What Is a Shipping Label and How Does It Work?

Ben Eachus
7 min read May 18, 2021

Every package requires a shipping label, but what is a shipping label exactly and how does it work? Shipping labels are critical to inbound and outbound logistics. They are the identifiers of tracking information that ensure packages are shipped and delivered to the correct customer and location. 

When they are improperly created or affixed to a package, it can cause multiple problems, such as shipping delays and lost orders, all of which can lead to angry customers. Customers also must refer to shipping labels when tracking their packages or in some cases, when making returns.

In short, the shipping label is the most important part of the packaging process. Without it, deliveries can go off the rails in more ways than one. Most third-party logistics companies require pre-labeling for package pickup, although UPS allows you to schedule a pickup without labels. However, when working in a warehouse, the longer a package goes without an identifying label, the more susceptible it is to get lost in the mix and cause shipping problems.

Breaking Down the Shipping Label

When asking, what is a shipping label, it’s necessary to break it down piece by piece to understand why each part is equally important to the shipping process. Companies typically follow the same template for all of their shipping labels for consistency. However, there are slight variations depending on which shipping carrier is used and what’s required to ensure on-time delivery. A sender is always responsible for providing: 

  • Company name and address
  • Recipient’s name and address
  • Level of service requested, such as priority, overnight, or two-day shipping

From there, the randomized combination of letters, numbers, and bar codes are automatically generated by the carrier, which provides trackable information through an online information system. The tracking label includes a tracking number which allows both carriers and customers to track packages and deliver or receive updates about delayed or faster-than-expected delivery dates. 

Local companies may choose to handwrite their labels for a personal touch. Although, as they expand, it makes sense to save time and manpower and have labels printed. Handwriting labels for even smaller shipping orders can be time-consuming and can minimize the quality over time. Automation helps keep the process moving forward and incorporates all the elements necessary to prepare a package for delivery.

Additionally, handwritten labels run the risk of being misidentified if they’re unreadable or unclear in what’s necessary to sync it to the carrier and make the delivery. As companies grow, it can be difficult to keep track of the shipping address on each parcel. Using a shipping software as part of the delivery process can make for a smoother transition. 

Although it’s recommended to print labels from an efficiency standpoint, there are still ways you can customize your shipping labels. Use a branding stamp for each label or pick a unique font that is readable but still adds a unique design element for the customer. This custom printing label can help set you apart from your competitor. The same is true for any packing slip or invoice.

Proper Shipping Label Placement

In addition to accurately filling out a shipping label in a legible manner, it’s also important to place it properly on the package. If a box already has a pre-designated space, affix it to where it’s supposed to go. Otherwise, the simple rule of thumb is to place the shipping label in the places easiest for the shipping carrier to see and scan. 

Make sure the shipping label is large enough to be displayed on one flat space without wrapping around package edges, making it increasingly difficult to scan or read fully. Standard label sizes are 4×4, 4×6, or 6×3. Also, use self-adhesive shipping labels for convenience and secure with clear tape, if needed. With that, avoid taping over the bar code to prevent failed scans. By choosing peel-and-stick labels that you can print multiples at once and affix to each package as necessary. This saves time and tape versus using paper labels that you then have to seal with tape. It also ensures your shipping labels and shipping information is easily readable and ready to go.

When considering placement, also keep in mind if the label will be kept intact after a customer has opened their box. The shipping label is essential in properly routing the package, but the codes are also important if the recipient decides to return an order or needs it to communicate with customer service regarding damaged or incorrect items. Make sure that if you have a split shipment, the codes are correct on each leg of the order. 

Lastly, it’s often less expensive when buying shipping labels in bulk. They can be conveniently ordered online and packages can be scheduled for carrier pickup rather than having to take them to a shipping center and individually affix labels to each box. For higher volume orders, using automation available through e-commerce fulfillment services can give you the time you need to focus on other areas of the operation. It’s professional and convenient all in one.

Part of scaling a company is finding solutions to mitigate inefficiencies and properly plan for growth. What may have worked as a small business operation is often no longer applicable when reaching a higher number of shipments. Tracking multiple orders and ensuring packages arrive at the customer’s doorstep becomes more difficult. 

Outsourcing Shipping to a 3PL

3PL or third-party logistics is a service that allows you to outsource the time-consuming process to a third-party equipped to handle a large capacity of shipments on a daily basis. Companies like FedEx and UPS train drivers and handlers for logging shipping label information and updating with customer notes if there are any special scenarios that may affect shipping. 

By having a shipping partner that takes care of picking, packing, and shipping your products, it leaves more time to focus on product development, customer service, marketing, and other areas of operations that help make a company successfully grow. This benefit is in addition to working with a built-in software solution that helps you manage and track your inventory and deliveries. At Flowspace, all of our certified warehouses are equipped to handle: 

  • Pick, Pack, & Ship
  • Wholesale Carton Pick
  • Item Labeling
  • Floor Loaded Container Unloading & Cross-Docking
  • Kitting Projects
  • Amazon FBM Prep
  • Order Fulfillment Services
  • E-Commerce Fulfillment
  • Shipping

When it comes to shipping labels, in particular, there’s a lot that goes into one small space. Making sure yours is templatized and ready to go helps make operations run more smoothly and ensure on-time delivery for all your customers. 

Shipping Labels: Common Questions

A shipping label works as a tracker for all products en route until they are received at the customer’s door. Until the package is recorded as delivered, it’s the only connection for the company, carrier, and customer to know the status of its delivery. 

If messages need to be sent to customers with updates on their delivery times, this is more easily done when there is a shipping label barcode and information to refer back to for guidance. Without it, backtracking the time it left the warehouse, got picked up by the carrier, and where it might be on the delivery route can be difficult and frustrating for all parties involved.

Here are a few other commonly asked questions and scenarios that highlight the importance of shipping labels.

Do carriers offer customized solutions?

Many times companies can work out rates and a system with their frequently used carriers to ensure what works best. The higher the volume, the easier it is to create a system of set pickup times and labeling procedures so everything is prepared and ready to go out on time. It can help minimize the number of missteps that can occur from the warehouse to a customer’s front door.

What’s the benefit of using 3PLs? 

3PLs are already well-versed in handling a large amount of inventory day in and day out. You can use their expansive network of fulfillment centers to offer premium shipping options and fulfill your inventory anywhere through an integrated software system. 

Also, you can budget different shipping rates into your expenses so there are fewer surprise costs month over month. Depending on the type of delivery times offered to customers, it’s also easier to group based on shipping rates requested the most. 

Using Fulfillment Services to Manage Shipments

When integrated with a software system like Flowspace, tracking orders is made easy with a shipping label template. It provides brand recognition for customers, and also, gives you insight into how many items are shipping per day, week, or month on average. This helps to forecast future sales and popularity of certain items. It also allows you to better anticipate any potential problems with shipping where you can provide solutions right away. 

For example, as a smaller company begins to expand, the need for multiple warehouses will likely be necessary for storage and logistics purposes. Finding an e-commerce fulfillment center that supports different regions ensures a consistent shipping time for all customers. Handling customer growth while providing the same high level of quality is one of the many challenges companies face. 

Another large aspect of shipping is dunnage and a very common question is “What Is Dunnage?” If you have the same question, check out our blog article for more information.

With the help of Flowspace to keep all operations immediately visible in one cloud-based system and delegating certain areas of service to e-commerce fulfillment centers, it makes scaling easier and keeps customer satisfaction intact.
For additional information on how Flowspace can support your business operations, submit a quote today!

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