If your fulfillment team ships all next-day deliveries via overnight carrier services, you are almost certainly overpaying carriers and adding to your cost of distribution. This is especially true during the holidays when consumers’ love of buying electronics goes into hyperdrive.
With the holiday shopping season in full swing, electronics remain a top holiday gifting choice, according to the Consumer Technology Association. Technology spending in the U.S. during the 2019 holiday season is projected to reach $97.1 billion in revenue with 186 million U.S. adults (74 percent) planning to purchase a tech product as a gift this year. The top tech gifts on consumers’ wish lists include laptops, smartphones, televisions, tablets and wearables. Smart home devices and wireless earbuds stand out as other popular, fast-growing technology product categories, with more than half (59 percent) of consumers expected to purchase a smart home product and 8 million units of wireless earbuds expected to sell, a 45 percent year-over-year increase.
Holiday retail sales are likely to increase between 4.5 and 5 percent in 2019, according to Deloitte’s annual holiday retail forecast, with e-commerce sales also projected to grow by 14-18 percent year-over-year. As sales (and shipping) volume rise within the peak holiday shopping season, so do the stakes. Electronics retailers need to be attentive to the potentially heightened expectations and challenges that come with transporting high-value tech products this time of year. Deliveries need to be on-time to keep customers happy, particularly as consumers increasingly demand same-day or next day delivery and expectations include special holiday offers and discounts. E-retailers also need to be conscious of overpaying for shipping and fulfillment, which can significantly reduce margins.
To properly address these and other holiday shipping concerns head-on, e-retailers should consider the following fulfillment tips to boost service and cut costs.
Select the most appropriate carrier service for each order
Securing the most cost-effective carrier service depends on a variety of factors, including delivery deadlines, package destination, carrier rates, performance and other critical considerations. Selecting from a wide network of carriers offering multiple delivery services allows sellers to address each of these factors and meet customer expectations while cutting costs.
So how can e-retailers select the most appropriate carrier service for their needs? It starts with understanding what it takes to provide the promised service while not overspending. For instance, if next-day arrival was promised, it may not require an overnight carrier service. Depending on proximity, ground shipping can often get a parcel to its destination just as fast as overnight shipping at much lower costs.
Many shoppers seek special offers during the holiday season, including free and expedited shipping. To effectively cater to customer preferences, e-retailers can set the terms without breaking the bank by requiring shoppers to reach certain spend levels to qualify for free shipping or offering two- or three-day delivery as the free option. When it comes to speed, however, some customers don’t mind paying a bit more to get their purchase sooner. E-retailers can charge a reasonable fee for expedited shipping or even embed shipping costs into listing prices to minimize costs and boost profitability. If sellers offer free shipping by embedding costs in the listing price of products, they typically only charge a few extra dollars and avoid losing shoppers due to high shipping prices. Paying $3 for expedited shipping on a $15 Bluetooth speaker beats $8 for expedited shipping on a $10 speaker. Even when customers cover the embedded shipping costs, sellers should prioritize securing the most cost-effective carrier service.
Assess and address the impact of accessorial charges
Addressing accessorial fees can also deliver instant and significant savings, and problems can often be corrected automatically. Some of the most common accessorial charges include residential surcharges, fuel surcharges, bad address penalties, extended area surcharges, third-party account number penalties, large package surcharges and more.
To assess the potential impact of accessorial charges, e-retailers first need to determine the total costs of distribution (CoD) per parcel by factoring in key shipping considerations like delivery timelines and carrier rates. Once all factors are weighed, e-retailers can better understand what percentage of CoD accessorial charges represent and pinpoint exactly which charges and carriers trigger the most fees. Upon identifying and quantifying those issues, e-retailers can enact plans to overcome them and clarify the potential ROI of correcting them.
Make tracking and visibility a two-front initiative
Consumers not only require fast delivery and free shipping for holiday orders, many shoppers expect to know the exact status, location and ETA of their package at any given time. For shoppers purchasing high-value electronics to gift for the holidays, parcel delivery transparency is key. For many e-retailers looking to establish and maintain customer loyalty, this means providing seamless visibility with real-time shipment data and package tracking capabilities, along with positioning customer service teams to monitor and proactively address problems to deliver exceptional customer service.
Automated shipping technology delivers – no magic sleigh required
To successfully achieve the fulfillment requirements of holiday shoppers, e-retailers need to consider shipping volume and needs. The smallest shippers may opt to do this work manually, while the largest shippers (like Amazon and others) may build it all themselves (including the fleets). For others, multi-carrier parcel shipping technology can automate this decision-making process.
According to a June 2019 Gartner report, choosing the right technology depends on a wide range of factors, such as type of end user, scope of transportation, freight mode, region where the transportation management system (TMS) will be implemented and shipper size (measured in freight spend). So, e-retailers should assess the most essential features when considering a parcel shipping solution, including:
- A large carrier services network
- An open platform that integrates with other systems
- Multiple integration options
- Control Tower and real-time reporting
- Cloud-based capabilities
- Optimal security
- Mode of transportation support
- Post-implementation support
Ultimately, the goal of any parcel shipping optimization effort is to help meet delivery commitments in the most efficient way – a top priority for e-retailers shipping high-value goods at the holidays. An automated TMS for parcel shipping can empower e-retailers to fulfill more orders at lower shipping costs, overcome obstacles to enhance customer service and make scaling holiday sales possible.