Amazon not only sold $2.5 billion worth of goods, it introduced Prime members to new services. How should rivals compete in 2017?
The web site may create the first impression a customer has of an online retailer, but whether a purchased item is delivered on time often has a longer lasting impact on how a consumer perceives the company. Customer dissatisfaction with shipping can cut repeat purchases by as much as 25%, according to some industry estimates.That is why selecting the right delivery service is a top priority for e-retailers.Increasingly, online merchants are seeking web-based tools and services that allow them to view and track shipments throughout the delivery process. In addition, merchants are setting up links on their sites so that customers can do their own tracking.Web-based visibilityThat’s led to a transformation in the way traditional shipping companies and carriers provide delivery services. Many companies and carriers are competing for merchant customers by offering web-based visibility into their services and freight movements.In addition, web-based visibility is offered in independent shipment-tracking software that lets retailers track movements among multiple carriers and service providers, so merchants don’t have to rely on a single delivery services provider for freight visibility.Retailers see giving customers a variety of shipping options as a way to win customer loyalty. At eToys Direct, shoppers are offered three service levels. 95% of parcels are shipped via standard delivery; 4%, second-day delivery; and 1%, next-day delivery, says Alison Castle, vice president of operations.Because prompt delivery keeps customers satisfied, retailers want a way to measure the performance of their shipping services. On a peak day, eToys Direct may ship 35,000 parcels over a 22-hour period, Castle says. That means offering customers a cost-efficient delivery service is a priority.When negotiating with parcel carriers, eToys Direct considers such issues as carrier rates to various destination zones, the service level a carrier will provide to various zones and ZIP code areas, various shipping options for various destinations, monthly volume discounts, residential delivery charges, rate shopping returns services, and improved cut-off dates at holiday time.Among delivery services trying to meet e-retailers’ demands for sophisticated delivery services is APX Logistics, a consolidator and mailer of small parcels in the U.S. It offers seven different shipping services designed to accommodate different types of retailers and their specialized needs. Like other delivery services, APX offers several tracing and reporting tools. Its DirecTrace service gives status reports on a shipment at any point in the delivery, and retailers can search using package ID, tracking number or order or invoice number.Customized trackingDirecTrace also links directly to the United States Postal Service web site, where a retailer can access additional tracing information, post office locations, ZIP Code lookups, and weather alerts and information on how the weather might affect delivery of a package. And the e-retailer can access the USPS delivery confirmation report which provides the data, ZIP code, and time a package was delivered to the customer.Reports APX can generate for retailers include delivery performance by geography, percentage of packages delivered by business day, number of packages delivered by business day and number of packages delivered by business day by geography.APX’s MyDirecTrace service allows a retailer to provide tracing services to its customers via the retailer’s web site or an e-mail link. The retailer can customize the tracking web page with its logo and color scheme. Customers can trace their own packages moving through the APX Logistics network.A growing challenge for delivery services is international shipping. According to a recent Internet Retailer report, 36% of 186 American e-retailers who completed the survey said that 10% or more of their annual online sales are coming from customers outside the U.S. And in five years, nearly 52% of respondents believe their foreign orders will hit or exceed 10% of all their web sales.The survey also found that 29% of respondents who do not process foreign orders from their retail web sites report their principal reason for avoiding the global online market is the difficulty and cost of shipping merchandise outside the U.S. That gives shipping services new goals to shoot for.There’s no doubt that e-merchants will continue to demand low-cost, high-quality and increasingly sophisticated delivery services. In the highly competitive world of online retail, merchants can ill afford to lose a customer to poor delivery.