How to manage split shipments: Definition, examples, and reducing shipping costs

E-Commerce|Blogs
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manage split shipments

Almost every online shopper has received a split shipment at one time or another. In a time where the speed of delivery benchmarks the quality of the e-commerce experience, a split shipment can seem like an advantage for businesses. If some items aren't immediately available, splitting an order into multiple shipments ensures that a customer receives some of their items as quickly as possible.

However, split shipments can cause more problems than they solve. While there are some scenarios where split shipments are unavoidable, many split orders happen for preventable reasons, increasing fulfillment costs and impacting the customer experience.

So, what are the key causes of split shipments, and how can e-commerce brands manage them effectively to avoid those high shipping costs? Let's dive in.

What is a split shipment?

A split shipment, also known as a partial shipment, refers to the practice of dividing a single order of multiple products into two or more shipments. Each parcel is then shipped individually to the end destination.

Split shipments happen frequently in e-commerce when customers place orders containing a large number of items. This is because sending items separately allows shoppers to receive their order faster, rather than waiting for the order to be consolidated and shipped. However, split shipments add a lot of complexity to the fulfillment and delivery process.

Why are split shipments so common?

As e-commerce order volumes have grown, splitting shipments so customers receive multiple packages have become more frequent. The decision to ship items separately may happen for the following reasons:

Brands are using multiple warehouse locations

A multi-node fulfillment strategy has many advantages for fast-moving e-commerce brands, including lowering transit times and maximizing scalability. However, storing inventory in more than one fulfillment center increases the odds of split shipments taking place.

When SKUs aren't stored in the same fulfillment center, there's a chance that one location won't have the items needed to fulfill a customer order in a single shipment. When this happens, one distribution center will fulfill part of the order, while a different location will fulfill the rest.

Moreover, if inventory hasn't been allocated properly across different warehouses, split shipping will be a more common occurrence. For example, if you aren't identifying which SKUs are commonly bought together and storing them in the same location, a lot of preventable partial shipments will be taking place.

Customers are ordering multiple products that don't fit into one package

When a customer places a large order, a split shipment may be the only option to fulfill and ship that order on time.

This is especially common for bulky or heavy items with a high DIM weight, as package size needs to be streamlined as much as possible to keep shipping cost-effective. In many cases, breaking down one order into several separate packages may work out cheaper than shipping a single box.

Furthermore, it may not practical for a business to have so many different-sized containers for a multi-product order scenario. Buying and storing packing materials can become expensive, and it may be more cost-effective to have fewer variations that require less handling during the packing process.

Items are being sent to different locations

There may be some cases where a customer wants some items within their order sent to different locations, rather than having to place separate orders.

This is a common practice during the holiday season when consumers are buying gifts for loved ones. If a brand offers gift wrapping, the customer may elect to ship gifts directly to the recipient, while shipping their own purchases to their own home. This is much more convenient than having to pay to ship gifts themselves once their order arrives at their home.

Why split shipments are costly for businesses

Higher fulfillment and shipping costs

The more parcels you ship, the more it's going to cost your business. If you're regularly shipping more than one package per order, this can cause your shipping costs to skyrocket.

Every separate package shipped represents additional fulfillment costs that your operation has to absorb. For example, if a single order is split into three separate deliveries, the cost of picking, packing materials, handling, labor, and transportation will be three times higher than if that order was consolidated.

In many cases, a business can't absorb the cost of more shipments. If split shipments occur regularly, brands may have to consider charging customers higher shipping costs. With 48% of online shoppers abandoning carts due to additional shipping costs and fees, this could seriously impact profitability.

Higher carbon emissions

Last-mile delivery is regularly the carbon-intensive part of the entire e-commerce fulfillment process, as it's difficult to practice economy of scale for individual home deliveries. Because split shipping results in more than one last-mile delivery trip, your carbon footprint per order is going to increase substantially. This may be a concern for consumers who prioritize sustainability, with 4 out of 5 consumers saying they're more likely to support brands with a positive approach to environmental sustainability.

More packaging waste

The science behind this is pretty simple. Multiple deliveries mean higher quantities of packaging waste. Not only does this add to the cost of fulfillment per order; but it also inconveniences your customer, too.

Packaging waste is a widespread issue in e-commerce, driven by a lack of effective cartonization strategies. So-called 'e-commerce packaging fails' populate social media sites like Reddit and Facebook, with brands regularly shamed online for excess packaging.

Forcing your customer to be in charge of packaging disposal - and having to do it several times over for multiple boxes - is bound to cause frustration. With consumers becomingly eco-conscious, wasteful packaging designs can also hurt brand loyalty. In fact, 1 in 3 online fashion consumers would not purchase a brand if its packaging wasn't eco-friendly.

Poorer customer experience

Split shipments are often poorly explained to customers. Until a parcel arrives containing only some of their items, they might not realize their order has been split.

This is where it's important to put yourself in your customer's shoes. They've been eagerly anticipating their order landing on their doorstep - only to open the box and discover they have to wait for additional shipments before their order is completed.

Depending on how an order has been split, partial shipments can be highly inconvenient for customers. For example, if a shopper has ordered a top and skirt that were marketed online as one outfit, they're going to expect them to arrive together. If they're shipped as multiple packages, this can lead to a lot of frustration and impact the customer experience.

Separate shipments can also lead to upset customers leaving negative reviews or slowing down customer support channels with repeated WISMO (where is my order?) inquiries, which can damage your brand's reputation.

When might businesses want to intentionally split shipments?

