Tag: compete with amazon

Buy Online Pickup In Store: Retail in Evolution

Posted on | by Carl Fowler

Yet, the store remains a core focus of the buying experience. That’s how it should be. The in-store customer is typically more loyal and tends to buy more than the online shopper.

A robust strategy for “Buy Online, Pick Up In Store,” or BOPIS, can offer the best of both worlds. BOPIS expands a retailer’s online exposure while preserving and deepening the in-store experience. In fact, retailers find that is common for shoppers to buy more product once they arrive at the store to retrieve their online orders. 

A well-designed BOPIS retail program also helps reduce delivery costs because the customer is going to the product, not vice-versa. Consumers prize the ease and convenience of the transaction, especially when the COVID-19 pandemic has made contactless interactions more of the rule than the exception.

Responding to a New Retail Landscape

For retailers with limited resources and insufficient time spent mastering alternate fulfillment methods, the real world suddenly became a very different place in 2020. Many have been challenged to adjust to an unfamiliar “fractured fulfillment” model where products are ordered, fulfilled, and distributed from anywhere to anywhere. It is difficult for retailers to strike the right balance of inventory levels that satisfy in-store shoppers and ensure product availability to support online channel growth.

Retailers often over-order store inventory to avoid the risk of stock-outs. This raises carrying costs, and shrinks inventory  available to allocate to online channels. 

Moving ahead with an ill-vetted BOPIS strategy can make things worse. Customers assured of a product’s in-stock status on a retailer’s website will be displeased if they take time to visit the store only to find the item isn’t available. This could damage a brand’s reputation, especially if word spreads quickly on social media.

Visibility is the pain point. Many retailers lack proper visibility into the inventory flow from their partners to effectively plan and execute an error-proof BOPIS strategy. Without visibility, retailers will continue to prioritize avoidance in-store stock-out scenarios, and will continue to absorb excess and costly inventory.

A strong 3PL provider arms retailers with superior, actionable data that improves inventory visibility without forcing them to increase levels of safety stock. The endgame is to manage appropriate safety stock thresholds for both in-store and BOPIS experiences so the customer is satisfied in either scenario. 

Personalized Solutions Require Visibility

Each retailer is unique, and each shipper-retailer partnership is unique. Working with good data, an experienced 3PL partner creates customized plans to achieve optimal results. Progress and outcomes are constantly measured and refined so fill rates achieve acceptable thresholds. Changes to the plan can be implemented quickly should circumstances change – and they often do. 

For example, a plan could require the partners to issue electronic order acknowledgements indicating changes to item quantities and arrival dates within a specified time of receiving an order. It could call for transmission of advance ship notices within two hours of a shipment’s departure so visibility is optimized. Fully leveraging distribution center connections to stores optimizes shipping flexibility to react quickly to customer behavior. 

It is still most profitable for stores when customers pick up their orders in-store, but the busy holiday season could make it difficult for consumers to get to the store. Data generated by zip codes can identify areas of strong online ordering and in-store activity. This offers retailers insight into how to best position inventory for timely and accurate distribution.

For example, a retailer wants to offer one- to two-day deliveries but its transportation providers are challenged to consistently hit those targets. It may be more feasible to ship that order out from a store versus a fulfillment center. This could require shippers to invest in a drop-shipping strategy to support an e-commerce strategy where goods are brought directly to the store level. All this strategy is grounded in visibility.

This holiday season will be like no other. In-store buying will still be prevalent. However, more consumers have adopted online ordering after being required to do so in the early days of the pandemic. BOPIS utilization will be strong this holiday, but it will continue long after peak season and even after the virus passes. Consumers want options. It is critical for retailers to comply, but to do so efficiently.

Master Your BOPIS Revolution

The last mile is the most complex part of e-commerce fulfillment. It is also the most important. The last mile makes or breaks everything that came before it. That final delivery is the moment your customer will remember your brand most. How well do you finish?

A BOPIS strategy is just one of several last-mile offerings that shippers and retailers are expected to deliver. Done right, it reaps brand loyalty, lower costs and profitable opportunities for new market share. However, it requires a specialized level of resources and knowledge. It also requires skills and vigilance to ensure flawless execution.

We created The BOPIS Revolution: Navigating the New Never Normal to highlight some of the things you need to keep in mind when approaching – or modifying – your BOPIS strategy. Watch our SME Roundtable for a deeper dive into the ways we drive top line revenue results through personalized solutions driven by technology and expertise.

To continue the conversation, reach out to one of our supply chain experts. Let’s talk about how we can help you evolve solutions that support final delivery strategies to control cost and consistently wow your customers.

UPS Announces Last Day to Ship

Posted on | by Charles Moore

A later-than-usual Thanksgiving on Nov. 26 condenses the shipping season by almost a week. Meanwhile, continuing effects of COVID-19 drive more buyers online to fill holiday wish lists – and many of them will avoid the personal contact of store shopping altogether.

