In the last few months, parcel rates have increased. This news comes as no surprise to anyone who leads a parcel operation as all the major carriers increase rates annually.
- On January 22, USPS instituted an average rate increase of 3.9% across its domestic shipping services like Priority Mail Express, Priority Mail, and Parcel Select.
- UPS increased its US Ground, Air, and Freight rates by an average of 4.9% late 2016.
- FedEx raised its FedEx Express package and freight standard list rates by an average of 3.9% for US, US export, and US import services and raised its FedEx Ground and FedEx Home Delivery standard list rates by an average of 4.9%.
Fees aren’t the only thing regularly increasing. Consumer expectations about how they want to shop, purchase, and receive the parcels are constantly rising. Today, consumers expect a lot. This has spurred the buzz among retailers around unified commerce with 85% of retailers saying that unified commerce is a priority (Boston Retail Partner’s Survey, 2016). However, creating this unified experience is not easy for most retailers. Unified commerce is about delivering a single version of the truth with real-time visibility to critical points in the journey for the customer experience, inventory management, as well as reporting on the processes that make up the journey. This is all done to help ensure long-term growth and sustainability against constantly evolving market conditions and consumer expectations.
Consumers have come to expect a unified experience spanning across all phases of the shopping experience – pre-purchase, purchase, and post-purchase. The first two are the traditional shopping experience of promotion, searching for products and actual buying – whether in-store or online – along with check-out and payment. Post-purchase includes getting the right product quickly at the customer’s convenience, such as same-day rush delivery, in-store pick-up, shipping from or to store or to a 3rd party collection point (e.g. lockbox etc.), installation and, most importantly, returns.
Surprisingly, the post-purchase experience has the greatest potential to impact the brand relationship both positively and negatively. When consumers were asked which phase has the greatest potential to damage their relationship with a retailer, post-purchase (41%) led over both purchase (36%) and pre-purchase (22%) (2016 Consumer Expectations Study, IBM).
In the parcel management world, the end customer is not always the first thought when your responsibility is to manage a mountain of parcels. Especially when parcel volumes expected to increase by 20% over the next three years, according to the Pitney Bowes Parcel Shipping Index. In addition to the parcel volume increases, you may have to manage the complexity of multiple carriers with different rate structures, tracking, billing processes, and service levels such as payment, delivery promise, and parcel protection to differentiate against competition.
The new reality is that the once behind-the-scenes supply chain is now customer-facing and an integral part of the brand experience. Delivery needs to run a gamut of options from direct-to-consumer, drop-ship to consumer, in-store pick-up, or store-to-consumer. And the expectation in today’s world is seamless visibility of inventory no matter if that is your DC, store, in transit, or on order. This is not only for you, but consumers expect visibility across all channels.
Technology can aid in the overall process through the use of APIs or plug-in modules that open up access to a range of complex shipping processes and optimization models to help augment your current systems. They can close the gaps to better manage costs, track deliveries, and help ensure an improved end-to-end customer experience. Businesses can implement API technology to not only reduce the impact on internal Information Technology (IT) resources and significantly improve time to market, but also to provide a global view of shipping services used anywhere in the supply or selling chain. Properly architected solutions allow companies to use multiple services in multiple locations to get optimum availability, such as:
- Provide greater and accurate visibility on shipments. Today, individual stores may be using stand-alone platforms or carrier-based portals, which can limit enterprise management and offer little or no roll-up reporting. To manage workflow for incoming and outbound packages and negotiate favorable pricing, retailers need visibility into the full range of shipping activities enterprise-wide.
- Optimize how you ship to manage costs more effectively. A parcel management system that provides access to ship with multiple carriers can help ensure that shipping costs are kept as low as possible. In many cases, retailers find that store-to-store and store-to-consumer requirements can open the door for the use of carriers that were not considered before. For example, the USPS (with discounts) option could offer cheaper and faster delivery based on where the parcel is going.
Many of these rising expectations are not in your control, but the reality is they touch your operation and you will risk losing to competition unless you continuously upgrade your infrastructure and business processes to address these evolving market and consumer needs. To find the flexible solutions that can help you evolve and manage costs may require partners who understand consumers, carrier options, and the latest technology. Ask the questions now to ensure that you are ready for the rising tide of costs and expectations.
Rajeeb Mohapatra is Senior Vice President, Global Ecommerce at Pitney Bowes. He holds an MBA from Duke University's The Fuqua School of Business. He has extensive experience with e-commerce strategies gleaned from both his experience at Pitney Bowes and his prior positions at Office Depot.