Keeping costs for last-mile shipping is more important and tougher than ever as costs continue to increase. As reported in Freighwaves, Tom Enright, vice president, and analyst for Gartner told attendees at the Gartner Supply Chain Symposium/XPO 2022 conference at Walt Disney World’s Dolphin Resort that the costs of the last-mile take a toll on retail profits.
According to the report, Enright told the audience that 53% of shipping costs and 41% of total supply chain costs are tied to the last mile. Additionally, the drain of not properly planning and optimizing shipments is costing the environment as well as profitability.
“It’s conceivable that two delivery vehicles, both half-full, are driving to the same town,” Freightwaves reported Enright said. Further, he reportedly added that the average delivery vehicle by weight is only 44% full. With an average cost of $10.10 per last-mile delivery, retailers are losing $2.02 per delivery after accounting for shipping fees.
Retailers’ and e-tailers’ heads are spinning as they try to keep up with consumer wants and needs. And they are spinning faster as it seems consumers aren’t exactly always sure what they want when it comes to fast, free, and sustainable parcel shipping.
Take, for instance, a recent exclusive study done by Retail Brew. It showed that half of the 2,000 people surveyed (54%) said sustainability is essential, while 46% said it isn’t.
Not unexpectedly, the split also fell along with age cohorts as well. According to the report, two-thirds of respondents who are Millennials and Gen Z said sustainability is important. In contrast, 55% of Gen X and 42% of Baby Boomers said it wasn’t important.
OK, so sustainable packing and shipping are keys to keeping customers happy, right?
Well, maybe. But other things still matter more for many.
According to a report in Chain Store Age, a Ware2Go survey showed that 80% of respondents are more likely to make a purchase online if the brand offers free shipping. However, speed matters too. Three-quarters said they are more likely to purchase if the brand provides shipping in two days or less. At the same time, 79% of respondents say they are more likely to buy from a brand again if the shipping was fast. And, almost 70% said they were more likely to click on an ad that offers fast, free shipping.
So, which is more crucial sustainable shipping or fast and free shipping? Well, it seems the answer is both.
To be successful, retailers need to meet a variety of consumer wants and turn shipping into a competitive advantage. However, retailers also must meet those needs efficiently if they want to turn that advantage into a profit.
Customers Want Free and Sustainable Shipping
Here are three ways to help meet free shipping and sustainability without cutting too deeply into profits:
Multi-Carrier Network. Utilizing a multi-carrier network made up of national, regional, and local carriers can help shippers cut the expenses of shipping free and low-cost offers to customers.
Omnichannel Shipping Strategy: By shipping from various locations, retailers, and eCommerce businesses by placing products closer to the customer not only cuts costs but speeds delivery time as well.
Cartonization: By packing efficiently using a multi-carrier parcel management solution incorporating AI-powered cartonization algorithms, shippers can reduce waste by using the correct sized cartons for items. As a bonus, shippers can reduce Dimensional Weight (DIM) fees, and other accessorial fees brought about by the carrier capacity crunch.
There are plenty of other ways to help meet the varying demands of today’s consumers. However, the more you add, the more that you have to manage. Therefore, finding the right multi-carrier management solution is essential to successfully delivering what consumers want without breaking the bank.
To learn more about how we can help you ship anywhere to anywhere, anytime, contact Transtream today.