Combined, these factors predict a capacity crunch for the small package networks. Already experiencing service delays and disruptions, these networks will not see relief until after the New Year, even as parcel carriers bring on thousands of new workers.

Be mindful of the “last shipping days” announced by UPS and FedEx, but that may not be enough to avoid a disappointed holiday customer in 2021. That’s why the world’s largest retailers are turning the holiday shopping clock from Black Friday toward a “Black October.”

Navigating this year’s peak season during the middle of a pandemic will require companies to be more creative and flexible. Forward-thinking shippers should be prepared to adjust. 

Retailers Drive Christmas Creep, Protect Experience

Amazon’s Prime Days on Oct. 13-14 delivered $3.5 billion in sales to small- and mid-sized businesses, with a 60 percent uptick in sales over last year. The move expedites holiday shopping – and product shipping. It also adheres to latest guidance from UPS: “encourage your customers to shop earlier than ever with special offers or other incentives.” FedEx echoes the same advice for shippers preparing for the 2021 holiday season.

Promotions like Walmart’s “Big Save Days” and Target’s “Deal Days” are all designed to pull parcel volume forward and avoid a costly catastrophe caused by a lack of capacity in December. 

If your organization is focused on protecting customer experience this holiday season, keep these five things in mind: 

  1. It is more important than ever to make sure that you proactively and clearly communicate the potential for delays. Every year the national carriers suspend their on-time guarantees during the holiday period. Earlier this year they suspended the guarantees due to COVID-19 complications and disruptions.
  2. Retailers can ship-to-stores for curbside pickup.
  3. Retailers can also ship-from-stores to shorten the distance that the package travels in the carrier’s networks and thereby reduce the potential for delay.
  4. Shipments can be made to alternative delivery locations such as certain retail partners, your customer’s office, or to one of the many parcel lockers.


5. Finally, if you operate multiple DCs across the US, it will be important to have the right inventory at the right locations to speed delivery and avoid split orders.

In a time where lockdowns have driven e-commerce shipments to levels never seen before, companies will need to deploy an all-of-the-above strategy to navigate it appropriately.

Know the Last Days to Ship

Now more than ever, it is important to make every possible effort to avoid deadline shipments. If you anticipate a last-minute holiday rush, make sure your UPS shipments go out on or before these dates to give your parcel the best possible chance to arrive by Dec. 24:

  • UPS Ground: As early as Tuesday, December 15* 
  • UPS 3 Day Select®: Monday, December 21 
  • UPS 2nd Day Air®: Tuesday, December  22 
  • UPS Next Day Air®: Wednesday, December 23

*Note UPS advises that most UPS Ground shipments have a later “last recommended shipping dates.” Shippers can track their transit time and cost here. 

FedEx released its holiday schedule ahead of UPS, and both schedules align closely. We detailed 7 tips for holiday delivery success shortly after the FedEx announcement. 

Regardless of the service provider you trust with your shipments, through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

You Shipped it – Did it Make Money?

Protecting customer experience this holiday season will require timely shipments and thorough communications throughout the sales cycle. 

Protecting your organization’s profit while responding to these customer expectations requires additional awareness and proactive measures.

  • Be aware of the Peak Season Surcharges and more importantly the differences for UPS, FedEx, Regional carriers and now the USPS.
  • Perform a detailed analysis to estimate the surcharges financial impact and to mitigate any negative effects on profitability.
  • Identify specific SKUs that will be negatively impacted and make decisions regarding those items to protect profit margins.  
  • Raise the cost of the item.
  • Increase the free shipping threshold.
  • Pass some or all of the additional cost to the customer.
  • Ensure carriers agreements are best in class and that invoices are audited for compliance to them.
  • Make sure you have the right box sizes so that the packaging is only la
    rge enough to adequately protect items during transit.
  • Work to eliminate operational errors that create avoidable costs such as incorrect addresses, unnecessary declared value and unauthorized packages.

To help shippers protect profit on every customer and every order, we created “You Shipped it … But Did You Make any Money.” Open it today for more guidance on making sure your peak season ends in the black.

E-commerce Supply Chain 2020: Digital Deck the Halls

Posted on | by John Richardson

The challenges this year will be as long a family’s shopping list:

  • The traditional holiday peak converges with elevated online demand due to the COVID-19 pandemic. E-commerce sales will match or surpass brick-and-mortar. Consumers have multiple ordering channels to tap. E-commerce supply chain fulfillment and delivery operations need to respond to this decentralized − and unprecedented − demand-pull.
  • Many supply chains remain out of kilter, one of the pandemic’s many legacies. U.S. inventories are at their lowest levels in five years, according to several analysts. Stock-outs have been common throughout most of 2020. U.S. imports are spiking. However, those goods may not reach store shelves or distribution centers in time to satisfy peak consumption needs.

