E2open Acquires Global Multi-Carrier E-Commerce Shipping Software Platform, Logistyx Technologies. Read More

7 Strategies to Reduce the Cost of Return Shipping

Peak shipping season will be here before we know it.  (Although there’s an argument to be made the current pandemic IS peak shipping season…) And as retailers move towards the end of 2020, returns will predictably increase.  But just because retailers can predict this surge doesn’t mean managing it is easy. Returns management, when left without a strategy, can negatively impact profits.  Consider, shoppers return 15 to 40% of what they buy online, whereas only five to 10% of in-store purchases come back. To further put those statistics in context: in the U.S., Statista reports the cost of returns has increased by approximately 75% in the last four years, and this number doesn’t account for restocking expenses and inventory losses.

Here are seven strategies to simplify returns and control costs:

1. Encourage In-Store Returns and Drop-Offs

If you are an omnichannel retailer and your store has re-opened, you can encourage shoppers to drop returns back to your store. By using existing infrastructure as fulfillment and returns centers for online consumers, retailers can reduce shipping costs and increase customer footfall. Buy Online Return In Store (BORIS) not only costs less for retailers, but pre-pandemic, many customers preferred it. Case in point: a 2018 UPS study reported 58% of shoppers in the US prefer returning an item to a store. The same is true for 45% of Europeans and 64% of Canadians.

2. Plan Ahead with Return Labels

Consumers want convenience when it comes to returns, and multi-carrier shipping software enables retailers to meet this need. Multi-carrier shipping software will automatically print the appropriate return shipping labels when the order is fulfilled.  Retailers then place those return labels into the cartons, enabling a simple, fast, and seamless return process regardless of whether the consumer returns the product to the store or ships the product back to the retailer. And while convenient for the consumer, equally beneficial is the retailer’s ability to pre-select the carrier service that makes the most financial sense for return shipping, thereby controlling transportation costs and minimizing return shipping errors.

3. Deliver Parcels On-Time

ebook logistyx quadrant Choosing a TMS for Parcel ShippingThirty-eight percent of seasonal and holiday purchases are returned, and one factor contributing to this statistic is late delivery. Who needs holiday presents after the holiday? Multi-carrier shipping software with a Control Tower helps retailers ensure goods reach customers as promised, even during peak season.  The Control Tower will send early warning signs when there are parcel delivery issues or “exception events,” empowering customer service teams to proactively trouble-shoot the exception event and communicate delivery updates to the customer in real time. For example, perhaps the product can be sent from a different distribution center to arrive on time. Or perhaps the customer is willing to retrieve the product from a nearby store or locker. Customers can even track and trace shipments on company websites without the need to visit carrier sites, reducing inbound calls about shipment status to customer service and increasing the customers’ browsing behavior on the retailer’s website – which (fingers crossed!) could lead to additional purchases. Consider too that tracking delivery exception events enables retailers to capture accurate carrier performance data – improving carrier service measurement and better informing carrier contract negotiations.

4. Track Returns

Returns present retailers with an inventory problem, because any products that are in the hands of the consumer, pending return, or in the process of being returned, is inventory that is unavailable to refurbish or redistribute.   However, as long as retailers are tracking parcels on the outbound shipping leg, they can use the same system to give them visibility over return shipments – and available inventory for resale – from the moment they are collected until the moment they arrive back at the warehouse.

With an accurate picture of expected return volumes, retailers can assign an appropriate level of workers and resources to manage the returns and ensure the goods can be swiftly put back in stores or warehouses for resale.

Moreover, tracking returns protects both the customer and the retailer. For example, some retailers now provide a refund to the customer as soon as the carrier scans the return parcel.  While there is a level of risk to the retailer because the product might not be in good enough condition to put back into stock, customers are more likely to be loyal if they know they will be refunded quickly.  In the UK, for example, an increasing number of retailers are starting to accept Klarna, a service that makes it possible for consumers to avoid paying a retailer altogether for a purchase they subsequently return.

5. Don’t Overlook International Customers

Cross-border retail is becoming the norm. E-commerce platform Shopify reported 57% of shoppers worldwide make international purchases.  While good for revenue, this complicates returns.  Some carrier networks manage returns better than others, and therefore return shipping processes aren’t standardized across the world.

