HOW SHIPPING RATES AND E-COMMERCE DRIVE DEMAND FOR MORE EFFICIENT SHIPPING SOLUTIONS

E-commerce is rapidly expanding with each passing day. As of this writing, the numbers haven’t been reported for 2016’s online volumes, but indicators are that it was a banner year for online and mobile commerce, continuing and expanding on 2015’s e-commerce growth of more than 14%. Certainly if the 2016 online Christmas shopping season was any indicator, online retailers were braced for the onslaught, with Amazon hiring 20% more holiday workers to meet anticipated demand, and expanding its warehouse capacity in preparation for the holiday season crunch.

Yet, in spite of adding capacity, Amazon and other retailers still struggled to meet the growing demand placed on shipping systems by online shoppers. Some sources indicate that Amazon was forced to extend its Two Day Prime shipping promise on certain items when postal and other carriers weren’t able to handle the rush of last-minute purchases. And Amazon, along with many other retailers, were forced to move their final shipping deadlines up by as many as four days relative to 2015 deadlines.

And the sector just keeps on growing: new web-based retailers continue to pop up hoping to service growing markets. This leaves shipping companies struggling to capitalize on opportunities to provide the best service available. And it leaves retailers struggling with how to meet customer expectations for reliability and predictability of service in an environment where demand for shipping is outpacing estimates and making it difficult for shippers to provide promised levels of service.

What Does the Customer Really Want?

Today’s e-commerce customer is a demanding one. One of the areas where their demands are highest is in the area of shipping. Customers want more and better shipping options. They want faster delivery and more reliable service. And of course they want low cost; even better if their shipments can be free. They want more insight into the status of their shipments, and they want to be alerted if changes or problems occur. But, most of all, they want their orders to arrive in good condition when they are promised.

Clearly, it’s not enough to offer convenient online ordering or to offer inexpensive or even free shipping. Today’s e-commerce customer also wants reliability and control over their shipping options from any device, to any location.

It’s a tall order—one that most retailers aren’t meeting.

These competing customer demands are forcing online storeowners to rethink the way they operate the shipping end of their business in order to navigate an ever-evolving consumer environment.

The Changing Customer

Customer preferences can change on a whim. As new retailers, apps and device options become available, consumers adapt how they shop for and buy consumer goods. This means the shipping solutions that are used to fulfill those orders also need to be flexible and adaptable in order to keep up with new e-commerce trends.

What’s driving all this change? One is the “Amazonification” of the retail environment. Amazon is what’s called a “category killer”—one big retailer that comes in and crushes many of its competitors who are unable to compete with Amazon’s wide variety of products, shipping options and customer service. Dominant retailers like Amazon have changed the way retailers approach their shipping strategies.

Online retailers that want to compete with Amazon need to offer competitive shipping options like one-day shipping or free shipping for exclusive customers. Mobile and omni-channel ordering and shipping options are also important, since today’s customer is increasingly likely to be ordering from a mobile device. How likely? More than 70% of Amazon customers ordered from mobile devices in 2015—a number that likely grew even further in 2016.

All of these factors will keep retailers on their toes in 2017, since they never know where their customers will be shopping next—online, in stores, via mobile or even a combination of these options.

How to Control Shipping Cost and Meet Customer Expectations

Of course, it’s costly to offer so many options, and the cost is getting higher all the time. Costs include the high cost of developing options to meet customer demand—such as developing omni-channel websites, or expanding warehouse space to meet on-time shipping demands. And there are pass through costs like increases in carrier rates when shippers like FedEx or UPS are forced to raise their rates to contend with demand.

For these reasons, stores and online retailers need to look beyond the warehouse to look at how to manage their total pool of inventory. Retailers must consider not just warehouse inventory but inventory in stores as a means of serving e-commerce customers. Stores can also offer “ship-from-store” or online ordering with in-store pick-up.  This will increase the amount of inventory available to online customers and allow stores to lower total shipping costs, while increasing in-store traffic and providing opportunities for add-on sales or upselling.

Retailers also need to look at the systems they are using to meet demand and deliver better options to customers. Shipment Execution software, for instance, provides a streamlined way to deliver a variety of shipping options while maintaining high volume processing, and delivers better control and visibility into the status of shipments as they move through the logistics chain.

Shipment Execution allows retailers to consolidate shipments to reduce cost, while delivering the tracking and visibility that customers demand. It even allows retailers and customers to take control of the delivery process to personalize according to customer preferences. All of these combine to help improve customer satisfaction and make online retailers more competitive against Amazon and other companies like it.

With Shipment Execution, online retailers can reduce costs while meeting ever-higher customer expectations. And it’s a scalable solution that positions retailers for the growth of the e-commerce sector and the continued expansion of their online business.