More consumers were expected to go online to make their holiday purchases this year, and they did not disappoint. Small parcel carriers, having learned their lesson from past years, prepared for the season with more staff, expanded delivery hours, and additional resources - and in some cases, new Peak Season Surcharges.
If necessity was the mother of invention, desperation was the father. And desperation is currently driving a lot of change within the eCommerce space as businesses struggle to keep up with the ever-increasing demand for faster and cheaper delivery. Heading into 2018, the focus for most online retailers is to find and implement ways to remain competitive against their biggest threat – Amazon. The successful ones will do so by taking advantage of new market opportunities and delivery technologies that help protect already thin margins.
Parcel shipping is getting expensive. The recent announcements by UPS and FedEx that rates will increase an average of 4.9% in 2018 came as no surprise to anyone, even with the current rate of inflation at 2.2%. That means rates are outpacing inflation by … well you can do the arithmetic.
eCommerce continues to drive the demand for parcel delivery services to new heights. It has become a critical issue for many businesses to reduce the cost of “free” parcel shipping without sacrificing service. This is hard to do when there is a margin-agnostic elephant in the room – Amazon. In 2016, the company’s shipping revenue amounted to $8.98 billion whereas its outbound shipping costs were $16.17 billion. That’s a loss of over $7 billion. And it continues to raise the free shipping bar with premium last-mile delivery services, including 2-day, same-day, and Sunday delivery in urban areas.
Clearly, most companies cannot directly compete with that. To keep up, eCommerce businesses need to focus on how they can protect their margins and control shipping costs. Here are 5 things shippers can and should be doing to keep costs in check.
Blockchain technology seems destined to become the next big thing in supply chain management. According to a November 2017 research report from Morgan Stanley, the industry will see blockchain-based smart contracts in use starting in 2018, with “sophisticated applications available by 2020.” The report also notes the market revenue potential for blockchain to be approximately $500B. Those involved in the parcel industry are paying attention because it’s a technology that could streamline complex parts of the last-mile parcel delivery process.
Amazon has transformed retail by changing what it means to buy online. And, it's not just about their vast website and buying algorithms. It’s the expectation they’ve created for consumers about delivery times and cost. Free 2-day shipping is the new normal – but even that’s not enough anymore.
eCommerce returns are a pain, but something all online retailers must deal with. Returns are about making the best of an unpleasant situation because in reality a return is, at best, a lost sale. At worst, a return is a lost customer, or even a lost potential customer. Shopping cart abandonment due to an unfavorable returns policy is a huge problem for the industry – 77% according to Listrak.
Pierbridge announced today the appointment of Scott Moore as VP Marketing.
Moore is a marketing executive with vision and many years of experience building world-class digital marketing practices and technologies that drive brand awareness, competitive differentiation, and lead generation.
Today, the parcel TMS industry tends to focus on automating eCommerce logistics processes, because that’s where the growth is. But increasingly, the healthcare industry is going through its own logistics transformation, with more frequent and smaller shipments going to and from consumers, including patients and doctors. To automate these processes, parcel TMS vendors are automating shipping processes in the warehouse, while also facilitating alternative delivery options.
With eCommerce driving more parcel service choices, routing and rating calculations have become inherently more complex. The result is that shippers are forced to “guesstimate” shipping costs in sales, order entry, shopping carts, purchasing, and fulfillment, leaving a widening gap between what shippers expect to pay vs. what they are actually invoiced by their carriers. Closing this gap is a real challenge.
In 2016, eCommerce in the U.S. grew 15% to $395b. During the same period, parcel spend grew 10% in the U.S., according to the Council of Supply Chain Management Professionals (CSCMP). LTL only grew by .5%, which reflects the continued shift to smaller more frequent shipments. eCommerce and parcel shipping are in lockstep and their pace is quickening. But with Amazon establishing free shipping as the new normal (now for premium services like same-day and Sunday delivery), eCommerce businesses are scrambling to protect their margins, even as the market continues to heat up.
Become a better parcel shipper to reduce costs, increase margins, improve customer service, and stay competitive. Stay informed on the latest trends in shipping and parcel transportation management. Delivered regularly by email and through social media.