A guide to e-commerce shipping (and the costs involved)
Last updated: 7 Jul 2025
E-commerce shipping can be complex, but understanding its key aspects and strategies helps you manage costs and streamline fulfillment efficiently.
Key takeaways
- E-commerce shipping includes supplier-to-warehouse and domestic delivery, ensuring smooth fulfillment and customer satisfaction
- Use durable, lightweight materials and automated labeling tools to reduce costs and improve shipping accuracy
- Shipping rates depend on package size, weight, destination, and delivery speed—optimizing these can protect your profit margins
- Compare carrier rates, use flat-rate options, and consider prepaid or hybrid services to cut shipping expenses effectively
- Leverage 3PL providers or dropshipping services for scalability, saving time on logistics, and focusing on business growth
Shipping is one of the most challenging aspects of e-commerce, especially for first-time sellers. From choosing shipping methods to managing inventory, labels, and costs, there’s a lot to juggle. It’s no wonder that 66.50% of internet users aged 16 to 64 say free delivery drives their e-commerce purchases.
But beyond free shipping, sellers must balance packaging, tracking, customs, and returns while keeping margins intact. This guide simplifies the shipping process, explains what affects costs, and offers practical tips to help you manage every stage efficiently.
Table of Contents
What is e-commerce shipping?
E-commerce shipping refers to the end-to-end process of transporting products to the end customers. It’s a vital component of the e-commerce fulfillment journey, bridging the gap between the online store and the customer’s doorstep.
E-commerce shipping can be divided into two main segments:
- Supplier to warehouse shipping: It involves transporting goods from the supplier to a seller’s domestic warehouse or a third-party logistics (3PL) provider. This involves international shipping via air, sea, or rail freight.
- Domestic shipping to customers: Once the products are stored locally, the next step is managing last-mile delivery to customers’ addresses. While sellers may not handle this stage directly, it remains the most visible part of the shipping process and plays a crucial role in shaping the customer’s experience.
How does the e-commerce shipping process work?
Here is how the e-commerce shipping process works:
1. Order processing and choosing a shipping method
Once you receive your order, the first thing that needs to be done is order processing.
Order processing starts with verifying stock availability and customer details. Next, items are picked, packed, and prepared with secure packaging. Tools like a shipping rate calculator can help estimate costs early in the process.
Then, a shipping method needs to be picked. Selecting the right shipping method is about balancing speed, cost, and customer needs. Key options include:
- Standard shipping
- Express shipping
- International shipping
- Box and ship services
2. Customs and costs
International shipping comes with customs duties, taxes, and fees that vary by product type, value, and destination. For sellers sourcing from other countries, accurate customs declarations are essential to avoid delays or penalties. Prepaying customs fees can speed up clearance. Understanding local import regulations and planning for these charges ensures smoother international shipping and helps protect your margins, allowing you to manage costs effectively.
3. Packaging and shipping labels
Smart e-commerce packaging and accurate labels are crucial for protecting products and reducing shipping costs. Use durable, lightweight materials to prevent damage without adding unnecessary weight. Optimising box sizes lowers expenses, and eco-friendly packaging can enhance your brand’s appeal.
Labels should include correct recipient details, a return address, and tracking information. Automating label creation with e-commerce shipping tools ensures accuracy, prevents costly errors, and streamlines the delivery process.
4. Pickup and dispatch
Pickup and dispatch mark the beginning of the delivery process, where coordinating with the right shipping carrier ensures timely and cost-effective shipments. Streamlined scheduling at this stage sets the foundation for smooth e-commerce shipping.
Types of e-commerce shipping
Here are the different types of e-commerce shipping and their pros and cons:
Ship orders yourself
This method involves managing the entire shipping process in-house, including packing, labelling, and dispatching orders.
Pros:
- Full control over the process
- Lower costs for small & large order volumes
- Personalised touches can enhance the customer experience
Cons:
- Time-consuming as order volumes grow
- Requires storage space and shipping supplies
- Might require capital investment
Ship orders using a dropshipping service
Dropshipping allows you to sell products without holding inventory. The supplier handles shipping directly to the customer.
Pros:
- Low upfront costs—no need to buy or store stock
- Scalable as you don’t manage inventory
- Easy to start for new sellers
Cons:
- Limited control over shipping times, product quality checks and packaging
- Have to pay extra commissions on dropshipping, leading to lower profits
- Longer delivery times, especially for international shipments
- Open 15+ local currency accounts and get paid like a local
- Pay suppliers, partners and staff worldwide in 100+ currencies
- Collect payments for free from 130+ marketplaces and payment gateways, including Amazon, Etsy, PayPal and Shopify
- Save with competitive exchange rates on currency conversions and transfers
- Lock in exchange rates for up to 24 months for cash flow certainty
Ship orders with a third-party logistics (3PL) service
3PL providers handle storage, packing, and shipping for your orders, allowing you to focus on other aspects of your business.
Pros:
- Saves time and streamlines operations
- Scalable to handle high order volumes
- Often integrates with your e-commerce platform for automation
Cons:
- Additional costs for storage and fulfilment services
- Less control over shipping processes
- Requires trust in the 3PL provider’s efficiency
Ship through marketplace fulfilment services
Marketplace fulfilment services, such as Amazon FBA, take care of storage, packing, and shipping for orders placed on their platform.