  • Parcel networks have been overwhelmed by demand since March. This has led to inconsistent delivery performance across the board. National and regional parcel carriers have maxed out their fulfillment and distribution infrastructures. Late deliveries mean that consumers will be forced to accept holiday service levels that are beneath their expectations. If there is good news, it’s that e-commerce consumers are aware of the problems and will be more tolerant of slower delivery. What they demand, and should expect, is access to real-time information about any service issues.
  • Consumers may order goods earlier than usual, allowing the supply chain to spread out delivery timetables to create a “load-leveling” effect. That would be positive news, but it should not automatically be counted upon. Amazon’s shift of its “Prime Day” program from July to mid-October could pull forward a fair amount of holiday activity.

  • Warehouse space is severely constrained. Amazon said several months ago it will need 50 percent more space to keep up with its projected holiday demand. Retailers with brick-and-mortar exposure need to position stores as “forward fulfillment” nodes. This allows orders to be pulled from store inventory and delivered over relatively short distances. Store networks will also support what is expected to be major demand spikes for in-store and curbside pickups of online orders. Pure-play e-tailers without store networks will need to get creative.
  • FedEx and UPS are levying meaningful peak surcharges on volumes from their largest customers. The U.S. Postal Service imposed the first peak surcharge in its history. Carriers say the fees are needed to offset their higher costs to serve. That is true, up to a point. Demands on delivery networks will be unprecedented, and carriers are pricing their services accordingly. Companies will have to consider this in their free shipping strategies to maintain profitability.

THE CLOCK IS TICKING

Is it too late for shippers and retailers to get their holiday house in order?

Not necessarily, but it will take fast action and deep planning. The challenges, as we’ve laid out, are immense. One key is to get ahead of the “demand curve.” When shippers gain visibility into end demand, they can prepare and execute a plan that enhances customer satisfaction and does so profitably. After all, meeting customer demands while losing money in the process is the hollowest of victories.

Managing the upstream channel is just as critical. Calibrating inventory flows with replenishment needs is a year-round challenge, and especially so during peak. The challenge is magnified this year with the headwind of COVID-19. Retailers need a clear line of sight into supplier production so they can forecast their inventory replenishment. In normal times, lack of visibility can lead to costly over-ordering to ensure adequate buffer stock. This season, however, over-ordering may be an adequate response, given how and where the inventory is positioned. 

During CSCMP’s EDGE 2020 Virtual Conference, Target Executive Vice President and Chief Supply Chain and Logistics Officer Arthur Valdez advised to “not be afraid to overreact.” That may sound counter-intuitive, but it can be an appropriate step during this peak. Target will be investing heavily in transportation services with a focus on improving delivery timing, Valdez said. Again, that appears to run against the grain as transport is considered a cost center. Yet it will be less costly than failing to execute deliveries because capacity is not available. A seasoned logistics partner can map out a strategy to leverage a customer’s existing assets, as well as to bring in outside capabilities that profitably meets customer demands.

This is especially important as shippers encounter an increasingly complex surcharge environment constructed by FedEx, UPS and, to a smaller degree, USPS and regional carriers.  High-volume FedEx and UPS customers could be looking at surcharges as high as $4 to $5 per piece. These are by far the most expensive surcharges we have ever seen. They can spell the difference between peak season success and failure, even if everything else breaks right. Any shipper expecting to tender significant traffic to either or both must be able to navigate those surcharges all within the framework of their logistics execution.

Amid the coming storm, it may be hard for folks to get a good fix on demand profiles beyond the holidays. But it pays to do so. For example, we may see another e-commerce surge early next year as fears of a combined COVID-seasonal flu cycle keep more consumers homebound. Already, we are seeing 2021 budget plans being adjusted to account for the lingering effect of COVID-19. We also expect similar peak season patterns for the next 3-5 years even after a coronavirus vaccine is approved and distributed. A strong logistics partner not only can help you get through 2020. It can prepare you for 2021, 2022, and beyond.

BOPIS: What Does It Mean for Shippers?

Posted on | by John Richardson

Linearity is on the way out. So is the shipper’s control of the supply chain. E-commerce has spawned the “omni-channel fulfillment” model where orders, distribution and deliveries occur from anywhere, anyone, and at any time. The traditional supply-push scenario with shippers calling the shots is giving way to a demand-pull approach with consumers in control of the transaction.

The “Buy Online, Pick Up In Store” (BOPIS) concept has become a key part of the asymmetrical, demand-pull world we live and work in. Who ever imagined a consumer ordering an item on an electronic device, having a retailer immediately pick and pack the product at one of multiple locations, and having it ready for the consumer’s arrival at a pre-arranged time, typically within a few hours and sometimes under an hour? 

Experience Depends on BOPIS Excellence

The COVID-19 pandemic is driving BOPIS toward mainstream adoption. Contactless interactions remain the order of the day – especially during the holiday season as health-conscious consumers continue to minimize time spent shopping in confined spaces. But BOPIS and other alternate fulfillment practices will outlast the pandemic. They will become permanent additions to the logistics landscape.

To execute an effective BOPIS strategy, shippers must understand retailers’ two overarching objectives: 

  • Ensure a seamless customer experience regardless of the order touchpoint.
  • Maintain adequate in-store inventory while expanding digital buying opportunities.

