The ecommerce industry has been bombarded with ways to cut parcel shipping costs. Between new and improved shipping software, and automated vehicles and drones, the last mile delivery aspect of parcel shipping has changed drastically. Of course, even for ecommerce giants like Amazon, most of this technology is still years away.
The advanced shipping technology isn’t the only change for ecommerce companies to deal with, however. Consumer demands are changing and growing harder to handle. Same-day and instant delivery are becoming more popular. Many ecommerce buyers still prefer lowest priced or cheapest parcel shipping options. Standard parcel shipping will still be a major part of ecommerce shipping strategies, but supply chain strategies will need to change.
Profit margins continue to narrow for ecommerce shipping companies. They need to watch their bottom line and make the most of all parcel shipping options to fulfill consumer demands and save money. Most ecommerce businesses know the basic tricks to save with parcel shipping, like small and light packaging, USPS First Class Packaging for shipments under a pound, negotiating rates with carriers, and so on. So, what can ecommerce shippers do to manage parcel costs?
Shipping software like transportation management system (TMS) can be very beneficial to ecommerce shipping companies. They provide the ability to compare shipping rates, print labels, track shipments, and more. They’re available over the cloud, which enables you to work from anywhere and still access valuable shipping data which can help you cut parcel costs. TMS helps shippers understand their supply chains to optimize their logistics strategies. While a lot of ecommerce strategies revolve around the consumer, TMS software can focus on your shipping spend to help reduce costs.
Every shipment needs to be considered carefully. Parcel shipping rates are very unpredictable, and there are any number of accessorial charges which might be added on. If you compare shipping rates and delivery times on every shipment, you can save money while keeping customers happy. If you decide to use shipping software like a TMS, that will be a valuable resource for comparing shipping rates. It’s important to select the right service for every shipment.
There are several different options for what to charge customers for parcel shipping. Free shipping is obviously an attractive option for consumers, and ecommerce companies that want to keep their customers happy. Consumers will be less likely to abandon their shopping cart if they see shipping is free. Free parcel shipping is best for items with low shipping costs, but high-priced goods. Ecommerce companies often use a minimum order price to qualify for free shipping.
Another popular parcel shipping model is flat rate shipping. This works when companies base prices on average costs of a package. It works well for ecommerce companies that ship similar items frequently. The parcel shipping rate can be based on either weight or total cost. It’s very possible to nearly cover all shipping costs with the right strategy.
The last option is to charge consumers exactly what the shipping costs are. Your shopping cart can provide real-time shipping quotes to let consumers select their own parcel shipping speeds and costs. If the products being shipped by your ecommerce company are heavy or costly to ship, this is a good strategy to save money.
For the most part, customers still prefer affordable shipping to fast shipping. There are obviously exceptions to that rule, both in terms of people and products. Usually, however, consumers feel it isn’t justifiable to add on extra costs to get faster parcel shipping. It’s important for ecommerce supply chain management to realize that cost is still more important than shipping speed. Keep an eye out for how the competition is handling their parcel shipping, understand your own supply chain, and offer shipping options accordingly.
Ecommerce companies need to optimize their supply chains to stay competitive, keep customers happy, and save money. Using shipping software, comparing shipping rates, evaluating shipping options, and balancing shipping costs and speed will lead to more effective ecommerce logistics. Improving parcel shipping strategies is vital to ecommerce company’s business, and these best practices can help.