Danica’s greatest passion is writing. From small businesses, tech, and digital marketing, to academic folklore analysis, movie reviews, and anthropology — she’s done it all. A literature major with a passion for business, software, and fun new gadgets, she has turned her writing craft into a profitable blogging business. When she’s not writing for SmallBizGenius, Danica enjoys hiking, trying to perfect her burger-making skills, and dreaming about vacations in Greece.
If you have an online shop, you know that one of the most important things for clients is reliable shipping. Various helpful website-building tools can help you create an eye-catching site, but you also need to adopt some eCommerce shipping best practices to ensure a great shopping experience for your customers. Their shopping journey starts on your website, but it ends up once their order arrives. If you don’t provide your customers with the shopping experience that they expect, you might end up with lots of cart abandonments and a lower number of orders. Eventually, you might even lose your regular clients. Establishing a good shipping strategy is crucial for your online business if you want to increase customer satisfaction and convert more leads into buyers. But putting a successful online shipping strategy in place is not always an easy thing to do. Many business owners think that free shipping is all you need, but it’s not simple. It’s an integral part of a consumer-friendly eCommerce shipping strategy, but far from being the only thing you should worry about. Successful online stores employ more sophisticated business strategies. Good delivery practices include the engagement of the different teams inside the company, collaboration with reliable carriers, friendly customer support, and so on. Establishing reliable shipping strategies can be complicated, especially if you are new in the business. Our article will help you understand this topic better, introducing basic shipping strategies for the successful delivery of your products. We’ll explain how you can benefit from different shipping methods, choose carriers, reduce shipping costs, and perform order tracking. Additionally, we’ll share some tricks and tips that can help you streamline your shipping process and boost customer satisfaction rates. Shipping Methods and Rates The first you need to know regarding eCommerce delivery strategy are the shipping methods and rates. Although free eCommerce shipping is praised as a solution for boosting clients’ satisfaction, there are also other methods that you can use to increase satisfaction rates. Let’s start with free shipping and then discuss the other shipping options. Free shipping According to the latest statistics, 90% of customers say that free shipping is the main reason they choose to shop online. Furthermore, over 60% of prospective buyers abandon shipping carts if there are shipping costs. Therefore, free shipping is a must if you want to stay competitive. We all know that free shipping is not really free, meaning that someone has to pay for it. Either your customers will pay more for the products, or you will have lower profit margins after covering the shipping costs yourself. The best eCommerce shipping method is offering free shipping to your customers but only when they meet specific requirements. You can set up an order limit for free shipping. For example, Amazon enables free shipping for orders over $25. This way, you may be able to cover shipping losses by getting customers to buy slightly more than they otherwise would have. Be transparent Let’s say that you just started your online business, and you are not in a position to offer free shipping. It doesn’t need to impact your customer satisfaction rates if you do things right. Firstly, you need to be honest with your customers. If your shipping is not free, you need to be clear about that. eCommerce shipping costs best practices are to set up shipping prices transparently, so your customers won’t have an unpleasant surprise when they complete their order. Some people won't mind paying shipping costs if they are clearly informed about them at the beginning of their purchase. However, you can expect many clients to abandon the shopping cart if they can’t see the fees from the start. We recommend adding the cost of shipment for each product to your shopping cart. Almost all eCommerce platforms (such as Shopify or Wix) have this option available. After your customers add the ZIP code, the shipping fees will instantly show up in the cart. There will be no surprises, so your customer will be far more likely to go through with their order. Make the delivery date visible The best eCommerce shipping solutions show clients the expected delivery date for their products. Just as you should be transparent with the delivery costs, you should also tell your customers when they can expect their order to arrive. The delivery time can differ depending on the chosen shipping method, order date, and more. You should be transparent and show this information during the checkout procedure because 80% of customers will abandon their shopping cart if they don’t know when their order will arrive. Offer flat-rate shipping Another strategy that you can adopt is flat-rate shipping. This is an option for an unchanging fee, often used for products that are similar in size or weight. You should still show the shipping costs, as per our suggestion above. However, it’s not a great choice