It is essential for retailers to have the right goods always available, and at the right place at the right time for the consumer. The “right time” could involve shipping to a residence or to another physical location. It could mean an in-person brick-and-mortar sale. It could mean BOPIS, or its first cousin, “Buy Online Pick Up at Curbside” (BOPAC). It could be a drop-shipping model where the shipper delivers directly to the store, thus minimizing the need to hold inventory in a space-constrained facility.

Striking the correct balance between in-store and digital inventory is just as critical. In-store customers are typically more loyal and buy more per visit than online customers. Retailers are loath to broaden their digital channels if doing so threatens to siphon off in-store activity.

Allowing both scenarios to thrive requires elevating visibility and analytics tools to new heights. A clear line of sight across the ecosystem allows shippers to align production with the retailer’s current replenishment needs. Analytics like Machine Learning and Artificial Intelligence also provide shippers with vital clues about consumers’ future buying habits so they and their retailer partners can stay a step ahead.

Technology is only as productive as the knowledge of the people managing it. Seasoned third-party logistics specialists understand how to design and implement a consistently successful BOPIS program that leverages cost-effective automation. They have worked extensively with all stakeholders, and can quickly adjust the go-to-market processes to optimize outcomes and avoid costly missteps.

Final Delivery Drives Loyalty or Brand Damage

Online fulfillment is a fast-paced, often-unforgiving business. You are only as good as your last delivery. The margin for error narrows still further in a BOPIS transaction. Failing to execute an order after the consumer was assured the product was in stock and went out of their way to retrieve it is a breach of the “trust covenant” between the stakeholders. A BOPIS-related stock-out can seriously damage both brands, especially if a negative review spreads on social media.

The good news for shippers is that mastering this intense pivot point should result in enduring brand loyalty from consumer and retailer alike. Consumers prize convenience, and will favor retailers who make the BOPIS experience as easy as “pulling up and popping the trunk.” This goodwill extends to the products they pick up and take home.

Retailers, meanwhile, know how complicated it is to make life easy for today’s consumer.  Shippers who consistently execute will become sticky to the retailer. Product quality is obviously important. However, consumers often cannot discern between the nuances of multiple products of similar craftsmanship. What they do know, and will remember, is how, when and where they received their product. Or why they didn’t. That is how your brand will be remembered. In today’s world, logistics, more than any part of a shipper’s business, is becoming the competitive differentiator.

Navigate the New “Never Normal”

Planned properly, the BOPIS fulfillment model is a valuable tool in the highly competitive e-commerce space. 

The devil is in the execution.

Transportation Insight specializes in designing and executing supply chain strategy adjustments that empower you to provide the final mile delivery options required to wow end customers.

We created “The BOPIS Revolution: Navigating the New Never Normal” to offer insight into the many variables involved in meeting consumers’ evolving demands for service. Read it today to understand the strategies that we can help you leverage to enhance customer service, grow market share and increase competitive advantage.

Last Days to Ship? 7 Tips to Meet Holiday Deadlines

Posted on | by Charles Moore

According to MarketWatch, Deloitte is forecasting a 1% to 1.5% year-over-year sales increase for the upcoming holiday season, during which time total retail sales will be about $1.15 billion (between November 2020 and January 2021). Meeting holiday shipping deadlines will be more important than ever.

“E-commerce sales, which have been strong throughout the coronavirus pandemic, are expected to climb 25% to 35%, reaching $182 billion and $196 billion,” Deloitte predicts. “Regardless of the scenario, however, consumers’ focus on health, financial concerns, and safety will result in a shift in the way they spend their holiday budget.”  

Here are seven tips for making sure your holiday packages get to their destinations on time.

7 Tips for Holiday Delivery Success 

The new realities of the current shipping environment have created ongoing service delays and disruptions, both of which have compounded into an overall capacity crunch for small parcel carriers. Working through this issue will require forward-thinking companies to adjust accordingly.

For example, shippers will need to be more creative and flexible to cope with the combination of COVID and the normal peak season. FedEx, UPS, and other carriers are hiring a lot more workers for the season, but we still expect to see some capacity issues. With the uncertainty, it will be more important than ever to inform customers when to expect shipments and be extremely transparent. 

Here are seven tips that will help you get your packages to their destinations on time: 

  1. Know the cutoff dates. FedEx’s last days to ship calendar is online here and UPS publishes its holiday deadlines here. The USPS plans to release its cutoff dates for holiday shipping sometime in October. Be sure to factor in these last days to ship dates when planning your holiday shipments. 
  2. Talk to your carriers. Proactively communicate with carriers regarding any expected increase in volume and any additional equipment requirements (e.g., feeders or bulk-type pickups). This will help your carriers plan ahead and provide some assurance that there will be capacity to accommodate your volume spikes (or, allow you to make alternative arrangements). 
  3. Next, talk to your customers. Companies should proactively communicate anticipated delays and properly set customer’s expectations on their websites and in any email communications. This could be as simple as featuring the holiday cutoff shipment dates prominently on the first page of your website. 
  4. Know the limits. Shippers should clearly understand any potential volume limits or caps that may be put in place by the carriers. Because these constraints can impact your ability to deliver on time, be sure to discuss them with your carrier. 
  5. Explore your options. Shippers should also understand their carrier options and negotiate favorable agreement terms to properly leverage all national, regional, and postal carriers. Having a “Plan B” in place is always a good idea during the busiest times of the year. 