Therefore, it’s important to build a returns process that accounts for cross-border commerce, and multi-carrier shipping software can help.  For example, retailers using a single carrier for outbound shipments may need to consider alternate carrier networks for returns. With multi-carrier shipping software, retailers can rate shop the return delivery options of global carriers in their transportation network and select the services that will satisfy customers at the lowest cost.

6. Take Care of the Environment

Most retailers want to re-sell returned items when they come back in good condition. In some cases, however, warehouse managers lack concrete guidelines for determining when a return can be re-stocked and when it can be destroyed.  Unfortunately, approximately 30% of returns end up in a landfill. Scrapping items that could be re-sold, even in a secondary market, impacts profits and takes a toll on the environment.

7. Avoid the Returns Process Altogether

Some companies are trying to avoid returns altogether, with wrong or lost orders replaced at no cost to the consumer.  For example, in the United States, pet supplier chewy.com asks customers to donate any incorrect orders to a local animal shelter.  Why would they do this?  They avoid the cost of dealing with the return, which may be higher than the cost of the new delivery. And in the case of prescription medications, seasonal products, or those with a short expiration date, the retailer may be unable to process and resell the products within a suitable timeframe.

Find the Right Technology Partner to Optimize Returns

In times like these, retailers need a partner in the logistics space on whom they can count – one who can help streamline the returns process and reduce transportation and operational costs.  Ready to find that partner? Talk to a Logistyx expert today.

EPSNews: COVID-19 Pandemic Creates Persistent Uptick in E-Commerce

With COVID-19 restrictions prohibiting brick-and-mortar retail, online shopping is experiencing significant growth and could be poised to exceed the typical 20 percent annual worldwide growth figure e-commerce experienced over the last 10 years.

For instance, COVID-19 inflated electronics prices for the first time in years, with sales up 58 percent online, according to Adobe’s Digital Economy Index (DEI). With many consumers sheltering-in-place and setting up home offices and classrooms, electronics like computers, webcams and audio equipment have been in high demand.

In a recent article for EPSNews, Logistyx Technologies President Ken Fleming discusses the many ways the COVID-19 pandemic has propelled e-commerce and how adopting cloud shipping technology can provide retailers the flexibility to adjust to subsequent changes and help them minimize order fulfillment costs. For example, growing customer expectations, rising competition in the marketplace, and the increased prevalence of supply chain disruptions compelled many retailers to embrace digitization and pivot to an omnichannel model that includes a strong e-commerce strategy.

With e-commerce surging amid the pandemic, Ken also shares various shipping scenarios retailers can implement – such as Buy Online, Pickup in Store (BOPIS) – to adhere to social distancing recommendations, while offering customers cheaper delivery options to keep costs in check.

Even as COVID-19 outbreak restrictions gradually ease, many consumers may be reluctant to return to shopping in stores, likely leading to a sustained uptick in e-commerce through the remainder of 2020 and beyond. Retailers can find long-term success by viewing e-commerce as a key sales channel and identifying how they can make omnichannel order fulfillment better.

Read Ken’s full article on EPSNews: “How the COVID-19 Pandemic is Driving E-Commerce.”

CustomerThink: 5 Simple Tactics for Saving on E-Commerce Shipping

As e-commerce increases and choice in retailers continues to grow, keeping costs in check while striving to meet customers’ exacting expectations can be difficult. Retailers generally want to keep shipping and packaging costs as low as possible to save money, while customers want safe packaging of goods and fast delivery times.

In a recent article for CustomerThink, Logistyx Technologies Vice President of Marketing & Communications Lisa Henthorn shares five fundamental shipping tactics e-commerce businesses can implement to reduce costs and satisfy customers’ demands. Lisa explores key shipping methods like selecting cost-efficient packaging, identifying a logical shipping method, consolidating orders, using predictive analytics data, and planning for returns.

Laying the groundwork with these simple, yet effective tactics helps businesses ensure their e-commerce shipping strategy connects seamlessly to maximize cost savings and better serve customers.

Read Lisa’s full article on CustomerThink: “How to Save on E-Commerce Shipping.”

How the COVID-19 Outbreak is Driving E-Commerce

For the last ten years, e-commerce worldwide has been increasing by approximately twenty percent each year. While it’s too early to tell what e-commerce growth for 2020 will be, with COVID-19 restrictions prohibiting brick-and-mortar retail, online shopping is experiencing significant growth and we may be poised to exceed the twenty percent figure.  In fact, retail platforms globally experienced a six percent increase in traffic between January and March alone.

