On-time delivery during peak season is always a challenge. In this
QAD Precision Report we look at three ways retailers and e-commerce
merchants can optimize peak season shipping.
This October, the annual Pitney
Bowes Parcel Shipping Index announced that global parcel
volume reached 87 billion in 2018. That is a 17 percent increase and a
significant jump from the 74 billion parcels shipped in 2017. The
report further forecasts that volumes will continue to rise and reach
200 billion parcels by 2025. This index measures volume across 13
major markets — Australia, Brazil, Canada, China, France, Germany,
Italy, India, Japan, Norway, Sweden, UK and US — and represents
approximately 3.7 billion people.
E-commerce is driving this growth across a variety of industries.
Although most closely associated with retail and the seemingly
unstoppable rise of online shopping, parcel shipping volumes are
growing across a number of vertical markets due to the increase in
direct-to-consumer sales and shortening supply chains.
Come November however — with Black Friday, Cyber Monday and Alibaba’s
Singles Day — and retail parcel volumes soar. It seems likely that
2019’s volumes will surpass last year’s totals.
For a long time now, the holiday season has been the biggest season
for parcel shipping and for retail. However, it used to be consumers
sending parcels and gifts to loved ones. These days, retailers send
the majority of holiday packages.
The upsurge in retail parcel volumes over the holiday period is not
accompanied by fewer parcel shipments across other industries.
Shippers across many industries need to send parcels all year round.
This makes peak season a challenge for many enterprises.
To meet customer demands during the busy holiday periods, retailers
must ensure their supply chain operations can keep the right mix of
products in stock. Holiday sales are crucial to most retailers.
Because of this, retailers often encourage or enable last-minute
orders with discounts and other incentives. Equally important to
selling goods, retailers must be able to deliver them reliably.
Why is that so important? Because online shoppers have the benefit of
choice. After a bad delivery experience, more than a third of online
shoppers won’t place further orders with an e-commerce or omnichannel
retailer. On the flip side, shoppers are loyal to brands that have
earned their trust. The top reason customers give for awarding their
loyalty to a particular retailer? Fast and reliable delivery.
High speed throughput is necessary when order volumes surge.
Retailers therefore must be able to process orders and get them into
carrier networks efficiently without allowing backlogs to develop.
Carriers ramp up staffing levels and capacity to deal with holiday
volumes. This year, FedEx announced plans to hire 55,000
seasonal workers in the US, while UPS aims to hire an
100,000 staff. These holiday hires meant that in 2018,
both carriers, and the USPS, achieved a better than 97
percent on-time delivery rate.
Despite that, retailers should manage customer expectations around
delivery windows. It’s far better to under-promise and over-deliver
than the other way around, especially when it comes to orders placed a
few days before 25 December.
To prevent disappointed and angry customers, retailers should
consider offering incentives to shoppers who are prepared to pick up
their purchases from a collection point or store.
Depending on what you sell and where you ship, it might be worthwhile
for some retailers to use more expensive service levels during the
holiday season to ensure on-time delivery. Not all retailers can do
this. Those shipping high volume, low value goods simply cannot afford
this squeeze on margins. A far better strategy is to incentive
shoppers to shop early and choose a slower, but free, shipping option.
Retailers can then consolidate orders heading to the same region,
metro or residential area and utilize LTL shipping alongside parcel carriers.
One of the most important ways to improve shipping reliability,
especially over peak season, is with a multi carrier parcel shipping
solution. Multi carrier shipping software makes it easy to spread
parcel shipments over a number of carriers, including regional and LTL
carriers. Shippers that depend on a single carrier have no backup if
their carrier is unable to handle excess capacity, putting customer
relationships and repeat business at risk.
A second benefit is that multi carrier parcel shipping solutions
improve visibility into the status of deliveries and the whereabouts
of each order. This helps to establish trust with customers, since you
can keep them better informed about the exact whereabouts and status
of their orders. This is always important, but over the holiday period
it is crucial.
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.