Tackling E-Commerce Shipping
E-commerce is quickly becoming a part of our everyday lives—putting pressure on retailers. Here are tips to help shippers keep costs down and customers happy.
1. Align transportation service levels with customer demands. Amazon reset expectations for delivery times. Instead of five to seven days, consumers have become accustomed to two-day delivery thanks to Amazon Prime membership. Now, Amazon is even going further by offering next-day delivery for Prime memberships. Can other retailers follow? Should they? Retailers should first understand their customers' needs and wants and then make smart transportation decisions that align with those needs yet are still financially feasible.
2. Offer alternative pickup locations. These days it's all about choices. Consumers are on the go and no longer willing to sit at home and wait for their packages. Offering alternative pickup locations is not only good customer service but can also help reduce shipping costs.
3. Leverage crowd-sourced providers. Walmart uses various crowd-sourced providers for last-mile delivery and Target actually acquired one, Shipt, in 2017. Utilizing such delivery providers can be extremely cost effective—depending on the retailers' costs and strategy.
4. Utilize regional small parcel providers. Never underestimate these often-overlooked providers. By focusing on a particular part of the United States where demand is greatest, retailers can opt to use just one or create a nationwide network with several of these providers.
5. Watch out for hidden shipping costs. Accessorial fees—residential delivery fees, fuel surcharges, and requiring a signature upon delivery—can increase shipping costs. Review your invoices regularly to make sure you're not paying more than you should.
6. Fulfill products in stores. A growing preference for many retailers is to fulfill products in stores versus warehouses. This allows for quicker delivery as well as potentially lower inventory carrying costs.
7. Manage returns effectively. The cost of returns is high and can occur in up to or even more than 30% of all e-commerce orders. Managing returns is a necessity in keeping costs down and customers happy. Solutions such as free shipping for returns and returns to stores are popular among retailers.
8. Know your fulfillment options. There are a growing number of fulfillment options from Fulfillment by Amazon, Shopify, UPS, and FedEx, to in-house and more. Know your options but, more importantly, know your cost limits and evaluate. You might be surprised.
9. Consider on-demand warehousing. Warehousing is moving closer and closer to the end customer to provide faster last-mile delivery. This can be a pricey strategy. One option is on-demand warehousing from companies such as STORD. UPS also offers a similar solution that may suffice depending on strategy and cost.
10. Skip the warehouses by using drop shipping. In drop-shipping, a business is not required to keep products in stock. Instead, the store sells the product and passes the sales order to a third-party supplier who then ships the order to the customer. Sounds great but drawbacks include being at the mercy of your supplier when it comes to product quality, fulfillment speed, or return policies.
SOURCE: Melissa Runge, VP Analytical Solutions, Spend Management Experts