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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