Shipping costs are squeezing eCommerce company profits.
Let’s start with the elephant in the room. Amazon. This evergrowing eCommerce bohemoth has become the standard against which all e-tailers are judged and not just by industry insiders.
Customers, especially those that belong to Amazon Prime, have come to take fast and free delivery for granted even on what was once thought of as premium services such as Sunday delivery and hold-at-locations.
Amazon Prime, a now 12-year-old program, changed retail with the promise of free two-day delivery. Even now, most e-tailers are still scrambling to offer fast, free shipping to simply keep up with Amazon’s service levels. At the same time, the company has plans to build out its program. According to Greg Greely, vice president of Amazon Prime,“We are continually investing in Prime, adding more selection and making delivery faster and more convenient.” Amazon’s investments include:
· USPS Partnership: Amazon has partnered with the U.S Postal Service to make last-mile deliveries seven days a week, including Sundays.
· Same-Day Delivery: In almost 30 metropolitan areas, Amazon is offering same-day delivery for about 1 million of its products.
· Technology: Amazon continues to test the use of drones to deliver packages. The goal is to be able to deliver to customers in certain areas within 30 minutes of clicking the “Order Now” button. Of course, it has significant FAA hurdles to overcome, but Amazon is not known for shrinking from a challenge.
· Flex: Amazon Flex was launched to make deliveries of common household items even faster with contract drivers.
So the question is, how do other pure-play e-tailers and hybrid retailers deliver the high expectations of customers while maintaining profit margins they need to keep their businesses thriving?
The answer is to ship like an Amazon—or at least as close as possible.
So, with that in mind, how can e-tailers control their shipping costs, remain competitive, and retain margins all at the same time? Well, the answers lay in a two-pronged, multi-carrier approach to shipping products to consumers.
The first prong is to manage shipping costs. This can be done by improving shipping practices in several ways:
· Collect and Centralize Data
· Improve Negotiations
· Rate Shop Carriers
· Check your Numbers
· Pack Better