Small BusinessCommerceShipping

Shipping best practices and tips for small businesses

As a business owner who ships products to customers, you know firsthand how complex and challenging it can be to get your item from point A to point B. From unexpected costs and oversized fees to insurance claims, lost packages, and more, the potential for trouble is high.

That’s why a clear, well-designed shipping strategy is key. It can help reduce costs, improve customer satisfaction, increase efficiency, and even boost profitability.

Smart tips and quick guidelines that can lead to successful selling

Online stores that offer convenient shipping options can help reduce cart abandonment and increase profits. Simplify shipping tasks and implement these proven tips to create a strategy that works best for your operation.

Ship with online tracking

The customer experience doesn’t stop once you process an order and ship the product. The post-purchase phase can be just as critical in your quest to create loyal shoppers. Think of it as a great opportunity to drum up excitement and create lasting relationships.

Keeping customers up-to-date on their order’s progress is a simple way to show you’re engaged in their purchase. You can do this by using a shipping service that provides online tracking. Keep in mind that standard shipping receipts only show that an item was shipped, while online tracking services indicate where an item is every step of the way, including upon delivery.

You can use PayPal for shipping and tracking your products. Remember:

  • If the total sale is $750 or more, obtain signature confirmation to confirm your customer received their order — the nominal expense is well worth it, plus it’s a PayPal requirement.
  • Use your discretion when shipping internationally using First Class Mail International because this shipping service is not accepted under PayPal’s Seller Protection Policy.

Learn more about PayPal’s shipping carriers.

Purchase shipping insurance

Shipping insurance can deliver significant benefits to businesses. Not only does it include tracking and delivery information, so the customer can see the order is en route and delivered, but it also insures the item in the event it is lost, stolen, or damaged.

Some of the biggest shipping insurance benefits include:

  • Financial protection. In case of damage or loss, shipping insurance will provide coverage for the cost of the product, allowing your business to recoup its losses.
  • Improved customer satisfaction. When customers know that their purchase is insured, they are more likely to feel confident in their order and have a better overall experience.
  • Simple claim process. In case of a shipping problem, you can file an insurance claim with the shipping company — sometimes it’s as easy as one click. Your customer or the shipping company can report claims, too.
  • Reduced liability. The business's liability is limited in case of damage or loss, which can help protect against costly ramifications.
  • Flexibility. There are different types of shipping insurance available, so businesses can choose the one that best suits their needs and budget.
  • International shipments. Insurance will help to protect the product while it is being shipped across borders and customs.

Types of shipping insurance

There are various shipping insurance types, so you’ll want to pick the one that works best for your business and its products. Other factors to consider include the risk involved in shipping the item as well as the item’s value.

Here’s a rundown of common shipping insurance options:

  • Carrier liability insurance. Provided by the shipping carrier, such as FedEx or UPS, and is included in the cost of shipping. It typically covers loss or damage of the package, but the coverage is typically limited and may not cover the full value of the product.
  • Third-party insurance. Purchased separately from the carrier and can provide broader coverage for the full value of the product. It can also include additional features like coverage for loss or damage due to natural disasters or transit delays.
  • All-risk coverage. Covers all risks that are not specifically excluded. It's the most comprehensive coverage option and can be more expensive than other options, but it offers a higher level of protection.
  • Cargo insurance. Covers the entire shipment, including all the products, packaging materials, and other associated costs. It's typically used for large commercial shipments and is often required by international trade regulations.
  • Marine insurance. Specifically covers the risk of loss or damage to goods that are transported by water. This includes shipping by boat, barge, or ship.

Use care when choosing a drop shipping supplier or acting as a drop shipper

Drop shipping can be a great way for businesses to expand their product offerings and reach new customers without investing in inventory or handling shipping themselves. Reason being is the seller (like you) does not keep goods in stock when drop shipping. Instead, they transfer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

However, you’re still responsible for delivering what the customer orders, so it’s critical to choose a reputable drop shipper to help avoid losses. Be wary of drop-shipping companies located in high-risk countries. If you’re a drop shipper, have a vetting process in place for all suppliers. This should include inventory management and product guarantees (to ensure that items are in stock and you’re delivering high-quality merchandise).

Popular drop shipping suppliers include:

  • Alibaba
  • SaleHoo
  • Oberlo
  • Spocket
  • AliExpress
  • Wholesale2B

Prevent out of stock items

As its name suggests, a stockout — also known as a stock shortage — occurs when a product is not available for sale because it’s out of stock. This can happen when a business is unable to meet the demand for a product due to a lack of inventory or supply chain shortages.

Stockouts can happen for several reasons, including:

  • Insufficient or incorrect demand forecasting
  • Miscounted inventory
  • Unexpected demand surges
  • Supplier or supply chain delays
  • No cash to buy extra inventory
  • Theft or damage
  • Shipping delays
  • Inefficient stock replenishment

With any stockout, there are hidden costs associated with an item running out of inventory, such as:

  • Lost sales
  • Poor customer experience
  • Damaged brand reputation
  • Increased operational costs for purchasing inventory on short notice

To prevent stockouts, businesses can use forecasting, inventory management, and sales data to predict demand and plan accordingly. Furthermore, businesses can review their supply chain to minimize lead time and reduce production delays.

Learn more about shipping with PayPal and get helpful tips for creating a shipping strategy.

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