Once upon a time, many businesspeople were primarily concerned with fulfillment. In the world of retail and B2B, holiday crunch-time was a hustle — it meant getting more shipments out, and faster. Still, the process was generally straightforward. Order received, order shipped — all in reasonably good time (or close enough to it).
That was then. Today, the shipping paradigm has shifted. It’s really another world. And for businesses that ship any serious volume at year’s end, it might as well be another universe.
The E-Commerce Blizzard
Today, what flows out of warehouses and shipping bays during the holiday rush is nothing short of a torrent; the numbers stagger the imagination. This year, UPS reported that its U.S. holiday deliveries are projected to reach a record 750 million packages during the 2018 peak season. And that’s just one carrier.
E-commerce is a story unto itself. From 2017 to 2018, online sales were projected to jump as much as 22% (per a survey of shippers by Deloitte). And that’s just one year.
According to Adobe Analytics, on Cyber Monday 2018, a record-breaking $7.9 billion in online sales occurred. And that’s just one day. How many millions of packages are wrapped up in that number?
Talk about a change in the weather. The storm of holiday shipping has turned into a blizzard.
Great Expectations 2018
When it comes to rush holiday shipping, the days of “reasonable expectations” on the part of the consumer are over, a relic of the past. In terms of modern logistics, a week has become an eternity. Customers expect their purchases to arrive fast, or even overnight. People tend to delay orders, even during the holiday rush, thanks to our Next Day, On Time, and Priority World. “Regular delivery” has become the irregular.
To underscore the point: just last year, over 70% of shoppers (15% more than the year before) anticipated they would be doing last-minute shopping. Why? Because they can. The once-infrequent and previously outré proposition of quick or overnight delivery has become the default expectation.
Here’s a critical figure that has even larger implications: this year, like last year, at least 90% of surveyed customers claimed that on-time delivery is of high importance to them. In short, they have come to demand it.
So it better be fast, and it better be on time. All of which adds up to the fact that peak-season shipping — long a burden on companies that ship products, parts or consumer goods — has gone from an end-of-year stress to a serious distribution strain.
What’s Your Winning Strategy?
The sheer quantity of parcels burdening the system, along with the drastic shift in customer expectations, means that shippers of every kind need to be more agile, more adaptive, and more data-driven. You need to be proactive, planning in advance. Frequent rate increases should be assumed. Expect the unexpected. At one time, it was enough to get your parcels out the door as best you could. In 2018, you need a five-star strategy just to break even on shipping.
Let’s consider two other peak-season stats that underline the impact consumer behavior can have on your profitability for the entire year:
- Customers won’t hesitate to ditch your brand for a competitor, if they can get what they want faster. A full two-thirds (67%) of consumers will forgo a holiday purchase when the delivery times available to them are standard delivery, or simply too slow.
- Shipping satisfaction correlates more strongly to brand loyalty than ever before. Over 80% of respondents in a recent survey stated that they would not return to a retailer, whether a physical location or online, that gave them a negative shipping experience or late delivery. That’s an enormous amount of lost revenue.
All this in the face of the ever-escalating cost of shipping, especially with the major carriers like FedEx and UPS. So the blizzard can also be a minefield.
Keeping Up with Demand & Expectation
There’s one common theme that separates exceptional shipping departments from their average counterparts: the exceptional ones have access to concrete data that give them unique insights into their operation, and they act on that data to enact substantial and meaningful change.
Are you making decisions based on a strategic view of your operations? Is your shipping program stuck in another time, even if that time is just one, two or three years ago? Is your shipping policy fixed and rigid, when it should be adroit and variable? Addressing these questions and building a highly responsive shipping strategy is often the difference between money walking out the door or additional profit to your bottom line.
Your shipping profile — volume, spend, average weight and cost, fuel, mileage, etc. — holds powerful insights that, when properly harnessed, can save you thousands. In practice, that means you need help with best practices, and with the necessary data-mining that needs to be done to arrive at a comprehensive understanding of your own shipping profile. You need analysts who can understand your shipping data and navigate the complexities of carrier pricing structures. Shipping consultants exist to safely lead shippers out of the minefield and optimize commercial shipping programs. They offer the much-needed, in-the-weeds, customized analysis and detailed reviews that are only possible with years of insider experience in the world of parcel carriers. They advise clients who want to prevent losses and keep customers happy, and who might even dare to dream that they can turn a profit from their shipping program.
Above all, experienced consulting firms ensure their clients are spending no more than they have to, and that their shipping department isn’t a drag on the bottom line — or the company’s reputation. The best firms typically work on a contingency basis, so that there is zero up-front investment on your part — they only make money if they save you money first. Whether they’re using analytics to help maximize savings opportunities or performing total overhauls of your shipping program and parcel contracts, an outside shipping optimization partner can give you the competitive advantage you sorely need in today’s ever-changing and sometimes treacherous shipping landscape. At LJM Group, our clients typically save between 10% and 25% per year after partnering with us.
Consumer demands are tougher than ever. Almost all want fast, and many even want free. During the holiday season, both the volume and the expectations are even higher. So don’t guess — know. Make sure you have the expert help you need to make your earnings soar.
Ready to dive deep? Check out our next free, live webinar on Thursday, December 6, History Always Repeats Itself… and So Do UPS/FedEx Increases. We’ve already seen that the world of carrier pricing may never again be stable and predictable. So where do we go from here? Join LJM pricing expert Kenneth Moyer, renowned strategist and negotiator, for new insights to remain profitable.