E-commerce: How to choose the right shipping setup

Shipping is a significant part of the customer experience - and often one of the largest variables for e-commerce businesses.

Yet many businesses fail to review their choice of carriers and shipping services regularly enough. As order volumes grow, product ranges change, customers shop from new locations, and delivery expectations evolve, the setup that once worked well may no longer be the most cost-effective or customer-friendly choice.

The right carrier is rarely the best choice for every shipment. One carrier may offer the best solution for small parcels delivered to a service point, while another is better suited to home delivery, business deliveries, heavy parcels or international shipping.

That is where a well-considered carrier mix can make a difference. By matching different order types with the most suitable services, you can control costs while giving customers delivery options that fit their needs.

In this guide, we will show you how to use your own shipping data to review your shipping setup and carrier mix - and identify opportunities to reduce costs.

What is a carrier mix?

A carrier mix means using different carriers or shipping agreements for different types of shipments, rather than automatically sending every parcel the same way.

For example, you may use:

• One carrier for small parcels delivered to service points
• Another for standard home delivery
• A third for evening delivery
• A fourth for heavy parcels or business deliveries
• Additional carriers for international shipments, depending on the destination country

Your carrier mix can also be reflected in your checkout, where customers can choose their preferred delivery method from multiple methods and carriers. But it can just as easily operate behind the scenes, with different order types being handled through different shipping services.

The goal is not to have as many carriers as possible. The goal is to have the right options for the shipments that matter most in your e-commerce business.

Why review your carrier mix?

Your shipping setup should evolve with your business.

Changes in order volumes, product ranges, customer preferences, delivery destinations and carrier prices can all affect which shipping services offer the best value. A carrier or shipping agreement that was the best fit for a particular type of shipment last year may not be the best choice today.

That does not necessarily mean moving all your shipments to a new carrier. Instead it may be worth assessing whether different services could provide a better solution for specific weight brackets, delivery methods or destinations.

Perhaps there is greater potential to reduce costs for heavier parcels. Perhaps you can offer customers a more attractive home-delivery option. Or perhaps Shipmondo’s shipping agreement can complement your current setup for the shipments where it is not as competitive.

How often should you review your carrier mix?

The short answer: regularly.

If you ship thousands of parcels each month, you will typically monitor prices, delivery performance and total shipping costs closely. Even small differences per shipment can have a significant impact, so shipping agreements are often reviewed and renegotiated on an ongoing basis.

For smaller online businesses, there is rarely a need to analyse the carrier mix as frequently. However, it should be revisited at a minimum when:

• Shipping rates or surcharges change
• Order volumes increase or decrease noticeably
• The balance between small and heavy parcels changes
• You start shipping to new markets
• Your customers’ delivery preferences change
• New carriers or delivery options become relevant

A review should not focus solely on finding the lowest shipping rates. Your order data, customer preferences, delivery performance and the practical handling in your warehouse should all be part of the assessment. It is the overall solution that determines whether your shipping setup is the right one.

How to evaluate your shipping setup

1: Start with your own order data

The best carrier mix does not start with identifying the carrier that is generally the cheapest. It starts with the parcels you actually send.

Begin by analyzing data from the past three to six months. If your business experiences major seasonal fluctuations, it may be useful to look at a full year of data so that Black Friday, the holiday season and other peak periods are included.

Look at factors such as:

• How many parcels do you ship? Are there significant seasonal fluctuations?
• What do your parcels weigh, and what are their dimensions?
• How are shipments split between service-point delivery, home delivery and business delivery?
• How many international parcels do you ship, and to which markets?
• What is your return rate?

The goal is to identify the order types that account for the largest share of your business. In many cases, a small number of combinations of weight, destination and delivery method will make up the majority of your shipments.

These are the shipments you should optimize first.

You can gain valuable insights into these figures directly in Shipmondo Analytics in your account.

2: Divide the parcels into relevant weight classes

A carrier may be highly competitive for parcels weighing less than 1 kg, but less attractive once the weight exceeds 5 or 10 kg. For this reason, an average price across all shipments can conceal important differences.

Instead divide your parcels according to the weight brackets used in carrier pricing. For example:

• 0-1 kg
• 1-2 kg
• 2-5 kg
• 5-10 kg
• 10-15 kg
• 15-20 kg

Then look at the share of your total shipment volume that falls within each bracket.

If 70% of your parcels weigh less than 2 kg, rates in the lower weight brackets should play a major role in your decision. On the other hand, if you ship furniture, spare parts, wine, pet food or other goods that often weigh more than 10 kg, price differences for heavier parcels may matter far more.

If you ship both, there can be significant savings in choosing carriers and shipping services based on weight. Also remember that the physical weight is not always the weight used for billing. Large, lightweight parcels may be priced according to their volumetric weight, so parcel dimensions should be included in your comparison.