While brands generally want to minimize split shipments to the same destination as much as possible, there are some circumstances where shipping multiple packages may be advisable for reasons of cost or convenience. These include:

When a customer has purchased products on backorder

If an order includes an item that's currently out of stock, it makes sense to fulfill and ship the rest of the products, rather than holding up delivery of the complete order until the back-ordered product arrives. This ensures that customers receive their purchases quickly, and prevents storage costs from escalating.

When orders include heavy/bulky items

If a product is particularly large or heavy, it may be more practical to use separate shipments. Common examples include furniture, fitness equipment, or machinery that has a dedicated delivery or installation service. Products that are fragile and require extra packaging, such as glassware and home decor, also benefit from a split shipment.

Due to carrier restrictions

Parcel carriers have a long list of rules and regulations for shipping different kinds of products, such as hazmat or oversized packages. For this reason, it may be difficult to ship an entire order together using the same service level or packaging/labeling. For example, if a customer order contains a hazmat item such as perfume, it can only be shipped via Ground and requires specialized packaging, so it may need to be shipped separately from the rest of the order.

How to reduce split shipments

So, what can brands do to avoid split shipments from putting a hole in their revenue?

Make sure inventory is allocated properly

Inventory allocation is one of the most challenging parts of having multiple fulfillment locations. Although multi-node fulfillment creates more flexibility for direct to consumer brands to fulfill orders quickly, you have to keep a closer eye on how much inventory you have at each location.

If inventory allocation isn't backed by global inventory visibility, there's a much higher chance of split shipments occurring because a fulfillment center doesn't have the SKUs required to fulfill an order.

For example, if you're a nationwide apparel brand, orders placed by customers in Arizona will differ from customers in New York (after all, the latter isn't likely to be ordering many swimsuits in winter!) Sales data can help guide your decision-making on where different SKUs should be stored at different times of the year, helping to avoid split shipments.

Let customers decide whether or not to split their order

One of the biggest reasons why split shipments frustrate customers is that they often have little choice in the matter.

Believe it or not, not every online shopper is obsessed with speed. CI&T's 2022 Connected Retail Report found that just 9% of customers expect same day delivery, while most expect a delivery timeframe between three to four days.

For reasons of sustainability or convenience, many consumers may prefer to consolidate an order containing multiple items into one delivery - even if it means that their order takes longer to arrive. Enabling customers to choose order consolidation at the checkout gives them more control over the post-purchase experience and reduces split shipments at the source.

Keep an eye on purchasing trends

The better you know your customers, the more you can get a handle on why split shipments are happening and how they might be avoided.

For example, which fulfillment locations are most commonly used when a partial shipment takes place? Does this make sense considering where the end destination of the order is? How many split shipments involve products which are frequently ordered together? How many shipping zones are these split shipments crossing on average?

Moreover, fast-paced product categories like apparel and cosmetics are often affected by changing trends that affect customer demand for different products.

Partner with a 3PL

Managing split shipments is a big undertaking if you don't have the right software and expertise to make it happen. If split shipments are a regular occurrence, this takes valuable time away from managing the brand experience.

Instead, consider outsourcing order fulfillment to an experienced e-commerce fulfillment provider who can build the right order processing and shipping strategy for your needs.

Ryder assists both emerging and established brands with effectively managing inventory allocation across our fulfillment network. This involves custom routing rules to allocate orders to the right facility and setting appropriate re-order points to avoid stockouts - common reasons for split shipments. Best of all, our SmartRate selection tool allows brands to easily find the best shipping rates in real-time, so those unavoidable split shipments don't affect your bottom line.

How to manage split shipments (when you have to)

It isn't possible to avoid split shipments entirely as an e-commerce business. Here are some ways to save money when splitting shipments and to ensure that the end-to-end experience goes smoothly:

Communicate with your customers

If customers are expecting a single package to arrive, split shipments can be pretty disconcerting. When they haven't been informed of multiple deliveries, they might assume their order has been fulfilled incorrectly. This leads to unhappy customers and a backlog of customer complaints.

If an order has to be split into two shipments, make sure that you inform your customer of this fact in their order confirmation. You should also give them an estimated delivery date for each shipment so the customer knows when to expect delivery. Being proactive and transparent in your post-purchase communications ensures that shoppers feel informed and confident that your brand can deliver (pun intended!)

Choose split shipments that minimize shipping costs

If you're going to split a shipment, make sure the way it's divided up makes sense from a cost and delivery standpoint. For example, if you're including free samples with your orders, it makes little sense to send those samples in a separate shipment and foot the total cost of shipping on free merchandise. Instead, make sure that every fulfillment center is equipped with product sampling capabilities, so these can be added to orders no matter where they are being fulfilled.

Ensure that product recommendations reflect inventory allocations

Product recommendations are playing an increasingly important role in e-commerce as brands aim to boost AOV through upselling and cross-selling. However, product recommendations can increase the likelihood of split shipments taking place, especially if customers receive recommendations for products that are stored in a different location than the items in their shopping cart. AI-driven product recommendation software can be used to tailor suggestions according to where SKUs are located, helping to simplify separate shipments as much as possible.

Split shipments can end up being very costly for e-commerce brands if they aren’t managed effectively. Splitting shipments can trouble or even triple the cost of fulfillment and shipping, which can result in your business making a loss on some orders. By reducing the number of split shipments made for preventable reasons, with as insufficient inventory or poor inventory allocation, you can improve the customer experience and lower your operating costs for a leaner, more efficient supply chain.

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