Parcel shipping continues to claim a larger share of the transportation market as manufacturers and retailers respond to consumer demands. Globally, annual volume could exceed 100 billion parcels by 2020. More companies are coming to understand the role that parcel shipping will play in their supply chains, and they are seeking ways to align their practices to the parcel networks.
While our team of Parcel Experts attended this year’s Parcel Forum, a range of insights emerged that will help manufacturers and retailers better operate in the changing parcel landscape. In addition to our Global Trade Experts’ Parcel Forum presentation focused on the intersection of e-commerce and trade compliance, here’s some of the top insights for small package shippers serving end customers in an environment where bulky e-commerce shipping is becoming more prominent.
Parcel is Here to Stay
While parcel shipping accounts for about 12 percent of the total value of shipments in the U.S., it represents less than 1 percent of the ton-miles across the industry. However, that’s beginning to change as shippers and carriers adapt to bulkier and heavier items. Shippers must adapt their fulfillment operations to pack boxes strategically to lower costs. Right-sizing boxes will help avoid shipping air and DIM surcharges.
Market Free Shipping Options
Keep in mind that free shipping isn’t really free. Encourage higher average cart sizes with low-cost or free shipping incentives at certain levels. Studies show that consumers are highly likely to add to their shopping cart to reach the next level of discount. They are likely to abandon the cart if shipping costs are too high. With free shipping as a marketing tool, revenues rise incrementally and consumers save money in the long run.
Retail supply chains should be configured to be all things to all shoppers, with real-time visibility into inventory whenever possible. Consumers expect standard retail availability as well as online ordering and parcel delivery, and phone or digital purchase with in-store pickup. They expect to be able to make returns through any channel, regardless of the channel they used for purchase. The new reality may require shifting to a fulfillment model reliant on a broader network of distribution centers rather than the traditional large centralized distribution center. Furthermore, the retail chain must have a centralized view across all inventory locations to support the use of stores as well as DCs to fulfill orders.
Transitioning to an omni-channel fulfillment strategy can reduce freight costs and increase inventory turnover. Retailers can retain sales by viewing inventory across all sites as a single entity to serve customers no matter how they interact with the brand. Fulfill with shipments between stores or guide customers to the nearest location with the product in stock. The goal is to create a seamless and easy shopping experience that encourages the consumer to come back.
Visibility is Power
Underlying the shift to parcel shipping is the power of visibility into shipment data that drives analytics and order optimization. Increased data accuracy, efficient ordering and inventory placement will help drive efficiency that better serves customers and turns the supply chain into a competitive advantage. New data sources and the rise of artificial intelligence will drive the development of new insights that lead to higher levels of performance.
Partner with an Expert
Few companies have the resources to respond on their own as quickly as the marketplace requires. Recognize when it’s necessary to connect with a trusted partner rather than trying to build a competency in-house.
With access to Transportation Insight’s e-commerce and omni-channel experts and robust solutions that provide end-to-end supply chain visibility, retailers can adapt quickly to changing customer buying habits and growing demand to provide the best possible customer experiences.