Attainable Shipping Strategies for a Competitive Market

The shippers interviewed made note of the extreme difficulties in moving product at the beginning of COVID-19, when all U.S. carriers struggled to maintain on-time service performance as order volume skyrocketed amid labor and staffing shortages. Since then, volume has stabilized, and all respondents noted improvements in overall service.

However, some respondents noted that their carriers’ service performance is still worse than it was before the pandemic, creating issues for customers and an increase in customer service inquiries.

Carrier fees can add up quickly, with fuel, residential delivery, oversized, seasonal and insurance surcharges eating away at profits.

Some of the survey respondents also mentioned high fulfillment fees (which include picking, packing, shipping and handling) required by one major, very popular third-party platform. In some cases, it just may not be realistic to sell on this kind of platform.

Carrier and fulfillment fees don’t just affect businesses; they also affect customers, who often face higher shipping and miscellaneous fees themselves. This can lead to abandoned shopping carts in the short run, and loss of loyalty or dampened brand reputation in the long run.

Most of the shippers surveyed reported that they clearly communicate to customers which items are in or out of stock on their websites. Some of the shippers said they remove out-of-stock items completely.

Leveraging inventory management systems and order management systems can make it easier to keep track of inventory, helping to ensure customers are immediately informed about out-of-stock items or inventory issues.

One respondent noted that for certain items coming directly from a distributor, they will label the item online and notify their customer that it may take longer to ship than expected—helping to manage expectations and keep customers informed.

While there is general uniformity in the way inventory availability is communicated, there is more variation in the delivery options provided to customers. Most shippers offer two or three options for delivery speed, each with a time range provided, so customers know when they can expect to receive their package.

Another interviewee, whose company offers subscription-based models, said they provide customers with continual order updates:

Many shippers are reluctant to provide firm commitments on delivery dates for various reasons, including carrier issues that have resulted in late and lost deliveries in recent years—and this reflects poorly on the business. One respondent emphasized the importance of finding a true partner in the carriers they work with, not just another vendor.

Leveraging carriers’ application programming interfaces (APIs)—mechanisms that allow two software components to communicate with each other—can give shippers access to real-time information on delivery progress.

These APIs can provide shippers with a range of benefits, including:

• Near-real-time package status Automated, near-real-time shipment updates allow shippers to easily monitor delivery progress and coordinate the release of customer communications.
• Automated data entry APIs automatically gather shipment data points, eliminating the need for manual data entry and reducing the risk of errors.
• Platform consolidation Consolidating all elements of freight management to a single platform saves both time and money, and eliminates the need for new software onboarding.

The interviewees also referenced the importance of leveraging a transportation management system (TMS)— software that supports logistics planning and execution. It allows companies to manage complexity across various transportation modes and geographic regions.

A TMS can also be used to identify the ideal shipping methods and best pricing, allowing businesses to “shop around” for the best carrier rates. This can enable significant cost savings while eliminating the need for time-consuming research.

To assist in inventory and fulfillment while increasing efficiency, many shippers rely on inventory management systems (IMS) and order management systems (OMS).

An IMS allows shippers to easily track inventory quantities and see which warehouse they are housed in. This makes it easier to maintain transparency with customers, reduces the risk of overstocking and understocking, and lowers the potential for inventory reporting and accounting errors. In the long run, this can make it easier to gauge costs and better anticipate trends.

These systems are often integrated with warehouse management systems (WMS), which are used by warehouse managers to track the exact location and movement of stock within various warehouses.

An OMS, meanwhile, manages the entire order life cycle. This means orders from multiple channels—including brick-and-mortar, social media, call centers, and e-commerce websites—can all be managed on a single, centralized platform. Order management systems also make it easier to route orders to the appropriate warehouse and manage returns while creating a simpler, more seamless purchasing process for customers.

Buy online, pick up in store (BOPIS) is a versatile option for many kinds of businesses, allowing customers to order items online, then pick them up curbside or at the register. This can be a great option for the holiday season or times of peak demand, during which customers may be scrambling for quick, cost-effective ways to finish last-minute shopping: In the final days leading up to Christmas 2022, U.S. retailers that offered BOPIS grew their online sales nearly seven times faster than those that didn’t.^[2]

Successful implementation of BOPIS can involve considerable investments in information technology (IT) and infrastructure:

As shipping costs rise, many respondents said their businesses are increasing the minimum order values needed for customers to receive free or less expensive shipping.

These kinds of changes must be considered carefully. When chosen wisely, a minimum order value for free shipping increases sales and improves brand reputation. But if a business is unrealistic about how much customers might be willing to spend, it can easily drive customers away.

It may be helpful to alert customers when they are close to the minimum order value for free shipping, especially during the checkout process, while also displaying items that customers can quickly add in order to reach the threshold.