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Three Ways Retailers Can Optimize Peak Season Parcel Shipping

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.

The Importance of Timely Delivery

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.

Encourage Early Orders

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 additional 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.

Leverage Multi Carrier Parcel Shipping 

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.

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.qadprecision.com.

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