Furthermore, history suggests a sustained uptick in e-commerce is likely. In the early 2000s, the SARS outbreak made e-commerce platforms such as Alibaba and JD.com household names–and neither platform has since forfeited their winning positions.

Omnichannel Models Build Resiliency

Many traditional retailers were struggling before the Covid-19 outbreak. The confluence of competition from online retailers, changing shopping behavior, and unpalatable operating costs such as rent and insurance, created a formidable marketplace.  Throw an unforeseen pandemic into the equation, when retailers that rely on in-store sales can no longer sell their goods, and suddenly it seems inevitable that some retailers will disappear.

New call-to-actionThe pandemic has really highlighted the importance of digital transformation. Retailers with a strong e-commerce strategy have had more flexibility than their brick-and-mortar counterparts and are therefore more likely to survive a supply chain disruption–and many retailers are not only surviving but thriving in the current environment. For example, reports suggest consumers are now spending approximately $11,000 per second on Amazon. And Amazon isn’t an outlier. Retailers such as Wayfair and Bed, Bath & Beyond are also thriving. In fact, Wayfair more than doubled online sales in March.

As the COVID-19 outbreak restrictions ease, forward-thinking retailers will learn from these examples and embrace digitization, moving to an omnichannel model that includes e-commerce channels. Growing customer expectations, rising competition in the marketplace, and the increase in the prevalence of supply chain disruptions leave them no other choice.  But to successfully pivot to an omnichannel model, retailers will need to look beyond website and marketing technologies in their digital transformation and also make investments in the right supply chain technology.

Cloud Multi-Carrier Shipping Technology Builds Agility

Any retailer pivoting to an omnichannel model that includes e-commerce will need to minimize order fulfillment costs. Shipping products to consumers is expensive, particularly in the last mile, and post-pandemic, decreasing net landed cost of goods will be critical. This means retailers will have to examine their parcel shipping operations and implementing and optimizing a multi-carrier parcel shipping strategy will be a key ingredient in cost control.

In a multi-carrier parcel shipping strategy, retailers contract with multiple carriers and then “rate shop” carrier services so they use the most cost-effective shipping option according to their business rules, shipment delivery location, package size, and shipment delivery window. To do so, the retailer utilizes a cloud multi-carrier shipping system, which goes beyond anything a single carrier-supplied parcel shipping system can accomplish.

For example, cloud multi-carrier shipping software enables retailers to easily use “zone skipping” to improve customer service and decrease transportation costs. Zone skipping occurs when multiple customers’ orders are consolidated for the first leg of the delivery journey and then inserted into a parcel carrier network for the last-mile delivery. This is especially beneficial for cross-border shipping because it significantly simplifies end-to-end logistics and decreases customs clearance costs.  The approach also provides greater flexibility since retailers can select local carriers in different countries and regions that have optimal delivery networks for serving their customers.

Importantly, multi-carrier shipping software also ensures retailers have the right mix of carrier services in their transportation strategy from the onset.  The software aggregates and normalizes shipping data across carriers, so retailers know when deliveries moving to a particular region, customer, or via a particular carrier are not meeting service levels. Retailers can hold carriers accountable for failing to meet expectations and wield hard data to back up rate negotiations, and they can consolidate carriers to ensure they get the best possible price.

Finally, integration between a multi-carrier shipping system and other supply chain systems, including an ERP, WMS, and OMS, increases responsiveness.  This means when supply chain disruptions occur or customer preferences change, retailers have the flexibility to execute­ any number of parcel shipping scenarios:

  • Buy online, pick-up in store (BOPIS)
  • Buy online, drop ship
  • In-store purchase, home delivery
  • Ship from store
  • Drop ship
  • Buy online, return in store
  • Same-day/on-demand delivery

When parcel shipping technology is integrated to other systems of record, retailers enhance the flow of products both within and without facilities, turning operations toward omnichannel success and future proofing the organization against additional changes to come.

E-Commerce Play During COVID-19: Buy Online, Pick Up in Store (BOPIS)

The costs associated with both final mile delivery as well as returns can have a substantial impact on retail margins. Therefore, as e-commerce has increased, many retailers have encouraged customers to consider cheaper delivery options such as “Buy Online, Pick Up in Store” (BOPIS) to keep these costs in check. Under normal conditions, BOPIS increases store traffic, creates an opportunity for additional purchases, and allows customers to return the item while in-store.

