Sept. 22 2010 09:28 AM

For many years, it seemed as though the carrier has had the upper hand, dictating terms and defining the services merchants can offer to their customers. This is counterintuitive because the carrier does not own the customer, the merchant does. The packages leaving your distribution center are not just boxes – they are customers. Each one must be handled with great care, and your company must have the ability to provide your customers with the best shopping experience at the lowest possible cost, without sacrificing quality.

The key thing for a shipper to remember is to look at more than just price. Of course, the goal of minimizing costs is a top priority – but one bad shipment, and not only may you lose a loyal customer, but that customer may spread the word via social networks and online customer reviews, potentially harming your brand’s hard-earned reputation. And if the same thing happens to another customer, then another, and another – saving mere pennies per package may become the least of your concerns. 

The customer must always come first. Even further, the service provided by your carrier affects more than just customer service and operations: it also affects finance, marketing, and your IT organization. Each shipment represents an investment that a customer has made in your brand, and best-in-class shipping has the ability to drive incremental value across the business when properly managed. 

Service is Shaped by Consumers, Not Carriers
Despite a drop in retail revenue from 2007 to 2008, order volumes continue to increase. When combined with a lower average selling price per transaction, consumers are driving the requirement for cost-effective, yet high-service shipping solutions. 

Despite the fact that many merchants place all of their eggs in one basket when implementing a shipping service, a ‘one-size-fits-all’ approach is rarely the answer. It is important to offer your customers a variety of shipping options. Keep in mind that one of the largest drivers of shopping cart abandonment is the total cost of the purchase including shipping and handling – so if all you offer is two-day air, your customer may go elsewhere or find a comparable item at a local store to save an extra $10 on his or her purchase. But be careful in choosing your carrier – skimping on service to cut a few cents for your ‘saver’ shipping options can lead to a bad customer experience, which may negatively impact customer loyalty and long-term revenue growth.

Efficiency, Service and Cost Containment are Driving Decisions
In a recent survey of C-level retail industry executives (from RIS News and Gartner), respondents identified key initiatives through the end of 2011 based on need and available resources. A well-executed transportation strategy can help companies address multiple areas of service and capabilities, leading to benefits such as:
• Improved customer satisfaction through a better shopping experience
• Improved visibility and efficiency in the supply chain
• Improved marketing communications/promotions
• Reduced operational expense and improve efficiencies
• Reduced IT costs while providing a secure, stable platform for managing shipments

Unfortunately, too many companies look beyond shipping as a key driver of improvements across the enterprise, being satisfied with the status quo. By making small incremental investments in optimizing your carrier’s implementation – or better yet, asking your carrier to do more – you can realize tremendous gains for a far lower investment than may be realized by focusing efforts elsewhere.

The Value of Intelligence
Shipping technologies have come a long way in recent years. While shipping has traditionally been viewed as a logistics process, it has become more closely tied with technology in recent years. Without the right technologies, shippers may lack the visibility (and corresponding intelligence) they need into the shipping and returns process, creating a ripple effect that spans the business.

When properly managed, the data events tied to the movement of a shipment can: 
• Reduce call-center costs and improve customer service through customized tools
• Provide end-to-end visibility only expected from expedited carriers
• Accurately monitor delivery performance
• Identify areas of operational savings tied to improved handling processes
• Manage a carrier’s performance against contractual commitments to the business

Exposing Surcharges and “Value-added Services”
While several carriers are expanding their offerings to include lower-cost Postal-based options, it’s important to consider that the price you see on the rate sheet may not be telling the full story. Some carriers rely on “value-added services” to increase their revenues, and ultimately, your costs. For example, a residential shipper may see shipping costs increase 25-40 percent; billing statements that are impossible to reconcile; and an increased cost of services that can negatively impact order volume and revenue. Suddenly, the rate no longer looks so low.

It is also important to examine whether your relationship with your carrier is characterized more as a vendor or as a partner. If you have maintained a relationship with a carrier for years, and they have only just begun to truly pay attention to your needs because of a competitive threat, it may be time to evaluate if they are a partner that is interested in the mutual growth of the partnership, or only in their own bottom line.

Top Considerations When Selecting a Carrier
When choosing a carrier, it can be easy to lose the forest for the trees and select what looks like the lowest absolute price, with the singular goal of getting the most for your dollar. 

However, it is critical to remember that as a shipper, you are ultimately in the business of customer service. Consider actionable opportunities across the business, and look for cost savings beyond the basic rate chart. In today’s highly competitive market, shippers must challenge carriers to deliver more value, and there are easily deployable, open technologies that can help do just that.