How to Get Your Shipping Strategy Right
Many retailers have arrived late in the omnichannel fulfillment market and have a lot of catching up to do.They need to adopt a strategy that gets them as close to their customers as possible. They know that they need to go omnichannel. And if that means fulfilling out of their local stores, that’s a process they need to further pursue. The right shipping software gives retailers and fulfillment companies access to as many carriers as they need in order to help them get orders to customers in one day. Retailers can use a lower service level, such as shipping by ground instead of air, and still get goods to their customers in a day. The omnichannel experience is all about getting packages to customers as fast as possible and at the lowest cost.
There are many customer verticals involved in shipping. For example if the retailer is shipping a high-value item such as jewelry, it can absorb the delivery cost quite easily and even supply free express shipping. However if it is selling a commodity where the margin is in single-digit percentages, the ability to provide that free service is impacted. In building their shipping strategy, retailers need to look at product mix in order to determine the most appropriate and effective fulfillment service. By leveraging an omnichannel approach, retailers can ship directly from the manufacturer or distributor of the product, increasing their footprint in the country. Considerations include the geographical realities of the situation, the cost realities of the product and what customers are willing to spend. It is crucial to balance all of these elements to provide an appropriate value mix for customers; otherwise they will go to another supplier who can provide the right mix.
While low cost and fast delivery are crucial for etailers today, value-added offerings like control over delivery scheduling, alternate delivery locations, and easy returns is what sets them apart from the competition. The ecommerce companies that are winning are those that are getting goods to customers at the lowest price and in the shortest delivery time, with the best customer experience. The pure ecommerce players are taking omnichannel seriously. According to John Berg, Vice President of ProShip: “94% of shipments today are still being flowed through traditional retail stores. And only 6% or less are being converted through an omnichannel experience. Omnichannel fulfillment can deliver a better customer experience by making it faster and much better.”
One of the benefits of omnichannel fulfillment is shipping from the location with the lowest carrying cost. This means there is a need to focus on sourcing. Major brands like Apple do this by supplying customers with shipments that come straight from China. This is something new players in the market should take advantage of. However there are costs involved and as Justin Cramer, Director of Services at ProShip, points out, “You need to do the math to ensure it is worth it. This involves working with a set of carriers to see if they can help you to embrace shipping from your vendor. Otherwise you might be missing out on a solution set that’s available to you as a smaller, or newer, player.”
Another area to consider is how to split your shipments when customers order more than one item. If for example a consumer orders three items and gets one of them tomorrow, she will not be unhappy because she has received part of her shipment early. When the rest of the order arrives in the timeframe expected, she is still happy. And overall she is delighted because she got that one product first. The odds are that the retailer sourced the products from two different locations and this explains the different delivery times. Waiting to ship all products to a fulfillment house would delay the delivery and make the customer unhappy.