During the COVID-19 outbreak, retailers such as The Home Depot, Lowes and Michaels have leaned heavily on BOPIS, offering curbside pick-up to adhere to social distancing recommendations. In addition, a large number of retailers have partnered with carriers to widen their pick-up location footprint. For example, Walmart customers can retrieve their online orders from a FedEx location, and retailer Michaels has a partnership in place with UPS.  As BOPIS is increasingly adopted by more retail chains, it could easily become a fulfillment staple once the coronavirus curve flattens.

Pandemics Like COVID-19 May Fade, but E-Commerce Will Remain

Our current situation will have lasting effects, one of which could be a greater-than-anticipated increase in e-commerce. Retailers that are currently looking at e-commerce as a key sales channel and identifying how they can make omnichannel order fulfillment better are going to win in the long-term.  To learn more about how a multi-carrier shipping system can meet your e-commerce shipping needs, watch our expert video.

Logistics Viewpoints: Omnichannel Retailers Skillfully Adapt in a Crisis

As early as February, omnichannel retailers were responding to the COVID-19 outbreak, initiating contingency plans for redirecting inventory to retail stores in other regions to diminish fallout. Large scale changes of this nature don’t come easily for most retailers, but those with truly integrated omnichannel systems can see, project demand for and shift inventory with relative ease, just one of the many ways omnichannel retailers can respond to a global pandemic or any number of disruptions that global supply chains may encounter.

In a recent article for Logistics Viewpoints, Logistyx Technologies President Ken Fleming shares how omnichannel organizations had many more options available to them to initially react to the pandemic and look ahead to recovery and preparation modes.

With an eye on how quickly the world in which we operate can change, more retailers have come to realize the benefits of a dynamic, multi-carrier approach to order fulfillment and parcel shipping, along with using fulfillment analytics to improve the process for critical decision making.

Learning from the examples of others, many retailers are laying the omnichannel groundwork to lessen the impact of this pandemic and better prepare for possible disruptions going forward.

Read Ken’s full article on Logistics Viewpoints: “Powerful Reactions: Omnichannel Responds Well in a Crisis” and drop us a line for assistance in preparing for the next supply chain disruption.

Are you Confident in your Omnichannel Retail Strategy?

Retailers, even those with mature omnichannel strategies, can have doubts. A successful omnichannel approach — the model of ordering, shipping, receiving, and returning products in absolutely any channel — requires an optimal balance of e-commerce, brick-and-mortar retail, and fulfillment and distribution capabilities.  For example:

  • Buy online, pick-up in store
  • Buy online, drop ship
  • In-store purchase, home delivery
  • Ship from store
  • Drop ship
  • Buy online, return in store
  • Same-day/on-demand delivery

It’s a difficult balance to reach.

And as consumer demands for lightning-quick delivery times continue to grow, tackling an omnichannel strategy is critical to remain competitive. However, as retailers refine their strategy, they often miss one factor that will make the model more successful and allow for rapid scale of business operations.

Want to learn what it is? We’ve got the answer.

What are Retailers Missing in their Omnichannel Strategy?

Many retailers already have most of the necessary components to execute an omnichannel strategy: premium websites, advanced order management systems, and optimal customer service processes, to name a few; yet, even some of the top retail giants are still running their warehouse operations through carrier-supplied parcel systems.

If you haven’t updated your parcel shipping capabilities in the last ten years, then you could be in their company.

What benefits are retailers missing without a modern parcel shipping system? Two big ones: excellent customer service and a high profit margin. Parcel shipping is arguably one of the most important pieces of the omnichannel puzzle — and it affects both customer service and profit margin outcomes alike. And too many businesses continue to overlook its significance.

How Carrier-Supplied Parcel Shipping Systems Stall Your Business Operations

Successful order fulfillment goes beyond order management and warehouse management. A parcel shipping system is actually responsible for a big piece of the puzzle: how, and how quickly, the order gets to the consumer. However, older, carrier-supplied parcel shipping systems aren’t conducive to exponential growth in multiple sales channels, nor do they empower the shipper to easily leverage a multi-carrier shipping strategy–leaving opportunities to rate shop for low-cost, efficient delivery methods untapped and introducing unwanted costs into the distribution model.