for businesses that sell vastly different products in terms of shape, size, weight, and price. Team Collaboration If you want to keep your customers satisfied, the eCommerce best practices for 2021 show that you need to cover all segments of the customers’ purchasing journey. This means collaboration between different teams and departments, including marketing, designers, web developers, customer service, and the shipping fulfillment team. The marketing team and developers will work closely together on communicating shipping and product promotions to the customers. Both team knowledge and tools can contribute to streamlining this process. While the marketing team researches which product you should promote, the web developers will help you implement the promotions on the pages that customers visit the most, and software can quickly tell you when and why customers gave up on their orders. With both domestic and international shipping, for eCommerce best practices to really work, you’ll need a good team for order fulfillment. You can work with a third-party company or have an in-house team that uses order fulfillment software. Regardless of the option you choose, ensure that your team will do the work responsibly. It has to be prepared to pack, label, and ship items on time. This team is also responsible for the possible returns. Lastly, every business requires good customer service, and the same goes for eCommerce stores. The customer service will communicate with your clients directly through phone, email, or live chat, so it’s extremely important to have reliable and knowledgeable people on this team. Carrier Options Speaking of eCommerce shipping strategies, one of the most important ones is choosing the right carrier. Three large companies provide eCommerce delivery services: FedEx, UPS, and USPS. The type of product you are selling can help you in decision-making because different carriers are good for different product types and particular types of shipping options. Some are better for international shipments, while others might excel at shipping clunky and oversized products. You also need to decide whether you’ll have one or more carriers. Choosing one is simpler, but it doesn’t provide you the freedom and flexibility that having more than one would. eCommerce shipping solutions with multiple carriers are usually in a better position when negotiating shipping rates and costs. Having multiple carriers is also a good idea because if one of the companies closes down or doesn’t work for some other reason, you’ll always have others to ship the products. Additionally, if you offer different types of shipping products, it’s better to have several carriers at your disposal. Some of them may provide more efficient eCommerce international shipping solutions, while others will offer great delivery services across the US. Delivery Updates Every customer prefers to know in which phase of delivery their package is, so you’ll need to provide your customers with a reliable tracking system. This way, you will build trust between the company and its clients. The success of this functionality depends on which inventory management system you use, but it’s generally not too complicated to set up. All good delivery solutions for eCommerce will have an order tracking service. It’s especially important for companies that do business overseas. International orders have longer delivery periods, so your clients might become nervous if they cannot check the status of their order. Over 80% of customers claim that they value online shops that provide information regarding fulfillment and delivery stage for their packages. Taking Responsibility Although lost and damaged packages are not your fault, they are still your responsibility because your clients will not be satisfied with the service they paid you for. The order and shipping best practices for eCommerce recommend that sellers resolve lost or damaged packages. After all, a seller is the one who chose a carrier that did not manage to deliver the shipment successfully. The first thing you should do is react as soon as possible once a shipping problem is reported. To be efficient, you can immediately check the shipment status online and see where the order is. Also, it’s smart to check if a customer’s address is written correctly. Problems like these are easy to solve, and your customers will be satisfied that you’re taking the initiative and helping resolve the issue in a timely manner. Good shipping strategies for eCommerce include quick and honest communication between a retailer and carrier. Once the customer reports a problem with a delivery, you should contact the carrier and see whether the item is delivered or not. Your carrier should tell you all that you need to know about the delivery status. We recommend being persistent with a carrier to find out what happened with an order. If the order is definitely lost or damaged, then you should send a new package to your customers. Do that as soon as possible to keep your customers satisfied. Tips and Tricks Assembling a good shipping team, providing reasonable eCommerce shipping costs, and having good customer support are all part of a good shipment strategy. In addition to these, you can adopt many other methods that will keep your customers satisfied and help you manage your budget more efficiently. Here are some more things you can do: Pack your products properly Before shipping a product to your