As Parcel Volumes Grow, Is It Time to Reevaluate Your Regional Delivery Strategy?
By Christoph Stehmann
According to eMarketer, US retail ecommerce sales will total approximately $350 billion in 2015. This represents a big opportunity for US businesses. 

However, many small- and mid-sized shippers – particularly those that rely on carriers for last-mile delivery of low-weight articles – are finding it challenging to keep up with the sheer volume of parcels. 

In addition, customers want choices when it comes to delivery options. Our research shows that when it comes to free shipping versus fast shipping, the majority of Americans (82%) find free shipping where the product arrives in five to seven days more attractive, while 17% prefer fast shipping where the product arrives in one to two business days for a fee. 

On average, Americans who find fast shipping more attractive than free shipping would be willing to pay $8.50 for the package to arrive within two business days. Relatively few (19%) would be willing to pay more than $10 for fast shipping.

Therefore, businesses should continue to adjust their strategies to respond to consumer preferences and offer flexible delivery options.

Building the Right Carrier Mix 

In addition to the major carriers and the USPS, there are hundreds of regional carriers that range from "micro-regionals," that cover single cities or partial states, to multi-state regionals. 

These regional carriers can help automate processes to help your business consistently meet challenging, service level agreements (SLAs). They can also help with cost savings. In many cases, they can help reduce per-parcel shipping costs by as much as 40%. 

In addition, since regional carriers do not need the extensive infrastructure required by larger national and international carriers, they can often provide more flexibility with ground-delivery options, including next-day delivery. They can also give your business the ability to introduce and expand incentives such as flat rate shipping and free pickup, and can be more flexible with accommodating special circumstances when they arise.

You may also be able to negotiate better pricing with regional carriers, which can be passed on to customers or used to boost profits.

Key Considerations for Adding Regional Carriers

When evaluating whether regional carriers can add value to your shipping operations, consider the following:

• Where do you ship and how well do your destinations align with coverage offered by regional carriers?
• Are your customers looking for faster delivery, or discounted or free shipping?
• Do you know if you’re getting the best available parcel pickup, tracking and delivery service?
• How much can you save by using regional carriers?

Also, inquire about whether a regional carrier uses automated parcel sorting solutions. These sorters are not just for high volume parcel businesses. New solutions can help small and mid-volume shippers of low-weight articles process fewer than 1,000 parcels per hour to more than 30,000 items per hour, and achieve some of the same benefits, including lowering costs and increasing efficiency with package delivery. 

These low-weight parcel and flats sorting systems are flexible, operationally efficient and tailored to meet a business’s specific needs. In addition, they can help your business with Intelligent Mail Package barcode compliance and accurate dimensioning.

If you find that a regional carrier could provide these types of benefits for your business, the next step is to consider if you should diversify to optimize these benefits.

Multi-carrier Shipping Solutions

Depending on the volume of packages that you ship, you might also want to consider using multiple regional carriers instead of one carrier to help make sure you can maintain SLAs. After all, one regional carrier might not be able to handle all of your packages.

By carefully automating and managing carrier selection, it’s possible for businesses to drive significant efficiencies, reduce shipping costs and increase customer convenience. One way to accomplish this is by simplifying shipping operations via a single, automated multi-carrier system. These powerful, yet scalable web-based solutions can enable businesses to compare multiple carriers and select the most cost-effective shipment method that meets delivery requirements for every parcel shipment. They can also help optimize, integrate and automate all shipping processes while providing the highest degree of real-time visibility and control of an operation.

Looking Ahead

Incorporating regional carriers in addition to national carriers can offer important long-term benefits to your shipping operations, including consistent service levels, flexible delivery options and overall savings. Also, this can not only help increase customer satisfaction, it can help your business boost its bottom line.

Christoph Stehmann is Chief Operating Officer, Digital Commerce Solutions, Pitney Bowes