the end consumer with no middleman, e.g., on your own website.
Fulfilled by Amazon (FBA): A fulfillment service offered by Amazon to sellers on its platform. FBA orders get perks like Prime shipping, improving the service for customers and sellers.
Fulfilled by Merchant (FBM): When the sellers execute the order fulfillment for an order on an Amazon order.
FBA Prep: A term that refers to preparing and packaging goods to go into the Amazon FBA network.
Batch fulfillment: A type of shipping process which involves grouping packaged orders to be shipped out simultaneously.
Crowdfunding fulfillment: The processing and shipping of a crowdsourced product to funders.
Amazon Multichannel fulfillment (MCF): A fulfillment program in which Amazon handles the storage, picking, packing, and shipping of orders for goods sold online (and not just on Amazon).
Distributed fulfillment: The fulfillment strategy that involves placing inventory and fulfillment service close to demand and customers.
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Picking: Selecting goods in packing and for shipping.
Packing: packaging goods in anticipation of shipping goods to customers.
Value-added services: Premium services typically offered by 3PLs, which modernize, streamline, and improve fulfillment,e.g., pallet bagging and product kitting.
Barcoding: A service in which barcodes, e.g. UPC codes, are added to products in preparation for storage and sale.
Stock Keeping Unit (SKU): An eight-digit number (usually) that businesses with physical products use to track and manage inventory levels.
Third-Party Logistics (3PL): A service that enables businesses to outsource key parts of backend operations like goods distribution, warehousing, and fulfillment.
Fourth Party Logistics (4PL): A service that allows businesses to outsource the management of their entire supply chain and logistics to one fulfillment provider.
Fifth Party Logistics (5PL): A service that manages all aspects of the business’s supply chain starting at production and ending at delivery.
Prep and pack service: A service offered by a fulfillment provider in which they manage receiving customer orders, arrange the package with the purchased goods, and ship the items.
Backorder: An order that can’t be fulfilled when made due to a lack of available inventory.
Electronic Data Interchange (EDI): Using technology to share data instead of paper-based. For example, customer data and order insights.
Zone skipping: The practice of shipping many packages to a carrier’s parcel hub near the package’s end destination.
Returns process: The process for managing when a customer buys goods from a store and sends it back to your distribution center for a refund or exchange
Shrinkwrapping: A service that involves tightly wrapping boxes or products with a polymer plastic film that “shrinks” around the object.
Relabelling: Relabelling involves taking products with premade labels, e.g. barcodes or printed packaging, and attaching new labels in line with the requirements of the sales channel and brand.
Co-packing: A service that consists of taking goods from their raw and packaging them into finished products.
Pallet bag packing: A fulfillment-related service in which goods are bundled and attached to outbound shipments to a pallet in one go.
Sort and segregation: Also known as sort and seg. A value-added service in which the fulfillment provider handles unloading and reorganizing shipments. It also includes services like stock counting, quality inspection, packaging, and repacking.
Fixed logistics: A logistics approach with more permanent fixtures through assets like leases and owned buildings and takes place in a set location, making set up and take down
Flexible logistics: A logistics model with little to no assets or long-term commitments, allowing for simple setup, adjustment, and take down.
Inbound logistics: Obtaining products and materials from suppliers.
Assembly Services: Some (not all) 3PLs offer this service to add a finishing touch that manufacturers don’t provide, such as placing items in branded boxes, or adding custom packaging
Awaiting Delivery Scan: A designation meaning that the item is out for Delivery, but has not been scanned as such; this does not mean that the package has not arrived, as there may be extenuating circumstances, however these discrepancies are often cleared up within a day or so
Carrier Facility: A location that acts as a hub for Shipping Carriers within a region, similar to a Distribution Center
Delivery Duty Paid (DDP) shipping: A method of shipping in which the Seller takes responsibility for all aspects of the sale. If you choose to use this option, the Customer is charged at the time of their order for the product, shipping cost, and associated fees. This will require you, as the seller, to estimate these fees in advance and implement them to amounts charged.
Delivery Duty Unpaid (DDU) shipping: In this case, the responsibility for Shipping costs is shared between you, the seller, and the buyer. You would ensure that items are received at the Country of Destination, and absorb any associated costs. Once the item has reached Customs, it then becomes the responsibility of the buyer to pay for import Duties or transportation costs before they can claim their items.
Delivery Exception: Any type of unexpected delay a Shipping Carrier encounters while a package is en-route. This could be anything from poor weather conditions, to a more widespread issue such as border closures.
Delivery Not Attempted: A message used to show that a package was out for delivery but was unable to be completed. The Driver may have run out of time, or encountered another issue.
Dimensional Weight (DIM): Also known as Volumetric weight, is a formula used by Shipping Carriers to determine cost per Volume for eCommerce packages
Discreet Shipping: A method of shipping where there are no labels, branding, or address to identify the Seller or what the item is. There are a number of reasons this could be selected, from sensitive contents, or detraction of theft.
Dunnage: Sturdy packaging material to protect items during shipping, such as packing peanuts or bubble wrap.
Out for Delivery: A notice that the Shipping Carrier has the package on a truck for delivery.
Packing Slip: An itemized list of all package contents
Reshipment: A replacement shipment sent if an order is damaged, lost, or incorrect.
Scheduled Delivery Pending: A message received when the shipping carrier is unable to make the delivery as expected and is unable to provide an alternative date
And, there you have it – a list of commonly used eCommerce terms. For the best results on your selling journey, keep on top of these terms to uplevel your knowledge. Also, use the services and strategies mentioned to get inspired on things you can improve in your eCommerce business for bigger and better wins.
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