Tag Archives: e-commerce shipping

How to Offset Rising Distribution Costs

How a Multi-Carrier Parcel Shipping System Can Help You Combat Rising Distribution Costs: Net landed cost of goods, the total cost associated with getting goods into customers’ hands, consists of cost of distribution (CoD) and cost of manufacturing (CoM). For years, manufacturers and brands have worked to reduce CoM as the means to reducing their […]

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How a Multi-Carrier Parcel Shipping System Can Help You Combat Rising Distribution Costs:

Net landed cost of goods, the total cost associated with getting goods into customers’ hands, consists of cost of distribution (CoD) and cost of manufacturing (CoM). For years, manufacturers and brands have worked to reduce CoM as the means to reducing their net landed cost of goods to compete and succeed in increasingly competitive marketplaces.

However, this strategy is reaching its limits, and therefore companies are increasingly turning to the often more rewarding, yet complex, opportunity to reduce CoD.

The Complexities of Cost of Distribution

Parcel shipping is experiencing strong – and accelerating – growth worldwide. Global package shipping grew by 48% between 2015 and 2017, and according to FedEx Corp. chairman and founder Fred Smith, B2C e-commerce sales are expected to reach $3.2 trillion by 2020. Global e-commerce sales are predicted to be even higher. This will translate into never-before-seen shipping volumes over the next couple of years.

Adding another layer of complexity: same-day delivery. As of 2017, 51% of retailers offered same-day delivery service to their customers, and the same-day delivery market is expected to grow significantly. While same-day delivery is a big opportunity for all retailers to improve their service level, it requires a high degree of order fulfillment and logistics sophistication. Major challenges, such as very short fulfillment lead-times and flexible last-mile delivery have to be overcome while bringing cost down to a level that consumers are willing to digest.

Put it all together, and the result is carriers are facing unprecedented demand for their services, which in turn forces them to invest in labor, technology and facilities to control volumes and maintain service agreements. Not surprisingly, the carriers have passed these costs on to manufacturers and brands.

UPS and FedEx have both increased published rate tariffs by a minimum of 4.9% per year since 2010, in addition to introducing oversize and handling surcharges as well as dimensional pricing for lightweight and bulky packaging. DHL Express also employed a similar strategy, raising rates by 3.9% in Germany in 2017 to boost services and prepare for future demand.

Achieve Efficiencies in your Distribution Model with Parcel Shipping Systems

For manufacturers and brands that haven’t already, it’s time to examine the impact these trends will continue to make. Any efficiencies achieved in the distribution model can help to offset these rising costs.

The mounting delivery capacity shortage and increasing e-commerce volumes further raise the stakes; shippers who can invest in parcel shipping systems that quickly determine the most efficient shipping option for each parcel they ship – considering delivery deadlines, carrier rates, performance and other factors – stand a better chance of keeping costs in check.

In fact, the right kind of parcel shipping system enables companies to reduce landed costs in four critical areas:

  • Dynamic carrier portfolio management for optimal rate and service selection
  • Carrier-compliant shipment processing that prevents fines due to shipping errors
  • Labor savings by eliminating manual, labor-intensive processes
  • Visibility to audit shipping history and recoup incorrect delivery charges

For businesses with large parcel shipment volumes, the importance of these outcomes cannot be understated. In a recent study by F. Curtis Barry & Company, the cost of shipping for these companies is by far the number-one fulfillment expense, often exceeding the sum of wages, benefits, facilities, utilities and supplies.

Profit is directly linked to how much – or how little – they are able to successfully reduce landed costs, making parcel shipping systems with low barriers to entry and easy scalability an attractive ROI for many.

Parcel Shipping Systems: A Lifeline for those who Want to Compete

As ecommerce continues its breakneck growth and the likes of Amazon keep pushing the boundaries of fulfillment, parcel shipping systems provide a lifeline for those who want to compete.

To learn more about how you can achieve efficiencies in distribution and reduce your net landed cost of goods by leveraging parcel shipping system technology, download our new white paper: The Other Half of your Net Landed Cost of Goods.

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Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. Contact us today. 

Copyright © Logistyx Technologies. All rights reserved.

Fast versus Free Shipping – Consumers Weigh In

It’s one of the hottest topics amongst shippers today – how to protect their bottom line from escalating shipping costs while meeting online shoppers’ demands for service. Read our blog for useful tips.

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Do customers always prefer fast shipping, free shipping or both?

by Paula Heikell

It’s one of the hottest topics amongst shippers today – how to protect their bottom line from escalating shipping costs while meeting online shoppers’ demands for service.

“Free shipping” is the answer most often heafree shippingrd as a top reason why shoppers choose certain e-commerce stores. But is it the only reason? Take a look at this insightful infographic provided by eFulfillment and you’ll see that other factors come into play. According to their data:

  • Free shipping is important, but not as important as low prices.
  • 58% of those surveyed want free or discounted shipping, while 28% want to have a choice of shipping options to select from.
  • A good portion of shoppers is willing to accept longer delivery windows for free shipping.
  • It’s still important to provide expedited shipping as an option.

Possible Solution: A Combination of Free and “Conditionally” Free Shipping Programs

Companies such as Craft Supplies, an online retailer of woodworking supplies, are embracing free shipping to gain a competitive advantage but getting creative to address those situations where free shipping is simply too cost-prohibitive.

Fast versus free shipping
Craft Supplies catalog.

“We were the first in our industry to offer our customers a flat-rates shipping program of $7 for orders up to $150 in value and free shipping for orders over $150 in value,” said Don Dafoe, Vice President of Marketing and IT for Craft Supplies, “To manage this marketing program cost-effectively, we needed to upgrade our shipping system and processes.” Dafoe chose to implement Logistyx Technologies’ multi-carrier shipping software system that allowed him to add USPS shipping – a cost-effective alternative to more expensive carriers.

Other Suggestions for Shipping Programs

Other ideas for win-win shipping programs that serve the customer and your company include:

  • Offer free shipping on standard delivery, but charge a premium for premier services such as expedited or time-specific deliveries.
  • Charge for shipping on low-value products and offer free shipping on high-value products.
  • Provide free shipping options if certain carriers are used.
  • Consider using lower-cost regional carriers, as well as the USPS.

If you’re new to the benefits of regional carriers, learn more by downloading our white paper:  Regional Carriers – A Sound Shipping Strategy for a Competitive Advantage.

These are just a few suggestions to consider. You may come up with some other useful shipping ideas by consulting your internal team, visiting your competitors’ e-commerce sites and talking to other shippers who have similar shipping requirements but are not necessarily in your industry.

Fast vs Free eCommerce Shipping InfographicAn infographic by eFulfillment Service

Leverage Technology

The best way to stay nimble in addressing shipping costs is to eliminate manual shipping processes and manage all your carriers on a carrier-agnostic, multi-carrier e-commerce shipping system. You’ll:

  • Speed up shipment processing while reducing labor costs.
  • Be able to respond to changing customer service preferences much more quickly.
  • Have access to good reporting tools that make it easy to track costs, delivery results and more.

For more information on how to implement a multi-carrier e-commerce shipping system to reduce your shipping costs, contact us today.

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Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. 

Copyright © 2017, Logistyx Technologies. All rights reserved.