Online sales are growing every year and retailers are increasing delivering their goods cross-border too. In the latest QAD Precision Report we look at parcel shipping strategies for retailers.
Last year online sales grew 18 percent globally. That’s a significant jump. It’s no wonder commentators quote statistics like these to argue that e-commerce is responsible for the death of bricks-and-mortar retail. It is fair to say that certain big name retailers are no longer with us, and many others are struggling. However, online shopping only makes up around 10 percent of all retail sales globally. Plus younger shoppers still enjoy the experience of browsing in an actual store. Like older consumers, Generation Z — that’s people aged 14 to 24 — shop on the high street as well as online.
A survey of 5,000 young consumers in the US found that just over 26 percent of Gen Z prefer online shopping to bricks-and-mortar retail. The majority — 47 percent — are fond of both. Young Europeans like to shop on the high street too. A survey of 50,000 Europeans across 11 countries found that 76 percent of young people think that shopping is an enjoyable way to spend time with friends and family.
Having said that, the e-commerce juggernaut is unstoppable with online sales expected to be worth $4.8 trillion by 2021. In the US — one of the busiest online shopping markets — 77 percent of people bought something online in 2018. That’s impressive, but low compared to Asia. A huge 83 percent of people in both China and South Korea shopped online last year. The UK is Europe’s online shopping champion — 82 percent of British people shopped online last year. The same is true of 81 percent of people in Germany.
Great Expectations and Greater Delivery Costs
E-commerce has created challenges for retailers. Customers want delivery options that are flexible and convenient — at least for them. Missed deliveries, lack of visibility into delivery times, and shipping charges are all pain points for customers. Few of us want to spend the day at home waiting for packages. Retailers can respond in a number of ways. These include using parcel lockers and Pick-Up and Drop-Off facilities, as well as pricey weekend and evening deliveries.
Most retailers offer free delivery on orders over a certain value. By itself, free delivery is no longer a differentiator. But of course, what is free for the customer can be very expensive for the retailer. It’s not always wise to try and pass on those costs to customers. Shoppers will pay for delivery, but only up to a point. More than half — 57 percent — of online shoppers will cancel an order if shipping costs are too high.
The last mile — that is the delivery to the final customer — makes up between a quarter to just over half of the total transportation cost. In the US, last mile delivery can cost between $2.50 to $5 per stop in densely populated cities. In rural areas, it can be as high as $30 per stop.
If you ship high volumes at low margins, those costs quickly add up. However, this is the reality of e-commerce for many retailers. What’s more, a good delivery experience is important to customers. Most of us — 76 percent — view the delivery experience as a mark of how much a retailer values our business.
Consolidation is King
When multiple customers place orders, consolidating them for the first leg of their journey can save time and money. Consolidations are particularly advantageous when you ship cross-border. A consolidated shipment only needs one customs declaration for the entire shipment. Sent separately, each parcel would need its own declaration.
Some carriers offer consolidated services where they will do this on your behalf. Alternatively, retailers can do this themselves with their choice of carriers for both the first and last mile. This offers greater flexibility as retailers can use local carriers in different countries and regions. Ideally, retailers need a transportation execution strategy that offers consolidation opportunities up-front by region and final destination. This is not only cost-effective — its also more efficient.
Simplifying Cross-Border Sales
The internet has made the world a global mall. Last year, 57 percent of us made at least one cross-border purchase. This means that retailers are competing with international as well as national rivals. Unfortunately, fulfilling international orders creates complexity. The processes most retailers have in place to manage international shipping are optimized to work with a centralized supply chain, not thousands of small parcel shipments.
Global trade management software
helps retailers manage the challenges of cross-border sales by automating export processes, documentation production and customs reporting. This ensures that a retailer’s goods glide through customs. With global trade management software, retailers can screen all orders automatically. The solution either clears the order for shipment or flags it for export compliance and fraud issues. Global trade management software also allows retailers to capture and calculate all the costs associated with a shipment. That could be for a line item or an entire shipment so that retailers have a complete picture of what international deliveries cost.
Multi Carrier Shipping is a Must
Not that long ago, retailers were able to use a single carrier for all deliveries. Such partnerships were generally preferable. They allowed companies to negotiate favorable rates and standardize shipping procedures. Today, leveraging multiple carriers can give retailers many advantages. These include providing more shipping options, more competitive rates and the ability to offer a consistent service to customers. With a comprehensive multi carrier shipping solution, retailers can seamlessly switch between carriers to get the best rates and service levels while still maintaining standardized shipping procedures. This allows retailers to balance the requirements of controlling costs and providing excellent customer service. A robust multi carrier shipping solution should also provide visibility into every shipment with all carriers so that all shipping data is in one place.
A multi carrier shipping solution should offer retailers the flexibility to leverage thousands of carrier services around the globe. A good solution should include both global players and local and regional carriers too. Plus it should allow retailers to easily onboard new carriers as needed. Retailers, like their customers, benefit from choice.
Parcel Shipping Strategies for Retailers
To survive and thrive, retailers need delivery optimization. There is no one-size-fits-all solution. A retailer’s needs will vary depending on what they sell, where they ship, and where they may ship in future. However, a delivery optimization strategy will include some or all of the following key capabilities:
No matter what they sell, where they sell or who they sell to, all retailers need to fulfil their online sales as efficiently and as cost-effectively as possible.
About QAD Precision – Trusted Global Trade and Transportation Execution
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.precisionsoftware.com.
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