As ecommerce continues to thrive, brands are feeling the pressure to improve their direct-to-consumer strategy. Crafting a shipping carrier mix may be low on the list of priorities for improving profits, but it shouldn’t be.
Relying on a single carrier to fulfill your shipping needs can be expensive, especially in the wake of rate increases and the many surcharge spikes taken by the major carriers of late (and still more to come).
But there are more reasons to do your research. A healthy carrier mix gives you options. When you can shift volumes depending on shipment characteristics, you can fulfill orders faster, solidify an outstanding customer experience and control costs.
But where to start? Your own backyard (or distribution or fulfillment center). We recommend reviewing your current operations as well as your current and historical shipping data before you start comparing the ever-growing list of carriers. The latter is part of the process, of course, but gaining a better understanding of your own data will deliver solutions that are best for your business.
We recommend approaching your analysis in three stages:
Stage 1: Your shipping data
Start with your shipping profile, a robust collection of data that includes weekly package volumes, mix of services used, average cost per package, common package dimensions and average weights (both actual and billed), surcharges, average time in transit, and customers’ typical preferences for shipping speed. You’ll likely find this information spread among a variety of sources, but work to synthesize it as best you can. You don’t need to go it alone. Many companies offer shipping optimization services that can translate all of your data into easy-to-understand, actionable insights for confident decision making.
Stage 2: Your own operations
Your shipping profile is a gold mine of data, but you’ll also need to look at your overall distribution network and even your customer service policies. We recommend reviewing the following:
- Your shipping policy, including free shipping. Can you really afford it?
- Your distribution network. Where are your shipments going, on average? Are your fulfillment centers in the most cost-effective/efficient zones?
- Your product mix within your network. Are you shipping the right products from the right locations?
- Your packaging. Can you mitigate some of the surcharges you incur by using different packaging or even breaking up shipments?
This stage of the process is one to put on repeat. Even after you’ve optimized your carrier mix, frequently reassessing your operations is the key to staying agile and responding quickly to changes to your business or the shipping industry.
Stage 3: Your carrier options
Now it’s time to compare your shipping profile with the offerings of various carriers. Check out the major players but don’t forget the other options, including regional carriers, LTL and last-mile delivery.
Analyze these carriers’ 2021 contracts and ask questions like:
- How will my package dimensions affect what I pay and my service levels?
- Is my contracted discount helping me pay less overall?
- Which surcharges will cost me the most?
- Are minimums keeping my prices higher than they should?
- Would regional carriers deliver faster to customers in some areas?
- What zones do I most frequently ship to, and am I paying for premium services when I don’t need them?
Again, you don’t have to digest all of this data on your own. Operational modeling can be useful to help you visualize carrier mixes before you change carriers or add new ones.
Stage 4: Make it actionable
Now that you’ve asked the questions, it’s time to take action. First, schedule some time with your current shipping carrier reps to discuss your options — now. No need to wait until contract negotiation time.
Then expand the discussions. If your analysis revealed that a regional carrier or LTL might work for your business, talk to them. But use caution. You want to seek out solutions that put you in control without drowning you. Your data will clarify your discussions.
Finally, have the confidence to make changes when and where they’re needed.
Crafting the best carrier mix takes time, but it is time well spent. It improves the bottom line and can have a topline effect. By eliminating shipping snags, customers are happier, ultimately promoting sales growth and building brand loyalty.
George Meier is chief business development office at Sifted