customer, you need to package it properly to keep it safe from transport damages. There are several shipping options at your disposal, depending on your product type and area of delivery. There are different types of envelopes and boxes, made from materials that protect your product during transportation. You could also consider a reverse dropshipping service if selling high-quality products to customers outside the US. eCommerce shipping options for packages depend on the size and weight of your product. You should keep your packages light and small because the size or weight of the box will also determine the price. If you have several products in different sizes and shapes, consider having separate packages for each of them. Use local delivery We already explained the benefits of having multiple carriers. Additionally, you can add a local delivery company to your carrier list. It’s a proven delivery method, and many small businesses use it to ship items to their local clients. Set the area for your local delivery by adding zip or postal codes. This way, your customers will be able to select it during the checkout. If you want to provide the best shipping for eCommerce, keep the local delivery free for at least some of your products. Get insurance In addition to tracking orders, many carriers offer shipping insurance. This is a good practice to secure your products during delivery. In most cases, insurance is not too expensive. eCommerce shipping companies like UPS and USPS Priority Mail already include coverage for products up to $100. Also, when you pick shipping for eCommerce, check if product insurance is already included in the eCommerce shipping rates. We recommend using insurance for expensive packages that may get lost or damaged. Bottom Line Shipping is an essential part of any online shop that sells physical items. As a retailer, you will face challenges when it comes to implementing eCommerce shipping strategies. Eventually, you will find what’s best for your online store. Before that happens, just take some time to check what works for your customers. Implementing eCommerce shipping solutions that fit your business will help you keep your customers, achieve low cart abandonment rates, and increase profits.
You probably already know what dropshipping is, but just in case you are not familiar with this type of business, here’s a short explanation: Dropshipping is an online business model that enables you, as a seller, to sell products without the obligation to ship them or stock the products on your own. Basically, your role is to list a wholesaler’s product on Amazon, eBay, or your own dropship website and find the right audience for it. When it comes to reverse dropshipping, it’s an even newer business model and as such, unfamiliar to many online sellers. So if you’re wondering “What is reverse dropshipping?” that’s the next topic we’ll cover in our SmallBizGenius guide. Reverse Dropshipping Definition Reverse dropshipping is a business model in which online sellers procure high-quality products for customers whose countries usually house mass-production sites, like China, Indonesia, etc. Products sold through reverse dropshipping are made in the US, UK, or other countries which usually outsource their mass production to Asian countries. If you are wondering why an industry giant like China is a hotspot for reverse dropshipping sellers, there’s a logical explanation. Many Chinese consumers are seeking fine products, but finding them inside their own country is difficult. The result of China’s high-production level is lower quality for most domestically made products. Therefore, Chinese consumers, especially the rich ones, must find other ways to buy products that would satisfy their expensive taste. If we want a more precise reverse dropshipping definition, we would say that a reverse dropship means buying high-quality products produced in the West, and selling them to wealthy, primarily Asian customers through your eCommerce website. Reverse dropshipping is a business model similar to regular dropshipping, with one significant difference. Instead of obtaining lots of poor-quality stuff that comes at a lower cost, reverse dropshipping companies procure top-notch, artisanal products. Hence, when it works, reverse dropshipping comes with much higher margins. How Reverse Dropshipping Works We introduced the basics of reverse dropshipping, meaning that the next thing we will explain is how it works. Generally, if you know how regular dropshipping works, you won’t have any problem understanding the concept of reverse dropshipping. The only thing you need to have in mind is that reverse dropshipping involves expensive and high-quality products produced in Western countries that are sold to rich Asian customers. As an owner of a dropshipping company, you will collaborate with domestic dropshipping suppliers. They will be responsible for manufacturing and storing products, packing them, and distributing orders to your customers. On your website, you will create a gallery with the products, set the price for them, and manage the inventory. You will be responsible for advertising your offer and finding customers. For example, you can choose a product available on eBay, Etsy, or some other eCommerce platform and sell it on your site. You’ll need to set a price that will cover both the dropshipping supplier’s price and marketing costs, and bring you profit. For example, if a product you choose