Maximizing Ecommerce Conversions with Automated Multi-Carrier Shipping

Ecommerce has exploded over the past decade, with global sales reaching $4.9 trillion in 2021. But with this massive opportunity comes a major challenge – meeting customer expectations for fast, cheap, and reliable shipping.

Shipping costs are one of the top reasons for cart abandonment in ecommerce. In fact, 49% of shoppers say they‘ve abandoned a purchase due to extra costs like shipping. And with retail giants like Amazon setting the standard for free and fast shipping, customers increasingly expect the same from every online store.

As an ecommerce business, how can you affordably offer the shipping options your customers demand? And as a developer, how can you build a scalable and flexible shipping system without wasting months on complex carrier integrations?

Enter Shippo – the API platform that‘s modernizing ecommerce shipping at scale. Shippo provides a suite of developer tools for connecting to multiple shipping carriers, optimizing shipping costs, and automating fulfillment workflows.

In this article, we‘ll explore how Shippo works and dive deep into a key component of their platform – webhooks. You‘ll learn how to use Shippo‘s webhooks to build event-driven shipping automation into your ecommerce stack. Finally, we‘ll evaluate the business and technical benefits of outsourcing your shipping logic to an API platform like Shippo.

The High Costs of "Free" Shipping

While free shipping is a powerful marketing tool for driving ecommerce sales, it comes with a big cost. Absorbing the shipping fees on every order eats away at your margins. Even if you bake the costs into your product prices, matching Amazon‘s efficiency is near impossible.

What can you do to minimize shipping costs without sacrificing speed and reliability? Here are a few common tactics:

• Reduce package weight and dimensions
• Use carrier-provided packaging when possible
• Optimize your fulfillment locations and inventory
• Negotiate bulk discounts with carriers

Even with these optimizations, you‘re still limited by the rates of individual carriers. The only way to truly minimize shipping spend is to intelligently allocate volume across carriers based on cost, speed, and other factors. But comparing rates and managing dozens of carrier integrations is a massive operational challenge.

This is where shipping API platforms like Shippo provide a major business advantage. By aggregating volume across their customer base, they‘re able to negotiate heavily discounted rates with major global carriers:

Source: Shippo Discounts

With Shippo‘s carrier network, you can save up to 89% on USPS, 67% on UPS, and 75% on DHL. This allows you to offer the free and discounted shipping options your customers expect while protecting your profit margins.

Streamlining Ecommerce Ops with Shippo

Cost optimization is just the beginning of Shippo‘s value for ecommerce businesses. Their platform also provides tools for streamlining many tedious shipping workflows:

Automation Rules:
Build "if-this-then-that" logic to automatically select the optimal carrier and service level for each order based on predefined rules. For example, if an order is over $100, use 2-day delivery.

Batch Label Generation:
Fulfill large volumes of orders efficiently by defining shipping parameters and generating hundreds of labels with a single API request.

Order Splitting:
If an order contains multiple items shipping from different locations, Shippo can automatically split the order into separate shipments with the lowest possible rates.

Returns Management:
Generate prepaid return labels and include them with the outbound shipment. When return packages are scanned by the carrier, Shippo will automatically notify your system.

By outsourcing these complex shipping operations to Shippo, you can keep your internal development resources focused on core product work. In fact, businesses save an average of 6.1 engineering hours for each new carrier integration they replace with Shippo.

The Power of Shippo Webhooks

While the Shippo API enables core functionality like comparing rates and creating labels, the true power of the platform comes from its webhooks. As we covered in the introduction, webhooks allow the Shippo platform to proactively stream shipping events to your ecommerce systems.

There are four core webhook events you can subscribe to:

• Tracking updates: Triggered when the status or location of a shipment changes according to the carrier. Includes timestamp and description for each event e.g. "Out for Delivery", "Delivered".

• Transaction creation: Triggered when a new shipping label is purchased through Shippo. Includes the label URL, tracking number, and other shipment details.