  1. Start your product promos early. Don’t wait until the last minute to kick off your holiday promotions. Starting early will help you pull volume forward to avoid peak shipping periods and allow time for expected delays. 
  2. Factor in holiday business schedules. For example, USPS is closed for all of the major federal holidays. With delivery times varying between its services, knowing the cutoff dates and hours of operation are both important. 

Maintaining Transparency  

Reflecting on how parcel carriers performed for the 2019-20 holiday shipping season, UPS’ SurePost and FedEx’s SmartPost both assured 100% delivery for holiday orders that were shipped on or before December 14 or 9 (respectively). However, we also saw that as the cutoff date approached, those commitments slipped. This is something to keep in mind as you lay out your plans for the 2020-21 season. 

Using the tips outlined in this article, you can strike a nice balance between growing your company’s holiday sales while also letting customers know that there is a risk of passing the carrier’s “suggested date” for accepting pickup for a Christmas delivery. Through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

Peak Season Performance Requires Visibility

To make sure holiday shippers are aware of the latest trends affecting their transportation cost management, we convened a roundtable of our parcel experts. Watch or listen to our webinar “Peak Season: Are You Ready?” to hear Todd Benge, Robyn Meyer, Toni Caputo, Bernie Reeb and myself address the unprecedented challenges emerging his year.

This digital event shares strategies to help you protect profit and enhance customer experience. Watch it today to make sure you are getting charged correctly and manage the capacity risks that threaten to derail your performance.

6 Qualities to Look for in an E-Commerce Logistics Partner

Posted on | by Robyn Meyer

With changing customer demands, new carrier surcharges, COVID, and other challenges taking a bite out of shippers’ bottom lines right now, those companies are best served by logistics partners that bring a high level of value to the table. Even better, they do this while helping shippers overcome their key pain points and achieve their organizational goals.

If your e-commerce logistics provider isn’t living up to expectations in these six areas, it may be time to find one that will.

  1. Technology Systems that Mirror the Carriers’ Own Systems
    This allows the provider to estimate cost impact and predictive modeling to the penny. Every time the carriers make a change, that change should also be made in your provider’s system.
  2. A Strong Team of Subject Matter Experts
    That team should include engineers and analysts that know how to leverage the carriers’ profitability areas to gain better advantages for you (versus what a traditional account rep can manage). Our experts regularly share their insight with the marketplace.

  1. Ongoing Analysis and Strategic “Thinkery”
    Look for a partner that thinks well beyond the “one and done” approach. Today’s business environment requires a partner that focuses on continued delivery optimization and cost mitigation.
  2. A Proactive Auditing Function
    Rather than relying on a reactive mindset (e.g., asking for the same refunds over and over again), your provider should be working with an “identify and repair” mindset to eliminate these potential issues and mitigate ongoing costs.
  3. Advanced Analytics and KPI Tracking
    As e-commerce continues to grow, you need a partner that is constantly innovating and adding functionalities like margin management, SKU-level profitability, KPI tracking, order performance management and high levels of supply chain visibility.   
  4. A Problem-solving Mindset
    When new accessorials or surcharges are released, your logistics provider should be measuring the impacts of those changes on your budget and helping you mitigate those impacts.

Master Your E-Commerce Supply Chain

Possessing these key qualities, we bring our client partners ongoing value as they race to meet demands for delivery speed, service and choice. Supporting your efforts to enhance customer experience, we also implement strategies to control costs so that you can maintain awareness of how each and every product and customer is performing. 

Our Parcel Experts created “You Shipped It, but … Did it Make Money?” to identify some of the emerging challenges that jeopardize your profit. It highlights our approach in the marketplace and gives you a glimpse into the level of analysis that we bring our customers. 

Let’s take a deeper look at the supply chain challenges you are experiencing. Reach out to our supply chain masters today to begin a conversation about your personalized solution.

Margin Management: Why Are You Selling Money-Losing SKUs?

Posted on | by Todd Benge

In July, Coca-Cola announced that it was cutting some “zombie brands” and focusing its resources on more profitable lines by introducing margin management. The company has about 400 master brands, half of which are brands of little or no scale and that account for about 2% of the firm’s total revenues. 

These brands (Odwalla juice and smoothie brand was among the first to get the axe) consume resources and divert money and time away from Coca-Cola’s more profitable businesses. 

Do you know the products that are consuming your resources without delivering the profitable benefits of sale?

