‘Twas the night before Christmas 2013. Gift-givers were stirring in hopes that their packages soon would be there. UPS never showed. Online orders on the weekend before the big day were up 37% over 2012, and purchasers were assured that their goodies would arrive by Wednesday, December 25. But a snowstorm hit Louisville, KY, home of UPS’s hub, and millions of packages ended up sitting on loading docks instead of under Christmas trees.
Free shipping and overnight delivery have become table stakes among e-commerce companies battling for holiday dollars, so failing to deliver as promised can have horrible repercussions. In a midsummer survey conducted by CFI group, more than 40% of holiday purchasers told eBay Enterprise that guaranteed 2- to 3-day shipping is the clincher that triggers their purchases. Moreover, shoppers are not forgiving of late Santas. Fully 96% said that guaranteed delivery dates were crucial to their choice of seller, and 46% said they’d stop doing business with retailers that were late.
Online retailers, therefore, are getting an early jump on their 2014 holiday shipping plans. After the debacle of holiday 2013, they’re concerned not only with increased volumes and weather, but also prices. Both UPS and FedEx have announced new dimensional pricing schemes that will charge by package size, not weight. Though new pricing takes effect at the beginning of 2015 and won’t impact this holiday season’s prices, marketers are scrambling to devise holiday shipping strategies that will keep them in the game without affecting their margins.
“Some companies are setting up expectations for delivery that will be difficult to count on unless everything goes right. But we saw what happened in Louisville last year, and Kentucky has only 22 snow plows,” says Jim Hendrickson, GM of distribution solutions for Pitney Bowes. “At least half of retailers and [e-commerce companies] are still using one dominant carrier, when what they should be doing is instituting multicarrier systems that compare pricing and delivery options.”
On-time delivery
Shipping options are often greater than catalogers and e-commerce players imagine. The growth of online commerce has spawned scores of new regional LTL (less than truckload) shippers that have widened the landscape for commercial shippers large and small.
Finding these shippers requires patience and a search engine, or software. For example, Pitney Bowes fields a system called SendSuite that lets shippers enter variables for individual orders, then automatically chooses or presents choices for carriers by price, delivery time, or special considerations, such as outsized packages. Over the past 20 years the company has compiled a library of shippers, updated regularly, that stores all their operational procedures. Retailers can use a rules-based system for selecting the best shipping option, or shipping managers can use SendSuite to custom-schedule individual shipments.
“Moving to a multicarrier system can save days and money in many ways,” says Mark Williams, director, global product management, distribution solutions, at Pitney Bowes. “For instance, it addresses validation through our proprietary database before the package is shipped. If an address is wrong a big carrier will correct it; but the package will be late and they’ll charge a fee of anywhere from $10 to $15. Clients don’t see that charge until they get their bills, so it throws off their margin projections.”
Williams says that moving to multicarrier shipping schemes can put online retailers on level with their best customers when it comes to shopping for bargains. SendSuite’s Smart Shop tool, for example, uncovered a bargain available within a single shipping company. For $42.79, an imaginary package shipped via UPS Next Day Air promised to be delivered to its destination by 10:30 a.m. on a Wednesday. Choosing UPS Next Day Air Saver would get the same package there by 3 p.m. for $7 less. This, Williams says, is where the shipper’s common sense comes into play.
“Did you ever notice,” Williams says, “that when UPS drops packages off at your office, they come once a day at the same time no matter what service you selected?”