The impact? Slower delivery times and higher costs getting your product to the consumer. And as shipping volumes increase, these costs add up and the consequences can seriously affect your bottom line.

A Cloud Parcel Shipping System is the Modern Alternative to Carrier-Supplied Parcel Shipping Systems

If you’re striving to scale your business, while optimizing customer service and increasing profit margins, it’s time to revisit parcel shipping. An effective omnichannel strategy must include a cloud multi-carrier parcel shipping system, which goes beyond anything a carrier-supplied parcel shipping system can accomplish.

Cloud multi-carrier parcel software seamlessly integrates with a retailer’s system of record to automate high volume, multi-carrier, omnichannel shipping.  It automatically selects the right carrier service for each order according to carrier contracts and business rules; creates or acquires the tracking, labels, and documents;  monitors delivery events and automates event exception workflows; manages the manifest and end-of-day processes; and analyzes carrier performance.  Retailers can satisfy customers’ delivery requirements and drive down the cost of shipping–transforming logistics into a profit center within the business.

Furthermore, cloud multi-carrier parcel software also ensures retailers have the right mix of carrier services in their transportation strategy from the onset.  The software aggregates and normalizes shipping data across carriers, so retailers know when deliveries moving to a particular region, customer, or via a particular carrier are not meeting service levels. Retailers can hold carriers accountable for failing to meet expectations and wield hard data to back up rate negotiations, and they can consolidate carriers to ensure they get the best possible price.

New call-to-actionIf your parcel shipping capabilities don’t align with your omnichannel retail strategy, you’re likely missing out on potential benefits and impeding the scalability of your businesses. And even if you think your omnichannel strategy is mature, it may be time to revisit the latest tools and technology to further advance your approach.

Multi-channel Retail or Omni-channel Retail: What’s the Difference?

When online shopping, customers have the luxury of placing small, frequent orders, and they can demand shipments be delivered with Amazon-like speed directly to their doorsteps, workplaces, or other convenient pickup locations. And as choice in retail continues to grow, customer loyalty is harder to secure. On-time delivery to the customer’s destination of choice can make or break an opportunity for repeat business, and retailers are increasingly dismayed to discover that one delivery delay can lead customers to purchase from another online merchant.

As merchants strive to meet customers’ exacting expectations, endlessly chasing Amazon’s same-day/next-day delivery model, many deploy either a multi-channel retail or omni-channel retail distribution strategy to optimize success.  Here we explore how the two models vary when it comes to customer experience, and how they’re vastly different when it comes to back-end operations, from warehouse fulfillment centers to shipping delivery timelines.

What is multi-channel retail?

Multi-channel retail centers around the product, placing it in places of prominence, both physical and online, to create more sales opportunities. The assumption is customers will choose the channel that best meets their needs.

The upside?  The customer has multiple channels by which to discover and purchase their product, and the retailer has many sales channels at their disposal. The downside?  In a multi-channel strategy, all channels may be available, but not all are integrated. Each sales channel is often managed as an independent silo, from order processing to fulfillment and shipping. The customer has separate purchase opportunities, but lacks a seamless purchasing and shipping experience.  For example, buying online and picking up in the store is difficult for a retailer to execute and may not be available to customers.

What is omni-channel retail?

New call-to-actionIn an omni-channel retail model, the customer experience and brand equity are front and center. The goal is to leverage various sales channels to formulate a seamless purchasing and shipping experience for the customer.  In other words, the omni-channel model accounts for the entire purchasing process, from the customer first discovering the product… to ordering the product… to receiving the product, with fluid movement between sales channels. A customer can easily order a product online and pick it up in the store… or purchase the product in the store and deliver it to their home… or order it from one store and pick it up in another. Warehousing, order, and delivery data are synchronized between each channel, providing the retailer with full transparency into inventory and into how the order moves through the retailer’s fulfillment and shipping processes.

The Impact on Order Fulfillment & Shipping

The warehouse process, while not visible to the buyer, plays a major role in the customer experience. Every shipment is a key point for customer engagement, and the fulfillment process can make or break the experience. Failure to fulfill an order accurately and/or deliver it on time where promised, and all bets are off.

