The holiday shipping season will soon be upon us. In this QAD Precision Report we look at five benefits of multi carrier shipping software to manage the challenges of peak season shipping.
September is here, and the holiday shipping season will soon be upon us. It may be a few months before Black Friday and Cyber Monday, but if past years are any indication, both are likely to drive high volumes of online sales.
In 2018, Cyber Monday online spending in the US totaled $6 billion according to ComScore. Other reports, most notably Adobe Analytics, claims Cyber Monday spending reached $7.9 billion. Notwithstanding these differences, both found that online spending on Cyber Monday has increased year over year.
In 2018, online spending on Cyber Monday surpassed online totals for Black Friday by $1.2 billion. However, it is fair to say that the line between the two is no longer clear cut. Many Black Friday deals are available online as well as in bricks-and-mortar stores. Moreover, retailers don’t make discounts available only on these specific days, but rather extend their sales over all of the Thanksgiving holiday period. Last year, US shoppers spent $3.7 billion online on Thanksgiving Day itself.
The rest of the world may not celebrate Thanksgiving, but both Black Friday and Cyber Monday are firmly established across much of the globe. With retailers offering an average discount of 55 percent globally, it is not difficult to see why consumers have embraced these sales events. In Europe, the number of shopping transactions taking place on Black Friday in 2018 was 361 percent higher than the daily average. Furthermore, across Europe, the number of Cyber Monday transactions jumped 57 percent compared to 2017.
Of course, these figures pale in comparison to China’s Singles Day. Alibaba’s online shopping extravaganza takes place on 11 November every year. Last year, online shoppers spent $30.8 billion over the 24-hour shopping event. That was up from the record of $25.3 billion set in 2017.
Despite ongoing geopolitical uncertainties, including the US-China trade war and the UK’s exit from the European Union, it is probably safe to predict that we are likely to see high parcel volumes over November and December. Consequently, shippers need to prepare for peak season.
The holiday season has long been a busy period for parcel shipping and for retailers. What’s changed is that it used to be consumers that sent the majority of parcels over the holidays. These days, it’s retailers sending most of those packages — and in greater numbers than ever before.
As parcel volumes have increased, carriers have responded by extending working hours over the busy periods and adding seasonal staff, as well as investing in automation and infrastructure. Nevertheless, peak season shipping still presents challenges for retailers as well as business-to-business shippers.
With multi carrier shipping software, retail shippers can meet customer delivery expectations, reduce the risk of late deliveries, and control shipping costs. There are five important benefits of multi carrier shipping software for peak season shipping. These are:
Avoiding carrier bottlenecks to ensure on-time delivery
Managing problem shipments by exception
Avoiding unnecessary surcharge fees
Controlling costs with consolidated shipments
Managing high volumes with an automated routing guide
Let’s take a look at these benefits in more detail.
The busy peak season can impact delivery time, and with that, customer satisfaction. During peak shipping season, carriers are challenged to predict where demand will be highest. Past demand is of course a useful indicator, but regional demand can fluctuate. If demand is higher than expected, regional bottlenecks can slow delivery performance.
These bottlenecks impact shippers that rely on a single carrier during the peak shipping season. Carrier performance directly impacts the customer. However, it’s the part of the customer experience that retailers don’t directly control. We all want and expect fast, on-time delivery. The 2019 UPS Pulse of the Online Shopper survey found that 23 percent of shoppers globally have abandoned a purchase because the retailer could not deliver the item on time.
Retail shippers that are dependent on one or two carriers have no alternatives if their carriers are unable to handle the peak season capacity. With multi carrier shipping software, retailers and other shippers affected by regional bottlenecks can analyze on-time delivery data not just by carrier, but by region. As a result, you will quickly spot where a carrier is underperforming and adjust by selecting a regional or other carrier whose performance in that region isn’t suffering.
Multi carrier shipping gives retailers a central portal to access the status and details of all shipments, with all carriers, anywhere in the world, from the time of pick-up through to delivery. Exception alerts allows retailers and high volume shippers to concentrate on and resolve real delivery issues instead of having to track shipments that are on target for on-time delivery.
UPS recently announced that it will not be charging residential surcharges this peak season. This is good news for B2C shippers, as home delivery is still one of the most popular options for online purchases.
Peak season surcharges are, however, understandable. The surcharges help to cover the costs of seasonal workers to boost on-time delivery. Retailers can either absorb these costs or pass them on to shoppers. Neither is ideal. These additional shipping charges negatively impact margins, particularly if goods are deeply discounted due to seasonal sales. Customers looking for Black Friday and Cyber Monday bargains are also unlikely to be willing to pay a premium for shipping. The same UPS study found that 41 percent of online shoppers will not complete a purchase if they believe that the delivery costs are too high.
Retailers who work with a mix of carriers, including smaller local and regional carriers, will be able to control shipping spend by routing deliveries through the lowest cost carrier that can still meet targeted delivery dates.
Multi-carrier shipping solutions are especially beneficial when you ship high volumes of small packages. Retailers can consolidate shipments and use one carrier to move goods across country or cross-border, and a different, local carrier at the destination for the final delivery to the customer. Shippers can manage consolidations in-house by using the zone-skip (hub induction) functionality in multi-carrier software solutions.
Consolidating packages on-the-fly that are going to the same destination and using the same carrier and service helps ensure that your freight bill is for a single shipment rather than multiple shipments. On-the-fly consolidation is particularly beneficial in environments where the sequence of processing packages going to the same destination is spread out across the day.
Consolidated shipments also reduce regulatory headaches. A consolidated shipment only requires a single customs declaration for the entire shipment rather than individual declarations for each individual package.
To manage high volumes during peak season, shippers should also leverage an automated routing guide alongside multi carrier software to manage carrier and service selection. This will select the best priced service that will still meet the required delivery date. The routing guide will use your business rules to automatically “shop” between services, picking the optimal service within the constraints of the shipment characteristics.
QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade management, transportation execution and multi carrier shipping software solutions from a single, integrated platform. Preeminent industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carriers and manage millions of shipping transactions every day. Our open architecture easily integrates with Enterprise Resource Planning, Warehouse Management Systems and legacy solutions. An ISO-certified company, QAD Precision assists companies to minimize shipping costs, optimize first mile and last mile deliveries, automate free trade agreement compliance, avoid customs delays and mitigate the risks associated with dynamic trading environments to maximize their competitive advantage. QAD Precision’s customers span multiple industries including banking and finance, life sciences, high technology, retail, industrial, automotive, higher education and public sector as well as logistics providers. For more information about QAD Precision, visit www.qadprecision.com.
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