Following Suit

Shippers of all sizes can borrow a page from Coca-Cola’s playbook which takes the examination of SKU viability to new levels by assessing (and in some cases, eliminating) entire brand portfolios in order to determine which products are making money, and which ones aren’t. 

When you understand SKU viability, you can refine your marketing messages, pricing, pass-through costs, and other elements that determine whether you make money on an order (or not). The key is to determine which products are “winners” and which are “losers,” and then focus on the former. Weed out the products that are not making money and focus on the ones that are profitable.

Use the 80/20 Rule

The Pareto Principle (80/20 Rule) comes into play here, and asserts that roughly 80% of the effects come from 20% of the causes. Recognizing that 20% of your SKUs typically represent 80% of your sales volume, determine a baseline. Focus on what it costs to pick, pack and ship each of those different SKUs. 

There aren’t many companies that have a good handle on profitability at the individual SKU level, particularly when factoring in fulfillment costs, inbound costs and shipping costs. Combined, these drivers can make a major difference in an order’s profitability.

Consider the manufacturer of outdoor goods that typically sells to big box retailers. During COVID, this company began shipping directly to consumers when more people started placing orders online. Shipping a pallet of 25 outdoor umbrellas to a large retailer at no charge was a profitable venture. On the other hand, free shipping for those 9-foot, 75-pound umbrellas bound for 25 different households via Parcel takes a huge chunk out of the bottom line.

This is a situation where evaluating SKUs based on the price that customers pay doesn’t work. Offers like “Buy $50 in merchandise and get free shipping” can further complicate the circumstances. Complexity increases when orders must be shipped in multiple boxes—a reality that quickly consumes the profitability on any order. 

Find a Partner to do the Heavy Lifting

Without good transportation analytics, SKU profitability becomes an expensive guessing game. And the more SKUs you’re selling, the more complex your margin management profile will be. 

Avoiding these problems requires a pick-and-axe approach similar to what Coca-Cola is using to whittle down its brand portfolio. If you don’t have the time, staff, or technology in-house to manage it on your own, Transportation Insight is here to do the heavy lifting for you.

To help you better understand all that’s required in determining SKU profitability, we created “You Shipped it, but … Did it Make Any Money?” Download it today for strategies that will help you protect profitability on every order.

Post-Pandemic Tactics for E-Commerce Logistics Advantage

Posted on | by Rick Brumett

Before COVID-19, businesses looking to build an e-commerce presence were hamstrung by the lack of speed in developing their current labor pool with the skills required for e-commerce, as well as fulfillment automation capability. Others dabbled in a web storefront strategy. These companies typically lacked the sophisticated technology, generally a good Warehouse Management System (WMS), needed to pick multiple orders to a cart and then have them quickly and accurately auto-sorted through a RF or mobile device. The result was unsustainable inefficiencies. We saw that e-fulfillment costs in some cases exceeded 25 percent of sales.

In the meantime, Amazon.com, which controlled about half of all U.S. e-commerce going into the crisis, kicked into high gear during it. At one point during the crisis Amazon customers spent as much as $11,000 a second on its products and services. By contrast, nearly 1 million traditional retail workers were furloughed in one week, and more than 250,000 stores had shut down. Many stores may never reopen, or may look very different going forward. The same goes for fulfillment centers. Many have and will continue to be physically modified to ensure worker safety. The flow of operations may need to be modified as well.

For many e-tailers, the “new normal” of e-commerce will be challenging and may seem insurmountable, but getting to the other side is doable. 

E-Commerce Logistics Strategy for the New Normal

Understand what current state looks like in the new normal − starting with your cost per-order. 

Are your costs segmented by freight, management and supervision, labor, facilities and shipping supplies?

Then understand what and how these costs can be managed, optimized and reduced. Typically, freight costs exceed the sum of the other components. Reducing freight dollars spent per revenue dollars created should be an immediate focus. 

The questions to ask from this point are critical to the next step. 

  • Is your network aligned to best serve the customer? 
  • Are your shipping lanes optimized? 
  • Are you using the best shipping partners to meet your strategic goals? 

Stay on top of your rates. Evaluate them frequently, and renegotiate them when appropriate. 

This is where collaborating with a seasoned logistics expert adds enormous value to you e-commerce platform. Our long and deep relationships with carriers, our data analytics and information mining expertise and our proprietary audit technology platform give you end-to-end visibility to answer those key questions.

Align Your Operations and Your Network

Once your network is optimized, it is time to consider how your operations play into that. What questions can quickly be addressed?

By asking these questions and making some quick, deployable solutions, you can improve your profitability profile in short order.  

Benchmark your service-level performance with best-in-class metrics. How does your fulfillment center operation compare with leaders in the field? 

Focus strongly on the efficiency of your picking and packing operations, which can account for more than half the cost of your order outside of outbound shipping. A thorough analysis of your fulfillment center process will yield changes to improve operations and reduce costs.