Pros:
- Fast and reliable delivery options
- Boosts visibility and credibility on the marketplace
- Includes customer service for shipping-related issues
Cons:
- High fees, including storage and fulfilment charges
- Limited customisation for packaging
- You’re tied to the marketplace’s rules and policies
E-commerce shipping costs
Understanding the costs of e-commerce shipping is key to managing your margins. Whether you’re selling on Amazon or selling on Shopify, here’s a breakdown of the main expenses:
Shipping carrier charges
Shipping carriers charge based on size, weight, and speed. For international orders through Aliexpress dropshipping or Alibaba dropshipping, you’ll also encounter customs fees, so it’s crucial to plan for these.
Packaging and labelling costs
Secure packaging protects products, but materials like boxes, tape, and labels add to costs. Dropshipping sellers avoid this expense, as suppliers handle packaging, but if you fulfil orders yourself, optimising these can save money.
Labour costs
Businesses handling shipping in-house must account for time spent on packing and dispatch. Dropshipping through Aliexpress removes this cost, but for direct fulfilment, streamlining processes is essential.
Insurance
Shipping insurance protects against lost or damaged packages. It’s especially important for international orders or high-value items. Investing in insurance provides peace of mind for both you and your customers, ensuring a smoother resolution if something goes wrong.
Customs and taxes
If sourcing goods through Alibaba dropshipping or any other dropshipping method, customs and duties can be significant. These vary by product type and destination, so factor them into your pricing.
Factors that affect shipping costs
Here are the key factors that influence shipping costs:
Package size and weight
Shipping fees increase with the size and weight of the package. Optimising packaging to reduce unnecessary bulk can significantly cut costs. Additionally, lightweight materials like poly mailers or compact boxes can help minimise dimensional weight charges.
Destination
Shipping domestically is typically cheaper than international shipping. Remote or rural areas also often incur higher delivery fees. Understanding zone-based pricing from carriers can help estimate costs more accurately for different destinations.
Delivery speed
Faster delivery options, like express shipping, cost more than standard options. Offering multiple delivery speeds gives customers flexibility while managing costs. Clearly communicating delivery timelines helps set customer expectations and improves satisfaction.
Freight method
The method of shipping impacts both speed and cost. Air freight is faster but significantly more expensive, making it suitable for time-sensitive shipments. Ocean freight, on the other hand, is cheaper and ideal for large shipments, though it takes longer.
How to determine e-commerce shipping rates for products?
Setting the right shipping rates is crucial for balancing operational costs and customer satisfaction. Here’s how to determine shipping rates effectively:
Understand shipping costs
Identify all components of your shipping expenses, including carrier fees, packaging, labour, insurance, and customs duties (for international shipments).
Choose a pricing strategy
- Free shipping: Increases sales appeal but requires absorbing costs or adjusting product prices.
- Flat-rate shipping: Offers consistent pricing, ideal for standardised product sizes and weights.
- Real-time rates: Calculates costs dynamically based on destination, weight, and delivery speed, providing transparency to customers.
Zone-based pricing
Shipping costs vary by region. Implement zone-based pricing to reflect costs for different delivery areas, including international zones.
Include handling fees
Consider adding a small handling fee to cover labour, packaging, and label costs without overburdening the customer.
How to save on e-commerce shipping costs: Tips to protect profit margins
Here are some ways in which you can save on shipping costs and protect your margins:
Compare carrier rates
Comparing rates from multiple shipping carriers is a great way to save money. Each carrier has strengths in specific areas, like international shipments or last-mile delivery. Using tools to shop for rates ensures you find the best option for your shipping needs and keeps costs low for your e-commerce shipping.
Use packaging provided by carriers
Many carriers offer free standard packaging, such as boxes or mailers, which can help reduce your e-commerce packaging costs. This is especially useful for lightweight or small items. Using carrier-provided packaging ensures your shipments meet carrier standards, avoiding unexpected charges.
Leverage flat rate shipping
Flat rate shipping works well for small but heavy items. Costs are based on the box size, not weight or distance, which simplifies pricing. This is an economical choice for businesses looking to control expenses and provide predictable rates to customers.
Prepaid shipping
Prepaying for shipping labels in bulk can lead to significant savings. This option is ideal for businesses with consistent order volumes. Prepaid shipping allows you to plan ahead, lock in lower rates, and manage e-commerce shipping costs more effectively.
Hybrid services
Hybrid services, like FedEx SmartPost or UPS SurePost, combine courier networks with local postal services for the final delivery. This reduces costs, particularly for non-urgent shipments, while maintaining tracking visibility. It’s a practical choice for businesses shipping to remote areas.
Negotiate rates
Businesses with high shipping volumes can negotiate discounted rates with carriers. Carriers often reward regular customers or large accounts with better terms. This can significantly lower costs over time and is worth exploring as part of your e-commerce shipping guide.
Consider regional carriers
Regional carriers often offer lower rates for deliveries within specific areas. They can be faster and cheaper than national carriers, especially for local deliveries. Businesses with a concentrated customer base can benefit from this cost-effective option.
Third-party insurance
Third-party shipping insurance can be cheaper than insurance offered by carriers. It’s particularly useful for high-value shipments or businesses with large shipping volumes. Flexible coverage options also make it easier to customise your protection needs.
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Pay your suppliers and shipping partners in their preferred currencies, with payments arriving in hours instead of days (cut-off times apply). This ensures your goods are shipped without delays. Plus, benefit from competitive foreign exchange rates, helping you save more and grow your earnings.
Disclaimer: The information contained is general only and largely our views. Before acting on the information you should consider whether it is appropriate for you, in light of your objectives, financial situation or needs. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions, estimates, mentioned products/services and referenced material constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. WorldFirst shall not be responsible for any losses or damages arising from your reliance of such information.
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