to sell costs $30 when bought wholesale, you can display it in your store for $75. The wealthy customer will order a product from your site and pay your price. Then, you forward the order to your manufacturer and pay the wholesale price, keeping the rest as profit. Your manufacturer will be in charge of distribution. You can decide if you’ll leave the shipping costs with the customers, or pay them yourself. Dropshipping Pros and Cons If you’re asking yourself: “Is dropshipping worth it?” the answer is yes. In 2020, China purchased $99.9 billion-worth of goods and services from the US. There are lots of reasons why you should choose reverse dropshipping over regular dropshipping. One of the most important reasons is that reverse dropshipping comes with higher margins. A regular dropshipping business works with low-quality products which are cheap for you to buy, but also cheap when sold. Reverse dropshipping sellers work with high-quality products and rich customers willing to pay more than someone ordering pants in bulk from Wish. Another good reason to choose reverse dropshipping over traditional dropshipping is a less competitive market. If you decide to open a dropshipping service, you will have only a few competitors, as this niche section of eCommerce has yet to fully develop. However, you need to be more prepared than when entering a regular dropshipping business, meaning that you’ll need to know everything about the trading laws and regulations of the countries you’ll ship from and to. For example, many countries have strict policies on which products can be sold. In some countries, people can buy food and beverages only from domestic suppliers. There are also country-specific rules when it comes to selling medication. If you consider starting a business with food, drugs, or alcoholic drinks, reverse dropshipping is not the kind of business model that will be good for you. Further Reading Drop Surfing vs. Dropshipping: How to Choose the Right Business Model All Rights Reserved: The Meaning of the Phrase and Its Applications Cross-selling vs. Upselling: What is the Difference? What Is the Best Time To Send a Press Release? Bottom Line In our opinion, reverse dropshipping is a good option for business owners ready to find the right buyer for high-end products and find dropshipping sources that are allowed to operate in Asian countries. Especially now, while the market is still very far from saturated, getting into reverse dropshipping may just be the best move an aspiring eCommerce businessperson can make.
If you think you need a stack of money to open a franchise business, then think again. According to statistics, there are loads of franchises under 10K these days. Compared to traditional businesses and other alternatives to franchises, that’s peanuts! In this post, we’ll take a look at some of the low-cost franchises available today and how you can set them up. Let’s get right into it. Coffee News Coffee News is a news publication found in laundromats, coffee shops, convenience stores, and many other locations. Circulation is highest where people want to grab something to read for the road or don’t want to look at their phones. Franchise owners essentially become representatives for the publication. Their work involves meeting with local brands and discussing the benefits of advertising through Coffee News. Entrepreneur magazine rated Coffee News as one of the top low-cost franchises people can operate in 2017. Franchisees are advised to get up to 50,000 people for their first gig and no more than 40,000 for any additional franchises. The amount of income you can generate depends on the number of editions you publish and the ad rate you achieve. Those who network effectively with small businesses and invest more time in outreach earn more. The contract length is four years. Cruise Planners Cruise Planners is the US’s largest travel advisor home-based franchise network. As a travel advisor, you’ll help guide tourists to safe destinations that meet their leisure criteria. The initial franchise fee is $6,995 for a limited time (the standard price is $10,995), making it among the most affordable options on this list. As part of the franchise, you’ll get access to hands-on training, lead-generation tools, professional development, coaching, and marketing materials. What's more, you can work from anywhere in the world, whether you’re at home or as a digital nomad. Cruise Planners say that you don’t require any prior travel abroad experience to join the team. Corvus Janitorial Corvus Janitorial got its start back in 2004. It now operations an incredible 900 franchise locations across the country, making it pretty much a household name. The total investment will set you anywhere between $10,000 and 35,000. Those interested in becoming cleaning entrepreneurs and benefiting from the franchise’s extensive marketing can request information online by submitting their email address. Dream Vacations The Dream Vacations team set up their franchise in 1992. It now has more than 1,500 franchisees, making it one of the largest travel franchises in the country. Startup costs are low: you’ll pay just $2,000 in initial costs. On top of this, Dream Vacations says it will deliver more than 90 percent of its marketing to you for free, so you’re not always having to pay expensive top-up fees. Dream Vacations has won numerous awards in recent years, including Top Low-Cost Franchise by Entrepreneur magazine. It