Apply technologies where it makes financial sense and where it fits your growth plans. Many legacy WMS applications were designed to manage fulfillment orders in pre-determined waves. They were not optimized to manage the unpredictable flows of e-commerce traffic. Today’s technology is built to allow orders to be picked for store and e-commerce simultaneously. This enables businesses to leverage inventory buys to achieve economies of scale.

Also, consider a multi-fulfillment center strategy, including BOPIS strategies. These can expedite orders to consumers quicker and reduce shipping costs. Facilities expansion can carry with it significant operating expense. An expert partner with a robust portfolio of data, expertise and carrier relationships can support your decision-making on this critical issue. 

Improvement Focus Drives Customer Experience

Above all, be consistent with ongoing process improvements. Don’t consider e-commerce logistics just a project, it is a process that has to be constantly improving. Companies that dedicate full-time employees to process improvements are those that make the biggest strides. 

Analyze your facility space requirements, and how labor is being utilized. Be open to suggestions on how to improve productivity and boost customer satisfaction. Make it a part of your corporate culture.

According to a recent study, millennial consumers who account for about $1.2 trillion in U.S. retail sales say they value the “experience” that accompanies an online order as much as the product itself. The “Generation Z” group coming up behind the Millennials shares those sentiments. 

At the core of that experience is fast, timely delivery supported by in-transit visibility across multiple digital platforms. Succeed in executing on that final step, and you will achieve favorable word of mouth that can help build a brand. Fail, and that brand may not get a second bite.

Those attitudes were in place well before Covid-19. And they are unlikely to diminish. It is both an enormous opportunity, and daunting challenge. Is your e-commerce strategy ready?

Master Logistics, Power Competitive Advantage

You invest a lot of money in your logistics network. But are you maximizing its value? Do you feel like your logistics operation is more of a cost center than a tool of competitive advantage?

It doesn’t have to be. In fact, with the right strategy and execution, logistics can drive the success of your enterprise. Companies like Amazon, Walmart, Target and Dell made logistics a priority, with spectacular results. There is no reason you can’t do the same!

To master your logistics strategy, read “Moving to the Front of the Line: Making Logistics a Competitive Advantage.”

The Logistics of Valentine’s Day: Signed, Sealed and Delivered

Posted on | by John Richardson

February 14 marks the most romantic day on the calendar: Valentine’s Day. It’s certainly not a cheap endeavor: The National Retail Federation estimates Americans will spend a record $27.4 billion on their showcases of love this year, with an average spend of $196.31 per person. 

While it’s not unusual to be loved by anyone, making sure every rose, heart-shaped chocolate box and sentimental card takes an unusual amount of effort. Valentine’s Day is the second busiest time of the year for shippers, behind only the Christmas season. And just like for Christmas holiday shipping, the logistics of Valentine’s Day highlights how the right supply chain network is needed to delight every end customer – no matter what product you’re providing.

We love and care for supply chains. That’s why I wanted to share some thoughts on the logistics of Valentine’s Day – so you can understand how suppliers and shipping companies ensure everything arrives on time – before the last candlelight dinner ends.

Flowers, Chocolates, and Cards: Managing Valentine’s Day From Multiple Fronts

With the shortest shelf life of all traditional Valentine’s Day gifts, fresh-cut flowers depend on the cold chain for success. Over 80% of flowers are imported, with most coming from Colombia. 

The International Trade Centre estimates over 500 million tons of flowers are sent for Valentine’s Day. After the flowers are harvested, the blooming buds are cooled to 35 degrees and loaded onto both commercial and freight aircraft for transport to the United States. 

At each point of entry, U.S. Customs and Border Protection officers thoroughly inspect every shipment for pests, disease and contraband. Once they clear Customs, it’s back to near-freezing temperatures for the flowers as they go to the warehouse, then the distribution center, before finally arriving at the florist. 

But what if there is a problem clearing Customs? Or a network disruption impacts a climate-controlled facility? Without the proper logistics processes – and contingency plans – one problem can quickly spoil the Valentine’s Day bouquet.

Many of these bouquets are accompanied by exquisite German chocolates. According to the UN Comtrade Database, 5.6% of all the chocolate imported into the United States comes from Germany. Getting the sweet treats to the United States poses an equally daunting task. 

While the chocolates can take an intermodal route into America, they have to be transported very carefully. After packaging, each load must be protected from moisture, humidity and temperature changes. The German Transport Information Service recommends all chocolates be transported in refrigerated containers to maintain the cold chain from start to finish. Doing that requires a lot of visibility to the product and its transit across the supply chain.

And what would these gifts be without the written words of love to accompany them? Hallmark estimates over 145 million Valentine’s Day cards are exchanged across the United States. The mid-February tradition is the second largest holiday for greeting cards, trailing only behind the Christmas season. 

As with anything you send through post or parcel service,  planning ahead is vital for mailing chocolate and gifts Based on the 2019 USPS holiday season estimates, sending gifts to APO, FPO and DPO addresses can take up to six weeks to arrive!If your loved ones are in America, you can still get away with Priority Shipping within the continental United States four days in advance. For those extreme procrastinators, a parcel carrier like UPS can guarantee delivery even if you are shipping on Feb. 13 – but it will cost you hundreds of dollars. 

