How to Choose E-Commerce Shipping Software

With skyrocketing parcel volumes, e-commerce shipping software has become a necessity for shippers across many verticals. In this QAD Precision Report we look at the questions to ask when choosing an e-commerce shipping solution.

This week, Amazon’s Prime Day marked the unofficial start of peak parcel shipping season. This year is shaping up to be a peak season unlike any other. Black Friday is just six weeks away. Although it began as a bricks-and-mortar sales event, Black Friday deals are now ubiquitous online too.

Amazon’s Cyber Monday takes place four days later on 30 November. Last year, online sales for the five days between Thanksgiving and Cyber Monday exceeded $28 billion.

However, the biggest online shopping event takes place on 11 November — Alibaba’s Singles’ Day. Last year, online shoppers spent $38.4 billion during the sale.

In 2019, 103 billion parcels made their way around the world. This year, the figure is likely to be even higher. 

In the US, a number of major retailers saw e-commerce volumes skyrocket in the second and third quarters. Some experienced growth of more than 100 percent. While brick and mortar stores were shut, shoppers turned to e-commerce merchants, omnichannel retailers and online stores. 

This surge in e-commerce orders was not unique to the US. Between 25 and 80 percent of shoppers in France, Germany and the UK, did more than half of all their shopping online during lockdown.

E-commerce volumes spiked in Australia too. After the World Health Organization declared that Covid-19 was indeed a pandemic, e-commerce volumes grew 80 percent in 8 weeks.

The full impact of the global pandemic on holiday shopping and parcel shipping is as yet unknown. However, given this unprecedented growth, carriers are expecting a busy peak season. 

Peak Season Surcharges

UPS and FedEx both announced seasonal surcharges in August. For the most part, these target large volume parcel shippers. 

UPS’s surcharges apply to companies shipping 25,000 or more packages a week. These shippers will pay between $1 and $4 extra from 15 November 2020 through to 16 January 2021. The difference in price is for ground and air services.

FedEx will apply surcharges to companies shipping more than 35,000 parcels a week using either FedEx Express or Ground. The surcharges will apply to shipments made during the periods of 5 to 16 October, and 16 to 29 November. 

In addition, FedEx will calculate surcharges based on pre-pandemic volumes between February 3 and March 1. An additional fee of $1 per parcel will be applied to ground deliveries when shippers exceed 110 percent of February volumes. Furthermore, FedEx will charge up to $4 per parcel if volumes exceed 500 percent of pre-pandemic volumes.

Even the US Postal Service  is adding additional charges for the holiday season. The USPS will charge an extra 24c to $1.50 per parcel from 18 October through to 27 December.

How E-Commerce Shipping Software Helps Manage Costs and Capacity

Parcel shipping volumes have grown on average 19 percent a year since 2013. The pandemic may have caused an unexpected increase in volume this year. Nevertheless, e-commerce volumes are only trending one way — up.

With growing volumes, a single carrier and/or manual workflows to manage the shipping process is becoming untenable for many organizations. 

E-commerce shipping software allows shippers to automate this process. This results in operational efficiencies and better customer service. 

Furthermore, e-commerce shipping solutions offer access to a multi carrier network. These can include major, global players as well as national and regional carriers. 

A multi carrier e-commerce shipping strategy has two major benefits. Firstly, shippers gain access to more shipping options and more capacity. This allows them to meet customer demands at times when capacity is tight.

Secondly, and perhaps most importantly, e-commerce shipping software can result in significant savings. These include:

• Automatically assigning every parcel to the lowest cost rate and service that will meet the delivery date

• Monitoring shipping volume by carrier to avoid peak season volume surcharges

• Consolidating shipments bound for the same geographic destination or country

There are a multitude of e-commerce shipping solution providers. When it comes time to choose a solution, here are three important questions to ask.

Question 1: Where Are You Shipping?

The first question to ask yourself is this: where are you shipping? Some e-commerce shipping software solutions are strong domestically, but cannot support global shipping operations.

Are international deliveries a significant, or growing, portion of your shipping operations?  If so, you will need a solution that offers global coverage.

As well as accessing a worldwide network of multiple carriers, your e-commerce shipping software should localize. In other words, you will need multilingual, multi-currency and multi-date capabilities. All documentation will be automatically generated, including carrier label printing, in the correct language and format.

Furthermore, if international shipping is a growing part of your business, you may need a solution that includes export management capabilities. 

An integrated solution will allow you to do both. This could include customs declarations, global documentation, customer screening, license determination and so forth. 

Question 2: What Volumes Are You Shipping?

Are you experiencing growing volumes? If so, you will need an e-commerce shipping solution that will allow you to manage this easily. 

Many solutions offer parcel tracking, but visibility is not enough in itself. High volume shippers need global parcel tracking with delivery exception management capabilities. This allows for real time tracking of all shipments, with all carriers from a single portal. If a parcel is at risk of missing its delivery date, staff will be alerted.

Furthermore, high volume parcel shippers should audit freight invoices for unexpected charges or service levels not received. Manually checking invoices for discrepancies is a time sink. However, freight auditing software  can automatically check and reconcile invoices. Automated solutions can do this for invoices that are hundreds of pages long and include tens of thousands of line items.

A final consideration is returns. Customers return 30 to 40 percent of all purchases from e-commerce merchants and other online sellers. For comparison, only 10 percent of in-store purchases are returned. 

If your e-commerce volumes are growing, the number of returns will too. Your e-commerce shipping software must allow you to manage orders and returns. When goods come back, they need to do so as efficiently and as cost effectively as possible.

Question 3: What Does The Future Hold?

If your shipping volumes have been steadily increasing over the past few years, you need to take that into consideration. In addition, if increasing cross-border or international sales is part of your strategy, your solution needs to support that too. Finally, if you are diversifying your product line, you need to take that into account as well. This is particularly the case if your  goods have dual use applications, are restricted or contain hazardous materials.

Forecasting the future can be an imprecise business. However, when choosing an e-commerce shipping solution, this is necessary. Given the time and investment requirements, your solution provider needs to offer ongoing support as you grow your business.

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About QAD Precision – Trusted Global Trade and Transportation Execution

QAD Precision, a division of QAD Inc., provides industry-leading global trade compliance, and multi carrier transportation execution solutions from a single, integrated platform. An ISO-certified company, QAD Precision assists companies to streamline their import, export and transportation operations, optimize deliveries, and increase logistics ROI. QAD Precision’s scalable and extensible solution easily integrates with existing ERP and WMS solutions. Industry leaders in every region of the world rely on QAD Precision’s global support centers to leverage thousands of carrier services and manage millions of global trade and shipping transactions every day. For more information about QAD Precision, visit www.qadprecision.com.

Further Reading

HOW E-COMMERCE IMPACTS B2B SHIPPING

THE NECESSITY OF E-COMMERCE DELIVERY OPTIMIZATION

THE LAST MILE DELIVERY: CHALLENGES AND OPPORTUNITIES