also made the Top 10 Most Profitable Franchises list by Fundera and Top Friendly Franchises for Veterans by US Veterans Magazine. Social Owl Social Owl is a franchise that lets you earn money by selling social media services to local businesses. Anyone with marketing experience can participate in the reseller program. Most small businesses, the franchise says, are out of the loop and too busy dealing with their day-to-day operations to manage social media campaigns on their own. Social Owl offers a turn-key solution for brands, allowing its network of franchisees to manage their social media marketing. As part of the franchise, you’ll create social sweepstakes and deals, and monitor their online reputation. Revenue from a single business averages around $300 per month, meaning a whopping $15,000 if you’re covering fifty businesses. And all that with a low down payment. There’s a monthly program called Monthly Value Bundle at just $297 and a yearly all-in-one option that will set you back $1,997 per year. Both of these come with no setup fees, which further saves money. Rugbytots Rugbytots is a franchise serving more than 20,000 children in 80 countries, introducing them to the sport of rugby. It’s inexpensive to join, and you don’t have to be a professional rugby player or coach to sign up. Rugbytots is looking for people passionate about helping the franchise’s program progress. The franchise has grown dramatically since its founding in 2006, thanks to its network of like-minded people. It received the 5 Star Franchisee Satisfaction award at the 2014 Best Franchise Awards and got it again in 2017. The franchise attributes its success to ongoing investments in its systems, franchisee training, and its family approach to business. Network Lead Exchange Network Lead Exchange is a relatively new franchise, having started only in 2019. Entrepreneurs who want to open a franchise like it because once they start, they are the only business in the sector for their industry. When members join their local chapters, they collaborate and share quality leads. Start-up costs are just $10,000, making it a reasonably affordable option with amazing growth potential. CasaGroup Food franchises under 10k are often few and far between, but CasaGroup is one of the exceptions. This vending machine franchise operates in Florida and provides many machines, offering convenience foods and healthy options. CasaGroup believes that the vending machine market will grow considerably between now and 2027. Market size will balloon, according to estimates, from $18 billion today to more than $25 billion in five years, so the future looks bright. The income you can generate from the opportunity varies. Top-earning franchisees will naturally be those who install the most vending machines in areas of high footfall. Further Reading How to Start a Bookkeeping Business Best Small Business Insurance Providers Finding the Best POS System for Your Small Business Conclusion Today, there are many franchises for sale under 10k. There are even select franchises under 5k, so investing has never been more affordable. Since startup statistics show us that new businesses have trouble taking off, a home-based franchise that doesn’t require substantial capital can be a great solution. Restaurant franchises are popular, but generally more expensive. However, they can be among the most lucrative ones over the long-run. Ultimately, though, it pays to really study the market and pick based on both your areas of interest and the earning potential of the franchise.
If you run a company, you’ll almost certainly have come across the terms “gross pay” and “net pay” as part of your payroll operations. But what do these terms actually mean? Below, we discuss gross pay vs. net pay and how to calculate both for your employees. Gross vs. Net Pay Gross pay is what you pay employees before taxes and deductions. It’s the salary you quote when you’re recruiting staff. For instance, a company might advertise for a marketing manager, paying $45,000 per year plus benefits. Gross pay and net income (also called “take-home pay”) are not the same. You’ll notice that net pay is, by definition, lower than gross pay. That’s because it’s calculated by subtracting taxes and deductions from gross pay (and then adding benefits or allowances). Employers typically highlight net pay in bold on pay stubs since this is the money the employee actually receives into their bank account. Employees in the systems of income tax withholding (“pay-as-you-earn” or PAYE) never receive their gross pay. If you have the right software, payroll sends taxes automatically to the IRS. Gross Income vs. Net Pay: Deductions Gross monthly income is all of the pay an employee receives as compensation for their work. Net pay is the total income minus any deductions. As stated above, apart from some very unusual circumstances, net pay is lower than gross pay. Deductions from gross pay fall into two categories: voluntary and involuntary deductions. Involuntary deductions include: Payroll taxes (Social Security - or FICA - and Medicare taxes) Federal taxes State taxes Local income taxes Employers may also make voluntary deductions on the employee’s behalf. For instance, workers may see further reductions in their take-home pay due to: Union dues Equipment and uniform costs Pension contributions 401(k) deductions Health savings account deductions Flexible savings account deductions In most cases, you can