• Batch label generation: Triggered when a batch shipment is created. Includes the details of all child transactions generated for the batch.

• Carrier account registration: Triggered when a new carrier account is registered or requires action in Shippo. Useful for monitoring the health of your carrier connections.

Once registered, Shippo will send an HTTP POST request with the relevant event payload to your specified webhook URL each time one of these events occurs. By writing a bit of request handling logic, you can use these payloads to trigger automated workflows in your order management, customer support, and billing systems.

Let‘s walk through a few real-world use cases for Shippo tracking webhooks. To help illustrate, we‘ll include some code snippets for a hypothetical ecommerce application built with Express and TypeScript:

Order Shipped Notifications

Whenever a shipment is scanned by the carrier for the first time, Shippo will fire a tracking webhook event. You can parse the event payload to extract the relevant order and tracking details. Use this to trigger an automated email to the customer notifying them that their order is on the way.

import { Request, Response } from ‘express‘;
import shippo from ‘shippo‘;
import { getUserFromOrder, sendEmail } from ‘../lib‘;

export async function handleShippoWebhook(req: Request, res: Response) {
  const shippoEvent = req.body;

  if (shippoEvent.event === ‘TRACKING_UPDATE‘) {
    const trackingStatus = shippoEvent.data.tracking_status;
    const orderNumber = shippoEvent.data.metadata.order_number;
    const trackingNumber = shippoEvent.data.tracking_number;

    if (trackingStatus.status === ‘IN_TRANSIT‘) {
      // Fetch user details from order
      const user = await getUserFromOrder(orderNumber);

      // Send email with tracking link
      await sendEmail(user, ‘ORDER_SHIPPED‘, { 
        orderNumber, 
        trackingNumber, 
        trackingLink: `https://www.shippo.com/track/${trackingNumber}` 
      });
    }
  }

  return res.sendStatus(200);
}

In this example, we first check if the incoming webhook is a TRACKING_UPDATE event. If so, we parse out the relevant data from the event payload, including the order number, tracking number, and current status of the shipment.

If the status is IN_TRANSIT (meaning the shipment has been scanned by the carrier), we look up the user details associated with that order number. Finally, we send them an email using a predefined ORDER_SHIPPED template that includes their order details and a link to track the package delivery.

Returns Processing

Customers increasingly expect online retailers to offer free and easy returns. Failure to do so can significantly dent your conversion rates and customer loyalty. But processing return shipments can create a lot of manual overhead for your support team.

With Shippo webhooks, you can automate the receipt and processing of returns. Whenever a return label is scanned by the carrier, Shippo will fire a tracking event to your webhooks. You can automatically update the customer‘s order status and trigger your internal returns handling process.

import { Request, Response } from ‘express‘;
import shippo from ‘shippo‘;
import { updateOrderStatus, issueReturnCredit } from ‘../lib‘;

export async function handleShippoWebhook(req: Request, res: Response) {
  const shippoEvent = req.body;

  if (shippoEvent.event === ‘TRACKING_UPDATE‘) {
    const trackingStatus = shippoEvent.data.tracking_status;
    const orderNumber = shippoEvent.data.metadata.order_number;
    const trackingNumber = shippoEvent.data.tracking_number;

    if (trackingStatus.status === ‘DELIVERED‘ && shippoEvent.data.is_return) {
      await updateOrderStatus(orderNumber, ‘RETURNED‘);
      await issueReturnCredit(orderNumber);
    }
  }

  return res.sendStatus(200);
}

Similar to the shipping notification example, we first check for TRACKING_UPDATE events. But instead of looking for the IN_TRANSIT status, we check if the package was DELIVERED and if it was a return shipment.

The is_return flag will be set to true if the tracking number is associated with a return label generated in Shippo. If both conditions are met, we can assume the return was successfully delivered. The code then updates the order status in our system to RETURNED and issues a credit to the customer for the original purchase amount.