Multi-channel Fulfillment

In the multi-channel model, product fulfillment and shipping are carried out separately through each channel. These siloed processes can increase time and costs; in fact, order data in one channel often doesn’t reach other sales channels, causing the retailer to miss cost-saving order consolidation and streamlined shipping opportunities.

Omni-channel Fulfillment

The omni-channel model offers a more flexible fulfillment and shipping experience for both the merchant and the customer. By leaning on a variety of order completion strategies, omni-channel fulfillment allows the retailer to choose the shipping and fulfillment option that makes the most sense for each order.  For example, the merchant can fulfill an order directly from a store… or from a distribution center… or by moving inventory from a distribution center to a store and then fulfilling the order from the store. In doing so, the merchant is better positioned to meet customer expectations for delivery timelines and accuracy.

With the right omni-channel strategy in place, retailers can establish an approach that improves customer service and profitability. Plus, by centralizing all product data in one database, the retailer can offer more flexibility, choice, and accuracy in the shopping experience.  Stock-outs are less likely to occur, and customers can receive real-time information regarding a product’s availability at a designated location.

Omni-channel Strategy is the Key to Streamlined Operations

Today, one of the keys to success for modern retailers is the ability to achieve cost-effective parcel shipping while meeting stringent delivery demands.  Without an omni-channel strategy in place, this becomes difficult and the customer experience can suffer.

It’s time to improve the experience for all of your customers by implementing an omni-channel retail and fulfillment strategy that connects sales channels, payment methods, fulfillment, and shipping.

Need assistance implementing or modernizing your retail omni-channel fulfillment strategy?  Get in touch with a Logistyx expert today.

Ken Fleming’s Comments on Cross-Border Parcel Shipping Featured in Total Retail’s “50 Best Retail Tips of 2019”

For retailers competing in today’s fast-paced, omnichannel landscape, staying on the cutting edge of emerging topics in the complex supply chain industry is key. So, when questions begin to outpace answers, where can retailers turn for reliable insight? Explore Total Retail’s “50 Best Retail Tips of 2019” report, featuring commentary from company President Ken Fleming on international shipping strategy.

Ken’s insight helps retailers save money through consolidation and awareness of the fees and surcharges that accompany cross-border shipping. Along with his advice, the report contains key points from other industry professionals on their retail strategies. Topics of interest include e-commerce, marketing, technology, returns, and more.

Add to your growing knowledge of retail best practices with tips from Ken and all of Total Retail’s featured industry leaders. Download the full “50 Best Retail Tips of 2019” report for free.

Do you Have the Right Omnichannel Fulfillment Strategy in Place?

Behold: “the omni-channel customer experience.” The number of articles written about this topic every day is enormous.  Proof positive: there are 29,800,000+ hits in Google on the subject, with headlines that talk to everything from the continued growth of omnichannel fulfillment worldwide (both in volume and in channels)… to Gen Z’s – ease with e-commerce… to the necessity of building a seamless customer experience and a powerful brand by involving not just the entire supply chain, but the entire organization.  Long story short, your customer cares about one thing: to get their goods when, where, and how they want them.

As David Hogg, VP Business Development at Logistyx, points out in a recent article on Internet Retailing, taking a strategic – not a reactionary – approach to omni-channel distribution is the key to identifying opportunities to consistently achieve same-day/next-day delivery and thereby improve customer service as well as profitability.  But while the promise of omnichannel is a win-win for consumers and retailers alike, many build an omni-channel fulfillment strategy via a series of year-over-year IT projects and revised business processes instead of fundamentally redesigning the fulfillment model to optimize the customer experience and minimize the cost of increasingly complex supply chain processes.  For example, by taking a re-design approach, retailers can connect assortment planning for online and in-store with demand planning – optimizing inbound delivery and inventory allocation. As a result, delivery from warehouse to consumer, from store to consumer, from store to store, and from warehouse to a pick-up point can be optimized for last mile fulfillment.

Read David’s full article on Internet Retailing, Omnichannel Fulfillment: The Never-Ending Delivery.

Want to learn more? Visit Logistyx at booth #C30 at Home Delivery World in Amsterdam, March 19-20, and plan now to attend David’s presentation, Make your Shipping Data Work for You, on March 19 at 13:10.

