As you get started in e-commerce, you will soon come across terms related to e-commerce shipping that may be foreign to you. So at Ship&co, we have prepared for you a glossary of commonly used e-commerce shipping terms.
In chronological order, here are the common e-commerce shipping terms, explained in simple everyday terms.
- Commercial invoice: Commercial invoice is a documentation needed for international shipments, required for customs purposes. A commercial invoice is a way for you to list down what items you are trying to import, and their retail value, for customs to check for health and safety, as well as tax purposes. For more, take a look at this blog post.
- Cost, Insurance, and Freight (CIF) value: Cost, Insurance, and Freight (CIF) value is the total retail value of a parcel, along with any cost of insurance and freight. This value is required for international shipping so that customs can check the taxable amount for the parcel.
- Courier service: Courier service is a company, usually a private company, that provides the service of delivering parcels and documents. Examples include DHL, FedEx, and UPS. Courier services typically provide reliable services, but at higher prices compared to postal services (see below).
- Dangerous goods: Dangerous goods are items that may pose a health, safety, or environmental risk during transit. These items may not be dangerous in their normal states (e.g., perfumes containing alcohol), but may contain components that could pose a risk during transit (e.g., alcohol can be flammable) and therefore needs to be handled with extra precaution. Check the list of dangerous goods in this blog post.
- DDP: DDP, or Deliver Duty Paid, means that the shipper is responsible for paying the duties. See more in this blog post. See also: DDU.
- DDU: DDU, or Deliver Duty Unpaid, means that the customer is responsible for paying the customs duties. See more in this blog post. See also: DDP.
- Delivery signature: Delivery signature (or proof of delivery or delivery confirmation) is whereby the recipient leaves an acknowledgement that the parcel has been received in order to release the parcel - often in the form of a signature. There may different types of delivery signature required. If direct signature is required, this means that the recipient has to acknowledge the receipt. If an indirect signature is required, the receipt can be acknowledged by someone else, such as a neighbour.
- Dimensional weight: See below: Volumetric weight.
- Electronic trade: See below: Paperless trade.
- Expedited shipping: Expedited shipping, as the name suggests, is any shipping method that promises to deliver a customer’s order faster than a standard shipping method would. This could be overnight or next-day, though the exact definition differs by the shipping provider. As expedited shipping methods are costlier, e-commerce businesses often charge additional amount to customers who select expedited shipping methods.
- First mile delivery: First mile delivery is the first stage of the logistics supply chain, where the parcel leaves the sender’s doorsteps. The sender could request a shipping provider to pick up the parcel from the sender, or the sender could drop off the parcel at a designated location, such as the post office or a drop-off mailbox. See also: Last mile delivery.
- Goods and Services Tax (GST): See below: Value Added Tax.
- HS code: The Harmonized Item Description and Coding System, also known as HS code, is an international standard maintained by the World Customs Organization (WCO) that classifies traded products. Items are identified by a 6-digit number. This is important for international shipping, as customs of the destination country requires each item in the parcel to be declared, along with their HS code. This then determines whether any item is forbidden to be imported into the country, or incurs additional tax. At Ship&co, we automatically assign the HS code to each of your items when automatically creating custom documents.
- Import duty: Import duty is the tax charged by the importing country for the item you import into the country, and it serves to encourage or safeguard domestic industries. Note the import duty is the absolute value of tax payable, while tariff (see below) is the percentage of tax payable.
- Incoterms: Incoterms, or International Commercial Terms, are terms set by the International Chamber of Commerce (ICC), that describe whether the sender or the receiver will be paying for duties and taxes.
- Last mile delivery: Last mile delivery is the last stage of the logistics supply chain, where the parcel gets passed on to the recipient. In e-commerce logistics, last mile delivery is especially critical as this is customer-facing, and therefore has an impact on customer’s perception of service quality. See also: First mile delivery.
- Manifest: Manifest is a list of all goods that are being transported by the shipping provider. In the context of e-commerce shipping, some shipping providers will require you to provide a manifest during pick up of the parcel, especially in the case of international shipping. At Ship&co, we automatically create manifest documents for selected carriers that require them.
