Ask the Right Questions About Your Retail Freight Management Strategy

In just 24 hours, the U.S. Postal Service on average processes and delivers over 500 million pieces of mail. In the same timeframe, FedEx ships nine million boxes. While the logistics of shipping may be invisible to shoppers placing orders from their homes or stores, freight management is a complex decision-making network that brands navigate daily. When moving orders to many places all at once, freight management is much more complicated than simply selecting a shipping method.

What’s more, the thought process behind a retail freight management strategy has a direct impact on a brand’s customer experience. Again, while customers may not see this firsthand, the intricacies involved in designing a box and its shipping procedures are many. Key components of shipping like speed, packaging materials and price can help brands build loyalty with shoppers or turn customers off when not properly handled. As such, all companies should be asking key questions when developing their freight management strategies.

For brands looking to improve their freight management practices and excite customers, here are two crucial questions to start with:

What is my intended brand experience?

How a package is delivered, as well as quality of the package itself, has a major impact on a customer’s experience with a brand. When making decisions about shipping, brands and retailers must think like consumers. For example, imagine that after you place an order online, your package arrives in less than 48 hours, you are able to track its progress the entire way and the box even requires a signature for delivery at your door. You’re pretty pleased with your purchase, right?

Brands can use high-quality shipping to show they care without directly telling customers. Extra measures like fast delivery or security procedures (i.e., requiring a signature upon delivery) can show customers that above-average shipping is worth the cost. Likewise, the opposite can also be true. Not all brands feel the need to position shipping as a part of their core identity. For these brands, pristine packaging might not be a priority so long as the item itself arrives in good condition.

Neither option above is necessarily better. What’s important for brands is to choose the delivery practices and standards that complement their intended customer experience and overall identity. For many brands, the average value of goods shipped can often determine the type of shopping experience consumers want. Typically, the higher the average order value, the more consumers expect when it comes to the quality of shipping. Brands shipping higher-end products, like electronics or luxury items, should invest more in their shipping efforts.

Can I offer free shipping?

As the ecommerce marketplace grows, brands must be careful about how expensive shipping becomes. Unexpected shipping costs are the No. 1 reason shoppers abandon their purchases online. A great way for brands to mitigate this loss is through free shipping.

However, implementing free shipping is not a decision to be taken lightly. Like delivery procedures, free shipping directly impacts a brand’s image. The offering is also a budgetary consideration for both your marketing and logistics departments. While it’s costly, free shipping often leads to greater ROI by enticing shoppers and differentiating companies from competitors. Due to the importance of free shipping, brands should think critically about the following factors before implementing a free shipping policy:

  • Product size and weight: brands can use dimensional pricing to determine when free shipping is most cost effective. For example, it may work best when a product fits into a flat-rate shipping box. 
  • Shipping locations: short shipping routes are less expensive for brands to take on and are often a better financial fit for free shipping than faraway locations. 
  • Average order value: when offered at a certain spending threshold, free shipping can entice customers to up their average order values. 
  • Upcoming holidays: sales seasons like Christmas and Black Friday are great times to offer free shipping and expand your customer base. 
  • Marketing budget: marketing and shipping departments can team up by offering free shipping promotions when shoppers sign up for a company’s email program or share promotional information with their friends. 

Considering these factors when making decisions about free shipping will help to properly balance this tactic’s costs with profit margins. Not all orders require free shipping, but brands can selectively choose when to offer the perk in order to maximize the effectiveness of marketing initiatives along with the profitability of their freight management strategies.

As consumers continue to make more online purchases than ever, shipping quality plays a significant role in brand perception and loyalty. From warehouse to doorstep, brands and retailers must align their freight management practices with their ideal brand reputation. This starts with understanding what shoppers expect and desire from the shipping experience, and then creating a strategy that meets those needs.

Maria Haggerty is CEO of Dotcom Distribution

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