Omnichannel Fulfillment: The Never-Ending Delivery

Omnichannel retail has been implemented to varying degrees over the last seven or eight years.  The concept really became viable with the advent of robust, easy-to-use mobile phones and tablets, which for in-store associates, were convenient gateways to successful clienteling and inventory management applications.  These devices helped expand the sales floor beyond the physical store, and enabled associates to sell products directly from the fulfillment center.  Suddenly, stores were no longer “islands” of inventory exclusively sold through a POS system, and in-store sales were limited not by the number of products on the shelves, but by the number of products available within a retailer’s entire inventory ecosystem.

Essentially, omnichannel was a win-win for consumers and retailers alike.  Consumers had ready access to products, and retailers’ ability to sell products grew exponentially.

Building an Omnichannel Distribution Model

For today’s leading retailers, inventory is typically treated as both global and virtual in nature – open to almost any sales channel whether online, in-store, a call center, and/or a wholesaler.  And retailers are looking to fulfill orders to these destinations from any number of points of origin: a warehouse, a mini-urban distribution center (DC), a proprietary store, a locker, a 3rd party store, and/or a drop-ship supplier.

But building this omnichannel fulfillment distribution model isn’t easy.  Retailers have typically become “omnichannel capable” only through a drip feed of annual IT projects and revised business practices.  And even when larger business process and IT landscape changes have been sent into motion, such as new mobile POS systems, order management solutions, or mobile and cloud native commerce platforms, customer processes and fulfillment operations tend to be adjusted year-on-year rather than end-to-end.  This means retailers are missing opportunities to see whether processes can be fundamentally redesigned to optimize the customer experience and minimize the cost of increasingly complex supply chain processes (which are often executed with manual labor in several small fulfillment centers).

New call-to-action

For example, retailers tend to overlook planning processes that are the foundation of best practice supply chain management.  Assortment planning for online and in-store may remain disconnected, and in turn, demand planning for online and in-store remains disconnected.  In this environment, retailers will have sub-optimal procurement, where purchase orders from different channels land in suppliers’ inboxes as though they’re from two different companies.  Now, the retailer can’t optimize inbound delivery and inventory allocation, adding costs into the supply chain for both suppliers and retailers – a genuine lose/lose scenario.

Moving on [pun intended!] to last mile fulfillment, delivery from warehouse to consumer, from store to consumer, from store to store, and from warehouse to third party location for collection by consumer, all tend to suffer from a similar tactical impairment.  The approach is almost always, “Gee, we need to bolt on shipping to the e-commerce, order management, or aging warehouse system.  Go find one or have the IT program do a bespoke integration project with FedEx, etc., etc., etc.”  While this may address the short-term problem, it misses so many opportunities that it almost causes our V.P. of Business Development (and the author of this post!) sympathy pains.

So, what sort of opportunities are being missed?  Here are just a few examples:

  1. Optimizing the customer experience.  This is pretty fundamental.  Very few companies allow their customer to select their preferred last mile delivery carrier.  Modern multi-carrier systems can do this and still meet customer SLAs while controlling costs to meet internal profit objectives.
  1. Childlike sourcing logic for ship from store and store collections.  Most retailers use order management systems to make sourcing decisions, based on the customer’s postal code and inventory availability.  But the OMS/e-commerce systems have no history of their stores’ and their carriers’ operation/execution competence.  They certainly don’t take this into account in the sourcing logic for fulfillment, and thereby the retailer increases the likelihood of creating a negative customer experience – allocating to stores that are poor at shipping or using carriers that are habitually late, for example.
  1. Shipment order tracking.  When a retailer simply provides the customer with a tracking URL from the carrier, the retailer can’t proactively alert customers of delivery events in advance.  Instead, the retailer should build the technical infrastructure (cough, TMS for parcel shipping with a Control Tower, cough) that allows the retailer to capture – and act on – carrier status messages.
  1. How can a retailer quickly make product re-available for sale during peak season?

Put the Right Omnichannel Fulfillment Strategy in Place

The list of perils that can befall a retailer when tackling omnichannel distribution with a short-term mindset are leaving plenty of lost opportunities on the table.  But putting the right omnichannel retail strategy in place provides the direction many leading retailers need to successfully transition to a fulfillment approach that improves customer service and profitability.

Download our white paper: Omnichannel’s Missing Link, to learn more.