Integration Benefits

At this point you might be thinking – couldn‘t I build this same webhook functionality into my own ecommerce application? While you certainly could replicate the webhook handling logic, there are several key advantages to outsourcing it to Shippo:

Maintenance: Building a robust webhook processing system that can handle high event volume and gracefully recover from failures is not trivial. With Shippo, you can set up a webhook subscription with a few clicks and trust their infrastructure to deliver your events reliably at scale.

Visibility: Shippo provides a visual event log showing the real-time status of your webhook endpoints. You can see how many events were triggered, which were successfully delivered, and which failed for debugging.

Source: Shippo Webhook Logs

Customization: While you can achieve basic tracking updates with manual polling of the carrier APIs, Shippo‘s webhooks provide much richer event data. You can configure your subscriptions to include custom metadata and receive events via email/SMS in addition to HTTP.

Reliability: Shippo provides automatic retries and alerts for webhook failures. If your endpoint is unavailable or returns an error response, Shippo will continue retrying the event delivery based on your preferred cadence. You can also configure alerts to be notified if failures exceed a certain threshold.

Evaluating Shippo for Your Business

Throughout this article, we‘ve explored many of the technical and operational benefits of Shippo‘s shipping automation platform. But like any third-party service, Shippo comes with trade-offs that you‘ll need to carefully evaluate for your business:

Advantages

• Discounted carrier rates through Shippo‘s economies of scale
• Faster development via pre-built carrier library and unified API
• Operational flexibility to add/swap carriers without reintegration
• International scalability with support for global carrier networks
• Webhook customization with rich event subscriptions and retries

Considerations

• Vendor lock-in: Building your shipping workflows on Shippo means you‘re reliant on their platform for a mission-critical part of your business. While the switching costs are lower than direct carrier integrations, there is still a dependency risk.

• Platform fees: Shippo is more affordable than building your own integrations, but their fees can add up at higher volumes. Be sure to model the costs based on your shipping profile and compare against competitors like EasyPost and Stamps.com.

• Support levels: While Shippo does provide documentation and developer support, you won‘t get the same level of account management as you would with a direct carrier contract. Make sure you‘re comfortable with a self-service support model for shipping.

Success Stories

Thousands of ecommerce businesses are already handling millions of shipments per month with Shippo. Here are a few examples of companies successfully automating shipping at scale with the platform:

The Greetings Card Company: UK-based online greeting card retailer that sends over 180,000 personalized cards per month. They reduced card production time by 56% and label purchasing time by 85% using Shippo.

Mercari: Community-driven marketplace for buying and selling used items. They‘ve processed over $3B in transactions across 100M+ listings with Shippo‘s label generation API.

MeUndies: Direct-to-consumer retailer of underwear and loungewear. They‘ve optimized shipping costs while delighting customers with surprise upgrades to 2-day delivery.

Conclusion

Ecommerce success in today‘s competitive landscape requires a relentless focus on customer experience and operational efficiency. Automated shipping platforms like Shippo provide a powerful advantage on both fronts.

By leveraging Shippo‘s pre-built carrier network and webhook infrastructure, you can provide the fast and affordable delivery options your customers expect. Outsourcing shipping logic to Shippo also frees up your development cycles to focus on growth and product innovation.

As we‘ve seen in this article, Shippo‘s webhooks enable truly automated order processing – from label creation through returns. With a bit of webhook handling code, you can build a dynamic and responsive fulfillment chain that scales with your business.

While Shippo is not the only option in this space, they provide a uniquely developer-friendly and customizable platform. Their rich webhook subscriptions and granular event data give you the flexibility to build shipping workflows tailored to your customer experience.

If you‘re currently struggling with manual and error-prone carrier integrations, now is the time to explore a platform like Shippo. The cost and time savings of automated multi-carrier shipping await.

To learn more about Shippo‘s platform and start shipping with their API for free, check out their developer quickstart.