- Paperless trade: In the context of e-commerce shipping, paperless trade (also referred to as electronic trade) is whereby the shipper submits customs documents electronically, eliminating the need to print and physically attach them to shipments. This helps save time when preparing shipments, while also saving paper and printing cost. At Ship&co, we provide the option of paperless trade services for selected shipping providers.
- Postal service: Postal service is a shipping company typically operated by national governments, delivering mail, documents, and parcels. Examples include Japan Post, USPS, and SingPost. Postal service is typically cheaper than courier service, but may not have the full range or quality of services as courier service.
- Return label: A return shipping label is a pre-paid, pre-addressed shipping label that enables customers to return purchased goods back to the seller. The shipping fee would be incurred by the seller if the customer chooses to return the item and utilize the return label. In e-commerce shipping, where customers purchase with a risk that the item may not be suitable upon receipt, providing a return label gives customers a peace of mind that they can conveniently return the item with no cost. At Ship&co, you can easily create a return label for selected carriers.
- Shipping account: Shipping account is an account or a contract with the shipping carrier. When you have a shipping account with a carrier, you will have your own shipping rates (based on your shipment volumes), and most likely, credit terms as well (e.g., payment at the end of each month rather than paying for every shipment). With international carriers, a shipping account can be an import account or an export account.
- Shipping insurance: Shipping insurance is an insurance against damage or loss of the parcel during transit. Most express couriers have basic shipping insurance included in the shipment fee, with the option to purchase additional coverage at an extra cost.
- Shipping label: Shipping label is an identification label that is affixed to the parcel. It specifies the origin and destination, and often lists the contents of the parcel as well. See also: Waybill.
- Tariff: Tariff is the percentage of tax that is applied to the item you are importing to a foreign country. Note the difference with import duty, which is the absolute value of tax payable.
- Thermal label: Thermal shipping labels are printed with thermal printers, using thermal heat. Unlike inkjet printers, thermal printers do not utilize ink or toner, and as a result, produce labels in an economic and efficient way. Some commonly used thermal printers include DYMO LABELWRITER 4XL and ZEBRA ZD420. At Ship&co, we support the creation of thermal labels for most carriers (in additional to inkjet and laser).
- Tracking ID: Tracking ID, in the context of e-commerce shipping, is an identification given to a parcel upon shipment creation. This identification is then used to store and display information on the shipment status - for example, if the shipment has been picked up, or delivered. E-commerce businesses as well as their shipping providers provide the end customers with the tracking ID so that customers can track where their shipment is at any point. As this provides transparency and comfort to end customers, shipping services with tracking often cost more than services without, but tracking services has now become a norm in e-commerce that end customers have come to expect.
- Value Added Tax (VAT): Value Added Tax, also known as Goods and Services Tax, is a consumption tax that is applied upon sale of the goods at the destination country. This is important for e-commerce shipping as your goods, upon reaching the customs of the destination country, may be subject to such a consumption tax. For more on taxes, check out this blog post.
- Volumetric weight: Volumetric weight, also known as the dimensional weight, is a measure of the size of the parcel. The idea is that a bigger parcel, even if it is light, take up more space on the vehicle or aircraft of the carrier. Therefore, when the carrier charges for the shipment, they might compare the volumetric weight with the actual weight and charge whichever is greater (known as billable weight or chargeable weight). Volumetric weight calculation varies by carrier, but it is typically calculated as the product of the parcel’s length, breadth and height (in cm) divided by 5000. The unit in this calculation is in Kg.
- Waybill: Waybill is a document issued by the carrier that includes details of the shipment including origin and destination, shipping method, and tracking ID. For air freight, the document is referred to as Air Waybill. Waybill is often used interchangeably with shipping label, though a shipping label may not have as all the information that a typical waybill has.
Ship&co is a global shipping platform designed by and for e-commerce sellers. Created by the team behind Bento&co, who have been selling on Shopify since 2008, Ship&co provides a simple and easy-to-use web dashboard and shipping API. Ship&co helps online sellers ship packages faster by automatically syncing orders and creating shipping labels and invoices in minutes. With Ship&co, you can create shipping labels for FedEx, UPS, DHL, NinjaVan, Yamato, Sagawa, and more, with just two clicks to complete the process and mark your orders as shipped. For more information on Ship&co, visit shipandco.com or reach out to us via email@example.com !