Logistyx in Multichannel Merchant: As Omnichannel Retailing Grows, Merchants Move Closer to Customers

get the ebook: omnichannel merchants shift closer to the consumerOmnichannel customers may account for only a small portion of retailers’ patrons, but they represent a hefty portion of sales by ordering more often than others. To better accommodate these omnichannel customers’ preferences, many retailers have begun to adapt their fulfillment processes by providing more convenient physical locations and pickup sites, 3D print & ship capabilities, manufacturer direct shipping, and more.

In a recent Multichannel Merchant article, Logistyx Technologies President and Chief Sales Officer Ken Fleming highlights this growing retail trend and the ways in which merchants are getting closer to customers to improve service and ensure profitability.

With the right enterprise parcel shipping and distribution software solutions equipped to handle the new omnichannel paradigm, retailers can increase efficiencies and build closer relationships with consumers to drive success.

Read Ken’s full article on Multichannel Merchant:Omnichannel Merchants Shift Closer to the Customer.”

Perception is Everything: Free Shipping Solutions Don’t Have to Drain Profits

Offering free shipping does not have to cost a fortune when embedded into the initial listing price. In fact, this approach can be an effective way to increase sales without spending any extra at all. When customers see “free shipping,” they become more inclined to buy. To win over these customers without breaking the bank, sellers can embed shipping costs into listing prices and take simple steps to minimize those costs to further boost profitability.

Why sellers should consider offering free shipping

Today, customers increasingly expect free shipping options and will likely choose sellers that offer free shipping when the delivery date is similar to that of sellers who charge for shipping. By embedding shipping costs into prices, shopper perceptions and sales often improve at no cost to the seller.

New call-to-actionMany customers, for example, would rather buy a $15 lamp with free shipping than a $10 lamp with $5 shipping. Whether it costs them the same or not, many customers simply want to eliminate shipping costs from the shopping experience.

Ecommerce Foundation included comments from Etsy CEO Josh Silverman in its U.S. Ecommerce Report, 2018 that illustrate how this dynamic plays out in the marketplace for handcrafted, vintage, custom, and unique goods.

We know that shipping remains one of the top friction points in our marketplace. For example, in the third quarter, less than 20 percent of listings on Etsy offered free shipping and our research suggests that buyers perceive about half of the items in our marketplace as having high shipping prices. It not only impacts conversion rates on those items, it also damages the brand perception of Etsy overall.

When it comes to speed, however, some customers do not mind paying a bit more to get their purchase sooner, especially when standard shipping is free.

A survey featured in Ecommerce Foundation’s U.S. Ecommerce Report, 2018 from Statista, Temando, and Research Now shows demand for various express shipping options and that consumers are at least somewhat more willing to pay for express shipping.

Embedding the cost of standard shipping can help keep prices for express shipping options low and appealing to customers who look for these options. If sellers offer free shipping by embedding these costs in the listing price of products, they typically only charge a few extra dollars on top of that for expedited shipping and avoid losing shoppers due to high shipping prices.

Paying $3 for expedited shipping on a $15 lamp beats $8 for expedited shipping on a $10 lamp.

How to make embedded shipping cost-effective

Even when customers cover the embedded shipping costs, sellers should prioritize securing the most cost-effective carrier service. Multi-carrier shipping technology ensures the best carrier service for every parcel. Depending on proximity, for example, ground shipping can often get a parcel to its destination just as fast as overnight shipping. In this scenario, multi-carrier shipping technology can filter out unnecessary, expensive options as a result of more-informed decision-making.

Multi-carrier shipping technology can also help sellers avoid unexpected custodial fees incurred by bad addresses and non-compliant labels. When things do go wrong, it provides proactive notifications related to delivery status, disturbances such as weather events, or other problems that may arise.

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As shipping costs and fees shrink, substantial savings can be “reinvested” to keep product prices low and competitive while still embedding free shipping costs. Doing so boosts customer satisfaction, increases margins, and makes sellers more profitable.

Sellers should not shy away from free shipping

The fear of high costs should not deter sellers from offering free shipping, which can drive sales for retailers and manufacturers.

For retailers, embedded free shipping often means higher sales at no extra cost. For manufacturers, embracing this concept in their own direct sales and encouraging resellers to do the same leaves room for exponentially more product sales. When implemented the right way with the help of multi-carrier shipping technology, free shipping boosts shopper perceptions and profitability for many sellers.

Learn more about Logistyx’s multi-carrier shipping technology: TME.