Retailers: Is your Transportation Strategy Ready for Peak Season?
Peak season is always stressful for the retail industry, but the COVID-19 pandemic could create more issues than usual. Retailers can no longer rely on their usual playbooks, with planning cycles completely upended. For example, there is currently as much as an eight-month lead time for goods from China, and most companies haven’t placed orders, waiting to see the extent to which the pandemic will subside and economies will stabilize. And even if businesses place orders today, can suppliers fulfill these orders given the disruptions in their own supply chains?
2020 will yield a very different peak season, with retailers firing marketing engines to promote whatever goods they can get their hands on and even re-marketing unsold spring and summer merchandise as the new “it” items for fall and winter. And will consumers even be willing to shop in-store during peak? Safety and social distancing protocols will remain for the foreseeable future, likely with limits on the number of customers allowed in a store at a given time. It’s conceivable brands will forego big in-store sales to avoid overcrowding and retailers will reduce changing room capacity to enforce social distancing. These shifts in the in-store experience, when combined with anxiety about the virus’s spread, could mean stores of all sizes will experience substantial reductions in foot traffic–and sustained surges in e-commerce orders as a result.
Retailers will have to do their utmost to attract shoppers during this peak season and provide them with a satisfactory buying experience. A key ingredient will be on-time e-commerce order fulfillment, and smart retailers will make sure e-commerce fulfillment operations are scalable and flexible enough to cost-effectively support different order fulfillment processes and satisfy the customer from product discovery to delight.
Retail Planning for Peak Season 2020
Now is the right time for retailers to review their transportation strategy and consider the lessons they’re learning during the coronavirus pandemic. For example, is the transportation strategy flexible? Is it scalable? Has it met the demands of this unusual environment? Or are changes necessary?
Here are six opportunities for retailers to optimize their transportation strategy to meet 2020’s peak season challenges.
1. Move from Single Carrier Shipping to Multi-Carrier Shipping
Shipping delays are something of an unwelcome holiday tradition. A cross between fruitcake (apologies to all fans) and crowded airports (perhaps not this year). While the end goal of any retailer is to deliver products to customers on time, without damage, at minimal cost, and in the most efficient manner possible, the recent spike in e-commerce has also increased customers’ ability to customize their shipping options, enabling them to specify when, where, and how they want their parcels delivered.
One strategy to simplify this complexity during peak season is to leverage multiple carrier services, including local and regional carriers. This means for retailers using a single carrier for deliveries and returns, it may be time to look at a cloud multi-carrier shipping solution to quickly onboard new carriers and experiment with new delivery modes.
Cloud multi-carrier shipping software applications enable the retailer to quickly onboard new carriers and meet the customer’s shipping requirements from within the retailer’s system. Cloud multi-carrier shipping software applications automatically determine the carrier that can provide the best rates to a particular region and according to the retailer’s business rules, ensuring every shipment is in compliance with each carrier’s labeling and communication standards, as well as with any applicable trade regulations.
Importantly, cloud 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.
2. Optimize Returns
How are returns managed? Is the returns process flexible enough to satisfy customers? How much does return shipping cost? Are protocols in place to discourage returns?
The unfortunate reality is online shoppers return up to forty percent of purchases. But top retailers no longer accept returns as a simple cost of doing business. Instead, the world’s biggest retailers critically examine their returns processes and unlock myriad insights, including:
- Cost reduction opportunities: Is carrier service selection for returns following the same careful processes put in place for outbound shipments?
- Identifying weak links in fulfillment: Are the wrong products being shipped? Can these be traced to certain distribution centers, pickers, or procedural problems?
- Determining and attaching the cost of returns to outbound shipping costs: Many e-commerce businesses expect every e-commerce delivery to be returned, and they build the cost right into their products and services.
- Identifying which products are most returned: What can be done about this? When the lion’s share of a brand’s returns originate from the same product or product category, difficult decisions may be warranted.
- Assessing the impact of fraudulent returns: Luxury brands in particular need processes in place to ensure they never accept counterfeit products as legitimate returns. Even infrequent instances of fraudulent luxury product returns can wreak havoc on organizations, and every effort should be made to determine how often this happens and deter future instances.
3. Increase Visibility
How many customers are lost due to delivery delays? And what’s the lifetime value of those customers?
A cloud multi-carrier shipping system with Control Tower functionality will sync and normalize all shipment data across carriers and delivery destinations, allowing retailers to manage by exception. Staff are alert to deliveries at risk of delay and as a result, they can proactively resolve issues and communicate with customers if and when a delivery window slips. If a delay is unavoidable, they can inform the customer and potentially offer to compensate them by dismissing any shipping charges.
Furthermore, with detailed up-to-date visibility into the delivery journey, retailers can also offer customers the flexibility to change their original delivery instructions while the parcel is en route. A customer might be able to delay delivery or re-route the order to a new destination, for example. This flexibility can strengthen the customer relationship and build retailer loyalty.
4. Automate Freight Bill Auditing
Many carrier contracts include a form of financial compensation in case the service level agreement is not met. And yet it’s not uncommon to find discrepancies on carriers’ invoices, especially during the busy holiday season. By closely monitoring the performance of all carriers’ on-time delivery rates and making this data available in one place, a cloud multi-carrier shipping solution with a Control Tower and Business Intelligence allows retailers to easily identify invoice errors and reconcile carrier invoices to control transportation spend.
And the savings don’t stop there. In addition to the direct cost savings carrier invoice auditing achieves, retailers also benefit from “soft cost” savings, such as the elimination of manual tasks including opening mail, sorting invoices, researching rates, auditing and approving invoices, paying carriers, and assigning a cost accounting code. By eliminating these soft costs, accounting teams can redirect their resources to more strategic activities.
Furthermore, carrier invoice auditing provides retailers with an overview of invoiced carrier costs versus carrier agreements, enabling them to ensure their carrier procurement is aligned with strategy and verifying they’re receiving the delivery outcomes for which they’ve paid. The right cloud multi-carrier shipping software will also model and compare selected carrier services against actual carrier performance to find routing alternatives with lower cost implications and/or faster delivery times, and even identify more advanced optimization strategies, such as effective ways to position facilities and inventory around the globe.
5. Consolidate Parcels
Shipping multiple parcels from Chicago to New Orleans? When retailers ship each parcel separately, they incur shipping costs for each. A cloud multi-carrier shipping system will enable “zone skipping” and consolidate parcels, using one carrier to move a consolidated shipment across multiple states, for example, and a local carrier, such as USPS, for the last mile delivery–reducing total shipping spend. Furthermore, a consolidated cross-border shipment will only require one customs declaration, reducing regulatory hiccups. Final benefit: by using zone skipping, parcels no longer travel to multiple sorting facilities to reach their destination. Instead, shipments to local carriers are faster, which creates quicker deliveries for customers.
6. Improve Cross-Border Shipping
Global shipping is on the up-and-up. The 2019 UPS Pulse of the Online Shopper survey reported that while “shop local” is still trending, younger shoppers also buy goods from international sellers, looking to take advantage of price, variety, and the perceived quality of products. Retailers with a domestic-only transportation strategy will have a difficult time quickly expanding their global footprint to take advantage of this market opportunity.
Seamless cross-border shipping starts with the right label. A cloud multi-carrier shipping solution ensures that every parcel ships with the correct label and documentation, no matter the carrier, destination, or product, making it easier for retailers to expand their global reach.
Find the Right Technology Partner for Retail Peak Season
In times like these, retailers need a partner in the logistics space on whom they can count – one who can help prepare for peak season on a compressed timeframe. Ready to find that partner? Talk to a Logistyx expert today.