Shopify Fulfillment Guide: Everything You Need To Know
“Immediacy, convenience, and speed are top consumer demands. This is the new normal.”
- Shopify’s Future of Ecommerce Report, 2021.
More than 70% of consumers indicate convenience and free shipping are their top reasons to shop online.
With such a large majority of your customers depending on you for these things, your Shopify fulfillment method has to be top-notch.
If it’s not, you could be losing out on a huge chunk of your audience.
73% of shoppers are put off by delivery costs, and around 55% abandon their carts due to unexpected costs added at checkout - often including shipping.
So, how do you avoid losing out?
Smart shipping looks different for every business. So here, we’ll explore what options are open to Shopify sellers, and the factors they should take into consideration when choosing how to best serve their customers.
In this Shopify fulfillment guide:
Table of Contents
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Ecommerce Fulfillment in 2021
The world is getting smaller.
Customers today expect things to travel further, faster, and cheaper than ever before.
In Shopify’s Future of Ecommerce Report, 2021, they discuss their five key global ecommerce trends for this year, and name fulfillment as a “competitive differentiator”:
“Today’s brand has a four-pronged fulfillment mandate: fast, free, sustainable, and branded shipping.”
Here are some of the statistics they share about consumer expectations for delivery today:
- 64% of consumers want their orders shipped for free.
- 67% of US consumers want same-, next-, or two-day delivery options.
- 72% of consumers want brands to use sustainable packaging.
- According to Shopify’s own research, 5.3% more of its sellers started offering free shipping since the COVID-19 pandemic began.
- The same-day shipping market is expected to reach $9.6 billion by 2022.
Shopify’s advice to sellers mapping out their fulfillment strategies is to:
- “Establish free-shipping thresholds to protect profit margins as consumers worldwide expect quick delivery for ecommerce orders, and;
- Turn fulfillment into a competitive advantage by placing inventory closer to customers, automating returns, and offering flexible options like curbside pickup.”
Cool, so what does this actually mean in practice?
What are the fulfillment options that will help you meet this evolving demand?
Let’s find out.
When (And When Not) To Outsource Your Shopify Fulfillment
You have a number of options when it comes to your Shopify fulfillment, but they won’t work for just anyone, anytime.
When to outsource your fulfillment
Using a third-party company to manage your fulfillment for you has numerous benefits, and should be seriously considered if:
- You want expert help from an established firm.
- You don’t have or want to invest in the infrastructure and staff to handle fulfillment.
- You want a flexible solution that can handle sudden drops or rises in orders.
- You are too busy to meet your fulfillment demands yourself, and you want time back to do other things for your business.
When not to outsource your fulfillment
Equally, there are types of businesses and circumstances that don’t lend themselves well to 3PL solutions:
- Your cash flow is limited. If you don’t have the funds, you will need to do it yourself, even if just at the beginning while you get established.
- Your sales volumes are limited. If you’re only fulfilling a few orders a day or week, then it may not be cost-effective yet to outsource - you can probably handle fulfillment in-house.
- Your business has specialized needs. Many logistics companies do offer customization options, but depending on how far yours go, you may struggle to find a good fit.
Shopify Fulfillment Options
Assuming you are still keen to explore your outsourcing options, let’s look at those now.
Integrated fulfillment: The Shopify Fulfillment Network
Shopify has an integrated, automated fulfillment option exclusive to its sellers: The Shopify Fulfillment Network.
Source: Shopify.
The Shopify Fulfillment Network allows sellers to store their products at Shopify warehouses, and have orders picked, packed, and shipped automatically.
It is an outsourced, but integrated, fulfillment solution for sellers.
The Shopify Fulfillment Network:
- Syncs with your store, so you can select the items you want to send straight from your store admin.
- Stores your products in the locations it thinks will best suit your buyers, which should make shipping quicker when sales come through.
- Notifies you about inventory stock levels so you can stay on top.
- Packs your products in your own branded packaging and to your own custom design, if required, for an unboxing experience you get to control.
- Ships products internationally from the US or Canada. There are some criteria and requirements for this, which you can check out here.
What the Shopify Fulfillment Network doesn’t do:
- It doesn’t ship non-Shopify products, so if you go multi-channel, you’ll either need a separate solution or another one altogether.
- Dropshipping, as SFN is a storage and delivery service, not a supplier.
How much is it?
You can get a quote before you use SFN’s fulfillment service, and your SFN plan is added to your Shopify subscription for one integrated bill.
Quotes will be different based on every business’s needs, inventory, and preferences for fulfillment.
The SFN bill will cover things like pick pack rate, special projects rate (circumstantial fees when you ask the service to handle your inventory), storage rate, and transportation.
Contracts are flexible, so you can opt out at any time.
Amazon FBA for Shopify
Amazon FBA (Fulfilment by Amazon) has a service open to non-Amazon sellers, called Multi-Channel Fulfilment (MCF).
You will need an Amazon account, but you don’t need to list or sell items on Amazon to use the service.
The Multi-Channel Fulfilment service:
- Gives you access to Amazon’s famous shipping infrastructure without selling on the platform.
- Gives you scalable fulfillment, so if you add more channels to your sales portfolio, you can continue using MCF for all your shipping needs.
- Provides a fee estimate and breakdown in Seller Central so you can keep a close eye on your accrued costs and forecast accordingly. Amazon changes its fees yearly, check out MCF’s 2021 updates here.
- Offers the following delivery speeds: 3-5 business days, 2 business days, and priority next business day.
What MCF doesn’t do:
- Ship internationally. You would need to first import your inventory yourself, and then look to use Amazon’s overseas FBA networks.
- It doesn’t appear that you can use your own branded packaging. Your MCF orders may be shipped in Amazon packaging by default.
How much is it?