opt out of these payments. For instance, employees don’t have to make pension contributions or put money into a health savings account. For most voluntary deductions, the money remains the worker’s, whereas for involuntary deductions, it doesn’t. For instance, an employee will eventually be able to access the funds in their 401(k) account whereas they can’t get back any taxes they owe (unless they’ve paid more than they should). In most cases, there is a penalty for accessing savings early. For instance, employees may have to pay a fee to their pensions provider for early release. HR departments can inform workers about the types of penalties they’re likely to face if they want to access their cash today. This information is something you, as an employer, can include in the employee handbook. How To Calculate Gross Pay Now that we’ve discussed the gross pay definition, it’s time to find out how to calculate it. How calculations proceed depends on whether the employee gets paid hourly, weekly, or monthly. Gross annual income is simply the sum of weekly or monthly paychecks. For instance, if an employee receives a wage of $3,000 per month, then their gross annual income is just $3,000 multiplied by 12 – the number of calendar months in the year. If their weekly income is $1,000, then their annual pay is $52,000. Here is a table showing how many payrolls are necessary per year depending on the frequency of the payroll accounting period: Pay period Example Payrolls per year Daily You pay employees at the end of the day, say at 5 p.m. 365 Weekly You pay employees every Friday evening 52 Biweekly You pay employees every fortnight, such as a Friday 26 Semimonthly You pay employees twice a month, for example, on the 1st and then the 15th 24 Monthly You pay employees once per month, say on the 27th 12 If employees receive pay by the hour, then calculating gross pay is a little more challenging. For instance, you might have an employee earning $15 per hour, working 40 hours per week, on average. This would imply a weekly pay of $600. For payroll purposes, you’ll usually calculate their expected income and then pay taxes on their behalf based on this. Then, if they earn less than expected, they can apply for a tax rebate. Employers who pay bonuses also need to add these to their gross salary calculations. Bonus income is often taxed at a different rate from regular income. For instance, an employee might receive a base salary of $52,000 and then a bonus of $10,000 for good performance. Total income would be $62,000. The additional $10,000 is generally taxed at a different rate from the rest of the employee’s pay. How To Calculate Net Income Because of the complexity of the net pay definition, the net income formula is quite complicated. Here’s what to do: Step 1: Calculate Gross Pay First, to find annual net income, calculate gross income. Step 2: Calculate Voluntary Pre-Tax Deductions Part of the difference between gross income vs. net income are voluntary deductions. Employers typically make deductions such as health benefits, commuter benefits, or pension contributions. Here’s an example: Gross income $2,500 Health insurance -$500 Pension contribution -$200 Uniform costs -$20 Taxable gross income $1,780 Step 2: Subtract Mandatory Payroll Taxes Once you’ve deducted all voluntary contributions that reduce taxable gross income, the next step is to calculate mandatory payroll taxes. Generally speaking, employees pay both federal income tax withholdings and FICA payroll taxes. Local and state tax withholdings may also apply. Federal Income Tax To calculate an employee’s federal income tax, you’ll need to know their: Filing status (based on marital status and family situation) Withholding allowance Gross wages Most employers use an IRS Income Tax Withholding Table for the current tax year – Publication 15-A – to find their employees’ tax bracket. For instance, suppose an employee has gross wages of $2,500 and a tax withholding allowance of $1,000. The federal government will then tax the remaining wages at 22%, implying a tax bill of: ($2,500 - $1,000) x 0.22 = $330 Net pay will then be: $2,500 - $330 = $2,170 FICA Payroll Taxes Employees may also have to pay payroll taxes. These are currently set at 15.3%, with the employer and employee sharing the tax burden equally (7.65% each). Payroll taxes include a Social Security tax or FICA charged at 6.2% on the first $147,000 in income and a Medicare tax at 1.45%. To calculate this, first find the taxable pay (after making all qualifying voluntary deductions). Then reduce the gross pay by the amount stipulated on the FICA tax to get the net pay. Here’s an example: Taxable gross pay $2,500 Medicare at 1.45% -$36.25 Social security at 6.2% -$155 Net pay $2,308.75 Step 3: Apply Any Additional Mandatory Contributions Employees may also have to pay local and state taxes, so any pay stub must include these, too. Furthermore, some workers may be subject to court-ordered wage garnishments for things like child support or bankruptcy payments. Further Reading Onboarding New Employees: A Guide Employee Tracking Software - The Best Solutions The Best Free Employee Scheduling Solutions Wrapping Up The difference between gross pay and net pay is easy to understand once you become aware of all the elements that comprise gross pay. Gross pay is the wages employers offer employees before deductions and taxes, while net pay is what they actually get at the end of the pay period.