Read more about volumetric weight, surcharges and the actual cost of a shipment in our guide to understanding your shipping rates.

3: Compare actual order types - not just one standard parcel

Once you understand how your shipments are distributed, select three to five shipment types that represent the majority of your orders.

For example:

• A 0.8 kg parcel delivered to a service point
• A 3 kg parcel delivered to a home address
• An 8 kg parcel delivered to a business address
• A 12 kg parcel delivered to a home address
• A typical return shipment

Then compare the prices for these specific shipments across the carriers you are considering.

This prevents you from choosing one overall winner based on a parcel type that may account for only a small share of your volume. Instead, you can see whether one carrier is the strongest option for one order type, while another is better suited to a different one.

4: Make sure you compare the actual cost of shipping

A low base rate - the listed parcel price in a shipping agreement - does not necessarily mean the lowest total cost. Surcharges, fees and billing models vary between carriers, making it difficult to determine what each shipment actually costs.

For example, fuel or energy surcharges are often not included in the base rate but added separately to the invoice. These surcharges are typically adjusted regularly and can make up a significant proportion of the total shipping cost.

When considering shipping rates, be sure to consider:

• Fuel or energy surcharges
• Capacity surcharges
• Road tolls and other fixed surcharges
• Peak-season surcharges
• Collection or pickup fees
• Fees for oversized or non-standard parcels
• The cost of returns and uncollected shipments
• Whether pricing is based on actual weight or volumetric weight

When comparing shipping rates in Shipmondo with your own carrier agreements, make sure that the same costs and surcharges are included in both figures. This is the only way to make a fair comparison.

You can find more information about weight calculations, parcel requirements and carrier-specific surcharges in Shipmondo’s Help Centre.

5: Factor in your customers’ delivery preferences

Your shipping setup should not only make sense in a spreadsheet. It also needs to offer the delivery options your customers want.

Some customers consistently choose the lowest-cost delivery option, while others prefer home delivery, a specific service point or a parcel locker close to home or work. For some, the ability to choose a carrier they know and trust can also be an important factor.

Look at which delivery options your customers choose most often at checkout, as well as the preferences that recur in customer enquiries and feedback. It can also be useful to review what your closest competitors offer.

Understanding local delivery preferences is especially important when you sell across multiple markets. What customers expect from delivery can vary considerably between countries.

6: Does the shipping setup work day-to-day?

Shipping rates matter, but they should not be considered in isolation. A solution that appears to be the cheapest on paper can become more expensive if it requires additional time and handling in the warehouse.

For example, a carrier may offer an attractive rate but require parcels to be dropped off far from your warehouse. Another may offer collection, but have an early booking cut-off or specific requirements for sorting, packing and handling.

Before changing your carrier mix, consider:

• Are parcels collected or do they need to be dropped off?
• How often can parcels be collected?
• Does the carrier require separate sorting or dedicated cages?
• Do the carrier’s size and weight requirements suit your packing?
• What is the expected delivery time?
• What does the carrier’s standard insurance cover?
• How much additional time will the solution require in day-to-day operations?

If you ship high-value goods, pay particular attention to the carrier’s insurance coverage. Check the value covered by standard insurance, the terms that apply, and whether you need additional cover.

Also assess actual delivery performance, including delivery times, delays, damage rates and customer enquiries. A carrier’s performance can vary between delivery methods and destinations.

The cheapest shipping label is not necessarily the lowest-cost solution overall. A good carrier mix must make financial sense while also working efficiently in day-to-day operations.

Combine your own shipping agreements with Shipmondo’s rates

You do not have to choose between your own carrier agreements and Shipmondo’s built-in shipping rates.

If you already have a strong agreement for most of your shipments, you can continue using it and supplement it with Shipmondo rates for the services, weight brackets or destinations where another carrier is a better fit.

This may be relevant if you:

• Have a good primary agreement but lack a competitive home-delivery option
• Ship occasional heavy parcels that are expensive under your current agreement
• Want to offer customers an additional carrier at checkout
• Need an alternative during peak season
• Want to test a new carrier with part of your shipment volume
• Do not have sufficient volume to negotiate competitive rates with every carrier
• Lack a strong solution for particular international markets

In Shipmondo, you can manage your own carrier agreements and Shipmondo rates in the same account. This makes it possible to work with multiple carriers without handling shipments across different systems - and adjust your carrier mix as pricing, order data and customer needs change.

The best shipping setup is not necessarily built around one carrier or one agreement. It is the setup that provides the right solutions for the shipments that matter most to your business.

Read our guide to choosing between your own carrier agreements and Shipmondo’s rates.

Want to see whether Shipmondo’s shipping rates could complement your current setup? Create a free account to explore the rates available in your sender country.