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Optimizing Your Parcel Solution to Decrease Price & Increase Service

by Mike DeFabis on 2015-01-13 11:52:00

Outbound shipping is one of the most important aspects of ecommerce.  For most ecommerce companies, outbound shipping costs are their biggest expense.  Service and cost to the customer is also one of the biggest deciding factors of whether or not a customer makes a purchase.    Finding ways to ensure that you are lowering your shipping expenses, while still meeting customer demands, can be a tricky task.  This blog will give you tips on how to optimize your parcel shipping solution to maximize savings and increase customer satisfaction.same_day_delivery

Options

Giving your customers shipping options can be extremely beneficial.  Not all customers are going to want expedited shipping. Similarly, not all customers want free shipping.  Having several service types to choose from with different prices can be helpful to your customers.  Giving your customers different shipping choices is fairly obvious and most ecommerce companies already do that, but we can take it one step further.  Different carriers offer different types of services, and depending on the shipping method, your customer selects can determine the method of shipping.  For instance, if your customer selects overnight shipping you could use UPS or FedEx overnight service.  Mail consolidation programs like DHL Global Mail and UPS Mail Innovations are great for free shipping.  If the customer selects a standard shipping option, UPS SurePost or FedEx SmartPost are great options.  Using multiple carriers for different options can be tremendously beneficial.

Combining Carriers

Having different carriers for different shipping options is one thing, but you can take it even a step further and start combining carriers based on certain criteria.  For instance, depending on where a customer lives relative to your shipping location, one carrier might be better than another.  A great example is USPS Priority Mail offers much lower shipping costs for zones 1-5, but once you hit zone 6, UPS or FedEx begin to make sense.  Priority Mail and UPS Ground are very similar products for zones 1-5, but once you hit zone 6, USPS Priority Mail is being expedited via air.  Now this may not always be the best option if you are trying to keep costs down, but still offers a premium service.

Another example of where this might make sense is a mail consolidation company and UPS SurePost or FedEx SmartPost.  For packaging weighing less than 4lbs, a mail consolidation company offers very inexpensive pricing, but once you reach 4lbs, SurePost/SmartPost begins to make more sense. 

Understand Your Customer

Understanding your customer is the single most important aspect you need to know before you go making a bunch of changes to your shipping options.  Many factors can play into your shipping methods and customizations that are specific to your products and your customers.  An example of this would be if you purchased a $10 widget that you would normally have to pay $25 for anywhere else.  The customer might understand they are getting a discount on the product and might feel comfortable if they have to pay $5 for shipping it takes 5 days to arrive.  If your customer is purchasing a premium product and paying $150 for something they could go into the store and pay the exact same amount for and walk out with the product that day, they might expect free shipping and for it to come via a premium services like UPS/FedEx or USPS Priority Mail. 

Implementing

While designing all of these shipping metrics sounds great, implementing them can be a bit of a challenge.  If you outsource your ecommerce fulfillment, talk with your fulfillment company to see what shipping software they use and if they have any experience.  IDS has recently implemented ProParcel™ Shipping Solution as a customized shipping solution for its clients.  This allows IDS to provide a multitude of shipping methods based on varies factors.  If your fulfillment operations are done in house, discuss with your shipping software provider if implementing shipping metrics is possible.  If not, this could be a very manual process, but also could provide some tremendous cost savings and be worth it.

For more information on how IDS Fulfillment can help optimize your parcel shipping methods, Contact Us Today!

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