Amazon Prime shipping

6 Ways E-Commerce Startups Can Compete with Amazon Shipping (and Win)

Although it may seem like ages ago, many of us remember what an ordeal it was to order products online that were unavailable in our local stores. Back then, free shipping wasn’t available, and two-day shipping was exorbitantly expensive and reserved for nearly-forgotten birthday presents for the notoriously hard-to-please grandma. And if we needed pedestrian items like lightbulbs or toothbrushes, we would pencil in an immediate trip to Walmart. Fast forward to today, and we are not only ordering these items online, but Amazon Prime members can receive same day delivery in select areas.

With Prime, it seems that we can order nearly anything and have these items land on our doorsteps in two days or less. As a result, most of us are guilty of abandoning our carts on other sites after discovering that shipping isn’t free and it could take five to seven days to receive our orders.

Why would we want to pay extra and wait when we can just click on our Amazon app and receive the same product within two days?

This common consumer behavior is supported by the fact that 79% of consumers are more likely to shop online when there’s free shipping.

At this point, a year and a half into the COVID-19 pandemic, we all understand how vitally important it is not only for our businesses to be online, but to have an e-commerce component to our business: Consumers spent $861.12 billion online with U.S. merchants in 2020, up 44% year-over-year, according to Digital Commerce 360. Online spending represented 21.3% of retail sales, and this means that it is now essential for e-commerce startups to offer free, fast shipping.

Here are six things entrepreneurs can do to compete with Amazon Prime shipping to get orders out quickly and at low cost:

Influence the customer’s perception of speed

As soon as an order is shipped, an email with tracking information should be in the recipient’s inbox. Even if the order won’t arrive in two days, the knowledge that the product was shipped immediately will influence the shopper’s perception of shipping speed. The positive experience of knowing the order was shipped and the expectation of when the order will arrive increases the possibility of the customer returning for further purchases.

Get a shipping rate quote for each order

Shipping costs can vary widely among carriers, so it benefits business owners to search for the best price. When shipping many orders that are similar, you may benefit from group shipping methods based on the order type. When handling orders that have a variance of line items, manually rate quoting each order can be time consuming, which in turn causes orders to become backlogged. Instead, you should choose an optimized platform or program to quickly determine the cheapest option without holding up the order fulfillment process.

Build shipping costs into the order

It’s even possible to make money using this tactic, especially when choosing the cheapest option among shipping carriers. You can also review reports on how much was charged for shipping versus how much was actually paid. Typically, most warehouse management system solutions provide these shipment reports that chart the historical performance of orders that were shipped out.

Reduce the steps required to fulfill orders

When first starting out, many entrepreneurs tend to use paper lists to manually fulfill orders. However, this can be a slow and error-prone process, especially if the warehouse is disorganized or pickers are unfamiliar with the warehouse layout. Instead of paper pick lists, go digital. The best way to improve order fulfillment speed is to incorporate barcodes. Barcodes eliminate the guesswork involved in picking and packing orders and drastically reduce fulfillment errors. It’s extremely important to organize inventory and (if possible) use technology to optimize picking routes. This reduces walk time, and again further eliminates potential mistakes when picking items for orders.

Simplify the packing process

Generally, the cost of shipment is determined by either the weight or the package it’s shipped in (or both, depending on what the order is and where it’s going). While using scales at the time of packing seems like a logical step to determine the weight of the order, there are solutions that allow you to set the weight according to the product’s SKU or the weight and shipping method of each type of shipping container. This method, combined with a rate quote comparison for each shipment, will allow you to achieve a more efficient shipment cost per order when weight needs to be accounted for.

Add a touch of personalization

It’s definitely a challenge to beat Amazon’s speed and free shipping; and even if an entrepreneur is running a very efficient operation, it will still be a benchmark to reach. So, what else can a growing e-commerce startup do to compete?

You can add an additional experience for customers by personalizing the order.

For example, if you’re using Shopify, it’s possible to determine if a customer is a first time buyer or has ordered before. If you’re selling on Etsy, consider including a personalized, handwritten note thanking the customer for his or her order, or throw in a small freebie like a sticker or branded piece of swag. This personal touch makes a big impact on the customer, and is often more valuable than the expected shipment that arrives a little bit earlier.

Key takeaways

While it may be a challenge to beat Amazon’s two day (or same day) delivery as a new business, you can stay relevant by ensuring your shipping methods are fast, personalized and low-cost to your customer.

Originally published June 21, 2021.

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