Understanding the characteristics of your shipment – size, weight, destination and delivery timing – can help you avoid some of those costs, while still warming a heart at the end of the love line.

Tying The Logistics Knot 

In every stop, each of these gifts face unique challenges in their supply chains. Matching them all together requires an intricate dance that depends on every stage of the transportation process going nearly perfect. One mis-step in the supply chain, like exposing chocolates to moisture or keeping flowers outside a cold environment, results in a product that is unsellable.

Without proper planning and coordination of all the moving parts, your items could either arrive too early, or too late. Valentine’s Day gifts aren’t as effective on Feb. 13, and they’re completely useless on Feb. 15. 

The good news is that many of these situations can be mitigated using modern technology. While all the pieces are dependent upon each other to make Valentine’s Day pass without a hitch, technology plays a critical role in avoiding broken hearts.

To maintain quality, companies use robust logistics monitoring, modelling and execution tools. This supports planning for the most effective port of entry, warehouse and distribution center locations, and network reach. Often an enterprise logistics company helps analyze all these factors to determine the best route forward. Supply chain data combined with analysis supports  real-time decisions if there is disruption in the chain. 

Enterprise logistics providers also offer insightful observations when there are unique breaks in the supply chain. It is important to be able to trace and track every transportation activity in the best scenarios, just in case a contingency – or official record – is needed for the worst.

In those cases, the solution for wilted flowers is not the same as the solution for ruined chocolate. Sometimes it helps to have a partner that has experienced challenges in other just-in-time supply chains. They can bring an objective viewpoint to tie everything together and determine solutions if one piece breaks in the overall supply chains. 

We’ve created a map of your Valentine’s Day rose bouquet from the time it arrives in the U.S. to its last mile delivery to your door.

5 Ways to Build an E-Commerce Engine that Wins

Posted on | by Robyn Meyer

Facing stiff competition from web-based suppliers, e-commerce providers and even traditional companies, retailers must enhance the customer experience by offering variety in delivery options − and all without impacting the cost to the consumer.

In most cases, achieving this balance starts with a modern e-commerce engine that’s supported by a robust transportation and fulfillment approach.

Best Practices Achieve Competitive Advantage

Here are five critical steps for developing an e-commerce transportation and fulfillment plan that goes head-to-head with the e-tailing giants. 

  1. Make your website user friendly. This sounds elemental enough in theory, but in reality, very few companies are doing it. Success in e-commerce starts with a user-friendly interface that doesn’t frustrate customers or send them off to buy from another site. If your online store’s ordering system is cumbersome and difficult to use, no one is going to use it unless they have to. And mobile friendly is vital.
  2. Drive up online checkout rates. The retailer that isn’t boosting online checkout rates will quickly find itself struggling to survive in a sea of companies that have figured out the formula. If you ignore the need to drive down abandonment rates, all of the advertising, marketing and sales efforts in the world won’t help you compete against the likes of Amazon and other large e-tailers. Measure key performance indicators (KPIs) like page views to cart conversions in order to get a gauge on 1) current state, and 2) what you can do to drive those numbers up.
  3. Develop a same-day order fulfillment strategy. Handled improperly, same-day delivery can be a logistical nightmare and major risk for retailers. Although becoming a necessary evil that all retailers must do for at least some of their customers, making that happen requires locations and/or warehouses positioned close to those buyers; a modification of existing fulfillment procedures; and ensuring that the right product is in the right place and at precisely the right minute. Aligning BOPIS strategies with profitability is significantly important when developing same-day order fulfillment.

  1. Factor in parcel, heavy home, and customized deliveries. When it comes to bulky goods that require extra muscle and/or assembly, retailers need to factor in three different scenarios: leaving the box in the entryway of a home or apartment; placing it in the room of choice; or both, plus opening up the box, removing the packaging, and setting up the product(s). Retailers must deliver on some, or all of these, expectations for the end consumer, who is typically willing to pay for those additional services.
  2. Select the best and most economical transportation mode. Retailers don’t always have access to the data that allows them to utilize economical mode selection. Instead, they focus only on getting same-day and next-day shipments out the door as quickly as possible (without worrying about whether or not those are the best and most economical decisions). Retailers should be leveraging carrier contract agreements that align with package characteristics/shipping networks. They should also use technology (i.e., transportation management systems or TMS) to select not only the mode that is most economical and provides tracking visibility, but one that also meets customers’ delivery expectations.

By keeping customers at the center of the conversation, providing visibility to shipments, working to fulfill their needs on every order quickly, and developing a transportation plan that aligns with these goals, smart companies can position themselves as suppliers of choice in today’s competitive e-commerce world. 

Ready to learn more ways retailers can improve e-commerce performance to satisfy customer demands for service and choice? Download Transportation Insight’s e-commerce guide, Managing the Risk of Racing Amazon.