In its second-largest acquisition, Amazon buys the company for $970 million.
There’s more to smart shipping than price. Advanced technologies can help online retailers control costs while still delivering customer-pleasing service.
Delivery services handle the last mile in an item’s journey from web retailer to consumer, but planning a shipping strategy should not be the last thing on an e-retailer’s to-do list. There’s too much at stake. Retailers with well thought-out shipping programs are better able to provide consumers with the free or low-cost shipping options they desire. And those web merchants can cater more effectively to the desires of customer sub-segments, whether they are consumers particularly concerned with the environment or customers ordering from outside of North America.
And there are many ways a strong shipping plan can reduce costs, from ensuring packages don’t go astray to easing the burden of the inevitable product returns. All in all, shipping can’t be an afterthought for an online retailer.
“Shipping is a core part of any retailer’s business, which is why retailers should be making preparations for how best to ship their merchandise before they put it on their site,” says Rafael Zimberoff, product manager for ShipRush, provider of shipping software.
Savvy retailers are aware that consumers increasingly expect more than just the timely arrival of a purchase. The ability to track a package through the retailer’s web site or automated call center is moving up quickly on consumers’ list of priorities.
“Consumers want to be able to check on the status of their delivery anytime, especially if bad weather may be hindering travel where the item is being shipped,” says Randy Clark, president and CEO of MailExpress Inc., provider of lightweight package shipping services. “Consumers expect to be able to track their packages and retailers need to be able to meet that expectation.”
Package tracking is an expense that raises the cost of delivery. But it can be offset by offering longer standard delivery times, such as delivery in five to seven days rather than two or three. Retailers that offer longer delivery times can lock in fixed costs that are lower than overnight or second-day delivery, making it easier to absorb periodic free shipping offers. Overnight and second-day delivery can be positioned as premium services consumers must pay for.
“Retailers are looking for the appropriate balance to manage delivery costs without sacrificing the quality or reliability of the delivery experience,” says Ramsey Mansour, director, retail segment marketing, for shipping carrier UPS. “Next-day shipping is a great option in some cases, but the cost sometimes makes it harder for some retailers to meet price-conscious consumers’ demands for free shipping. This is why UPS offers a robust portfolio of shipping and technology services to help retailers balance cost with service.”
Free shipping is not the only way to turn delivery into a differentiator in consumers’ eyes. Many consumers are anxious to buy from ecologically friendly companies, and retailers can win their loyalty by partnering with carriers that offer eco-friendly initiatives, such as buying carbon credits to offset the environmental impact of each package shipped.
“A growing number of consumers are interested in ways they can reduce their carbon footprint,” says Paul Tessy, vice president, product management, commercial and strategy, for DHL Global Mail Services. “Offering green shipping initiatives is a way for them to do that.”
For its GoGreen Carbon Offset service, DHL calculates the carbon emissions generated during the delivery of a package. Based on this information, DHL sets a small fee that retailers who use GoGreen pay to offset the emissions by contributing to clean energy initiatives worldwide.
This service and the certificates that retailers receive each year to confirm their annual contributions are verified by SGS Group, a Swiss company that specializes in inspection and certification, including verifying environmental impact. Retailers who use the GoGreen service are billed for the offsets as part of their monthly invoices.
“Many consumers actively look to do business with retailers and companies that are taking steps to protect the climate by reducing emissions,” says Tessy. “Offering GoGreen is a way for retailers to add value to their brand with eco-conscious consumers.”
Using eco-friendly materials to pack an item is another way retailers can appeal to environmentally conscious consumers.
UPS will evaluate a retailer’s packing process to make sure it is environmentally friendly and sustainable as part of its Eco Responsible Packaging Program. The evaluation methodology used by UPS to qualify merchants for the program also was developed by SGS. The program has received endorsements from the Sustainable Packaging Coalition and Business for Social Responsibility, a consultancy focused on sustainability.
Once qualified, retailers can place an Eco Responsible Packaging Program logo on their packages. Retailers that need help meeting the qualifying criteria can receive tips on how to do so from the UPS Package Lab.
“Conservation of resources is a big part of the green movement and retailers that use eco-friendly packing materials and reduce the amount of packing materials used can help raise awareness about conservation efforts among consumers,” says Mansour. “It’s also a way for retailers to show eco-conscious consumers they are protecting the environment.”
In the mail
Whether environmentally conscious or not, online consumers want their packages delivered on time, even if they live in rural areas. The United States Postal Service can be an important asset for covering the last leg of a delivery, and retailers can work with mail service providers that partner with USPS.
Not only does the USPS deliver to every mailing address in the United States, there is no surcharge for Saturday or residential address delivery. In addition, the USPS delivers to post office boxes and military addresses and maintains a network of mail boxes where small packages can be directly dropped off and local post offices where larger packages can be taken. The USPS also offers free local pickup.
“The postal service and postal-like services such as FedEx SmartPost should be evaluated by e-commerce merchants who ship parcels that weigh four pounds or less,” says ShipRush’s Zimberoff. “Postal-based shipping is ideal for smaller packages, and lower-value packages. Remember that while the private carriers typically have some loss and damage coverage built in to the base shipping fees, postal shipping lacks this. For small and light parcels, the post office is often lower cost, but lacks some of the full-service features the private carriers offer. This is why the post office is often ideal for lower-value shipments.”