The rates to use MCF vary based on your inventory sizes, weights, units, storage time, and delivery speed.
These are slightly higher than FBA fees for native Amazon sellers, but can be estimated and tracked in Seller Central.
Dropshipping for Shopify
Dropshipping eliminates the need for inventory and fulfillment infrastructure altogether.
By working with a dropshipping supplier, every order you process is automatically fulfilled by them, and this is a popular way to get into ecommerce.
So, how does it work?
The dropshipping model
- A customer makes an order with your Shopify business.
- That order comes through to you and you place a corresponding order with your supplier. This could be automated, and is often done simply by email.
- The supplier charges your business for the order and ships the item, sending you an alert.
- You send your customer the alert that their item is on the way. This can all be very quick, and the model supports same-day shipping for many brands.
So, how do you go about finding a supplier and establishing that dropship model?
Finding dropship suppliers
Once you’ve decided what you want to sell and found a niche, you’re ready to look for a supplier.
Keep these things in mind for your search:
- What products do they dropship?
- Their location and shipping options - remember how important speed and convenience are to today’s consumers.
- Are they best suited to beginners or experts? You may find some companies are better for one or the other.
Shopify recommends the following suppliers for beginners:
And the following global dropship brands:
Some of the best dropshippers out there estimate the success rate for this business model is around 10-20%.
But you’re the one that determines whether you succeed, so if you do your research and preparation, there’s no reason why you can’t be part of the minority.
Here are Shopify’s top tips for making a success of your dropshipping business:
- Add value: Why should shoppers pick you? You need a differentiator, and one that means something to an audience. Solving a distinct problem is a great way to add value.
- Spend time on marketing and SEO: You need to be seen, and smart marketing is the way to do that. Spend at least 75% of your time on this, and automate your accounting so that you have your money handled in the background.
- Specialize: Find your niche and stick to it. Rather than narrowing your potential, you set yourself apart and attract more targeted customers closer to purchasing.
- Have a longer-term perspective: It could take you around a year or more to establish a profitable business, and it won’t be plain sailing.
- Make your customer service second to none: Customers on social media can be pretty unforgiving. With such transparency today and the potential to share far and wide, make sure what they’re saying about you is great.
Good luck!
Sustainable Fulfillment And Business Tips
With such a huge shift in focus towards environmental issues today, ecommerce is far from immune.
“Today’s shopper wants shipping to be not only fast and free, but also environmentally conscious.
Three-quarters of U.S. consumers are more likely to buy a product packaged sustainably. Many will also pay a premium.
The focus is on zero-waste packaging, where all materials are used, reused, or recycled.
Minimalist packaging, reduced package sizes, and redesigned shipping cases are also high priorities.”
- Shopify’s Future of Ecommerce Report, 2021.
What options are out there when it comes to making your Shopify fulfillment greener?
Watch out! The discerning consumer looking for sustainable brands can spot greenwashing today.
So if you’re going to pursue genuinely environmentally-friendly packaging and initiatives, make sure you do so authentically.
Ways for ecommerce sellers to be more sustainable
It doesn’t stop at just your fulfillment, so we’ll explore both that and other aspects of your business that you could make more sustainable.
- Use a Sustainable Shipping Initiative (SSI)-affiliated company: The SSI is an initiative that was founded by multiple organizations including WWF, to set goals and monitor the progress of affiliated companies in making their shipping processes more sustainable. If you outsource your fulfillment, consider finding an SSI member.
- Reduce your packaging: Plastic isn’t sexy anymore. Consumers won’t thank you for wrapping your products in multiple layers of single-use plastic, so rethink what you really need. Smaller items will also reduce your carbon footprint for travel, too.
- Replace your packaging: Can you use paper, cardboard, or plant-based cellophane for your packaging materials? If your customers can compost your packaging at home, you’re onto a green winner.
- Offer an offset option at checkout: Many brands will let their customers choose to donate to a carbon offset program at checkout. This money goes to initiatives like tree planting to help balance the impact their purchase might have on the environment. CarbonClick is one example of an app that offers this.
- Scrutinize your own supply chain and make changes: The best way to be more sustainable is to look inwards at your own manufacturing processes. Where can you save water, energy, materials, and make smart swaps?
- Offer a closed-loop program to your customers: Can you take back your products at the end of their life and dispose of them responsibly for your customers? Perhaps you can recycle or upcycle them to sell again, or donate them?
- Pay into an environmental initiative: Many brands sign up to programs like 1% For The Planet and The Lion’s Share Fund to make ongoing contributions to environmental causes. If you’re going to do this, make sure your supply chain is as sustainable as possible so that you’re not undermining your efforts elsewhere.
These are just a few ideas to get you started.
Don’t Let Your Shipping Sink Your Profits
Offering quick shipping cheaply, or even for free, will cost you somewhere.
Whether you need to raise your pricing, set a minimum spend threshold, or absorb some of the cost - if you don’t keep track, your profit margin will suffer.
And no business can thrive - or survive - with suffocating margins.
The problem is, Shopify settlement statements don’t give you the level of detail you need to figure that out. Significant manual calculations are required, and that takes time away from growing and improving your business.
A2X solves this problem for sellers.
By integrating A2X with Shopify and your accounting software, your bank deposits are assigned journal summaries that detail every income and expense line that went into them. No more guesses, calculations, or easy mistakes.
A2X also splits your statements that span months and organizes your books via the industry-approved accrual method, for the most accurate and reliable forecast data you can get.
When it comes to your business, you need the truth about your numbers.
Try A2X for Shopify today for free!
Also on the blog
Learn how to manage your Shopify accounting the right way
If you want to scale up your Shopify business, you need reliable accounting. Discover the best tools, key tax information and how to ensure that your Shopify accounting is set up for success.
Download our free guide
