The e-commerce landscape is radically changing, especially when it comes to defining the new normal for parcel delivery. Retailers specializing in larger, non-conventional items are accustomed to rising fees and surcharges to offset the logistical demands of delivery. The freight and LTL space has continued to expand as consumer demand for immediate delivery becomes more voracious. As a retailer looking to protect your bottom line from increased surcharges and fees, it’s important to have a good grasp of the rules and the best way to navigate them. Whether you’re shipping through UPS, FedEx, USPS, or a plethora of 3PL and last-mile competitors, how do you protect your business and the customer experience? Here are three key areas where you can immediately impact your bottom line.
Managing Hidden Costs
Both newcomers and veterans to the large shipment space are looking for cutting edge strategies to fight the war against rising costs and hidden fees. The main determinants for cost of shipments continue to be the service used, size of your package, the origin and destination of the shipment, and special requirements, such as required signatures or Hazmat. Hidden fees for special requirements and additional handling can easily become an unnoticed drain on your bottom line. One option that may shippers utilize is partnering with shipping software that ties in directly to shipping carrier APIs, allowing them to immediately see what the best rate is, as well as if the packages will be subject to any surcharges, such as residential or large package delivery fees. Having this insight provides shippers with a bottom-line cost that can then be passed on to the customer and used for more accurate budgeting.
Understand Your Shipping Options
Understanding the way your shipment gets delivered is just as important as knowing when your shipment needs to be managed outside of the normal delivery chain. Having visibility into multi-carrier shipping options is crucial to removing the guesswork around obtaining the best shipping rates. Data from recent years points to customer priority of free shipping over speed. Recent parcel delivery standards of free two-day shipping shrinking to next-day delivery have become the gold standard. There are new opportunities for large and heavy shipments as players like Amazon enter the market and existing carrier networks are reconfigured to take advantage of the bulk product requirements and optimize shipment transit times. It’s more important than ever to better understand your options and ensure you are partnering with the shipping solution that best serves your customer base.
The biggest increase in additional handling comes when your package exceeds 70 pounds. Just in the last two years, we’ve seen surcharges increase by 75% for additional handling. At scale, many delivery networks aren’t capable of efficiently transporting shipments greater than 70 pounds, which adds to the cost of shipping and handling. As more established shipping providers continue to iterate on the parcel delivery market, they have traditionally struggled to maintain efficiency with larger shipments, mainly because the traditional hub and spoke delivery system lacks an automated way to handle non-conveyable shipments.
Last-mile delivery places the focus on the delivery of goods to the final destination. A recent report from Marketers Media expects last-mile delivery market size to exceed $55 billion by 2025, a 55% increase from 2018. Traditional players in this space include couriers, 3PLs, freight companies, and the larger players like DHL, UPS, FedEx, and Amazon. They are investing resources into the discovery of the landscape that will shape the future of delivery in the years to come. A recent FreightWaves.com article discusses the competition:
“…the last-mile delivery segment of such non-conveyable items as appliances, treadmills, and building materials is relatively open… Delivery firms can charge hundreds of dollars for delivering, setting up, installing, and taking away large-format items. And it’s where the LTL and truckload carriers will converge to do battle.”
Efficiently Utilize your Resources
The manual work required to configure your own shipments can be both time-consuming and complex, leading to additional costs. This is particularly true when you’re managing single-carrier solutions. At scale, many e-commerce and warehouse shippers have tools that enable them to process hundreds and thousands of shipments a day. A multi-carrier software that brings functionality like enhanced barcode scanning, fast order lookup, full featured API connections with point of sale marketplaces and diverse shipping carriers, and a pricing tool to help you manage the best price with the service delivery option that will delight your customer. When you enable your team with these tools, you become more efficient in the way you can leverage your resources and flex to meet the needs of your changing business.
It’s more important than ever to be fully plugged into the solutions that help you interface with the players that matter. Taking the time to set up your business for success will ensure your team is more efficient, you are not held hostage to a single provider’s hidden fees, and you can manage your shipping costs in a volatile market.
Dominic Lozano is General Manager of ShipWorks, the leading enterprise shipping software program for serious and successful e-commerce merchants and warehouses. ShipWorks software and order fulfillment solution helps online retailers and warehouses organize, process and ship their orders quickly and easily from any PC. Visit www.shipworks.com for more information.This article originally appeared in the July/August, 2019 issue of PARCEL.