Weigh All Options Before Signing a National Carrier Bundling Agreement

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It’s common practice for the large national shipping companies to push e-retailers into “bundled” pricing packages, promising preferred pricing if they use all their services – express air, ground shipping, returns and more. Yet many e-retailers soon realize that what seemed like a good deal upfront doesn’t always play out as promised.

Many e-retailers working with national carriers are frustrated by recent rate increases and a shift to dimensional weight pricing (DIM) that charges by a package’s physical dimensions rather than its actual weight. Add to that unexpected surcharges and volume penalty fees during holiday peak and the picture becomes crystal clear – the bundled price that seemed so attractive when first negotiated comes with conditions.

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E-retailers recognize that shipping and returns are a critical part of their strategy. As a result, many smart ones are choosing to “unbundle” and diversify their shipping and returns with a mix of best-of-breed solutions, large national carriers, regional carriers, the U.S. Postal Service and specialty partners and consolidators. They’re learning that it’s best not to put all your eggs in one basket.

Unbundling can seem like a scary proposition, as it often seems easier to stick with a large national carrier due to familiarity. Some e-retailers may be put off by what seems like more upfront work to diversify. But those that have unbundled and crafted their own diversified shipping and returns strategy have never looked back.

Here are 6 concrete benefits e-retailers are seeing thanks to unbundling:

Fewer surprises with 3rd party USPS workshare partners and alternative final-mile carriers: It’s not unusual to hear that carrier rate grids and contracts can be confusing or even misleading. The introduction of DIM has only added to the murkiness. E-retailers that leverage USPS workshare partners and alternative carriers in their diversified strategy have found the transparency refreshing when compared to the big national carriers, as they generally don’t use DIM pricing.

Greater flexibility in regional markets: When you’re locked into a national carrier it can be challenging to vary shipping and returns in order to meet certain regional needs. E-retailers that utilize USPS workshare partners and other alternative final-mile carriers find it easier and faster to customize shipping programs. They’re then able to avoid delivery area surcharges and extended area surcharges.

Diversifying doesn’t mean completely cutting ties with national carriers: While the large national carriers will always push you toward bundled contracts, it doesn’t mean your relationships with them have to end once you decide to diversify. National carriers can be an important component of a diversified plan.

Best-of-breed solutions offer innovative technological capabilities: The large national carriers rely on name recognition to keep customers coming back. But it’s important not to overlook seasoned postal-based workshare partners, some of which are pioneers in the shipping and returns industry that have maintained a balance between experience and innovation.

These alternative providers have fulfillment, shipping and returns solutions that build meaningful connections with consumers and drive business growth for brands. With today’s heightened customer expectations, many e-retailers struggle to provide things like free shipping and returns. Many best-of-breed solutions can help smaller companies meet customer needs with tailored programs that free up budget. 

Tracking has come a long way: One of the main arguments for using a large national carrier has been tracking capabilities which they say surpass either USPS or smaller specialty partners. But tracking capabilities have come a long way. The USPS and its partners understand the need to offer customers detailed outbound and inbound insights to provide a better customer experience and benefits like a decrease in call center volume. 

Less worry during peak seasons like the holidays: Who could forget the holiday shipping debacle of 2013? Overwhelmed with unexpected volume, two of the largest national carriers struggled to deliver holiday orders on time, creating social media outrage and headaches for many e-retailers.

Those that have diversified no longer live in fear of another holiday season disaster since they’ve spread volume across a variety of carriers. They’ve also found that partnering with parcel providers who consistently have capacity and a better track record of on-time delivery over the past several peak seasons helps to lower risk.

Don’t get railroaded into working exclusively with one provider. Assembling a few strategic vendors to execute solutions that offer several valuable benefits provides greater savings, less risk, improved customer experience and opportunities to improve sales and grow your brand.

Patrick Allard is senior vice president of sales for Newgistics

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