The Digital Transformation of Shipping

Posted on Dec 5, 2019 By jhofkamp Share:

How to stack your facility with the right technology to lower shipping costs and boost CX

Do you remember when standard delivery times were 7-10 business days? From the 1990’s to 2000’s, standard delivery was the normal length of time customers waited to receive their online orders. Most orders didn’t even have tracking numbers, and if they did, they were only given out if the customer contacted customer service. The craziest part is customers were okay with that! Flash forward to today and consumers are demanding – and expecting – much more. From same-day delivery to complete tracking visibility, shippers are working on adapting to meet these engrained expectations.

Unfortunately, it seems that as soon as shippers get used to the latest consumer demands, they change again. In fact, some predict that by next year, the new expected delivery length will be as fast as next day (Amazon and Walmart are already offering it!) or even same day – sometimes within hours. While same-day delivery may seem unheard of, it is already being offered in some major cities, and has been for quite some time. “It’s been around quite frankly longer than some of the major carriers have. That’s just a service that many grocery stores and retailers have always offered in big cities. But now we are seeing it being offered in mid-size cities, so shippers need to be prepared for it,” noted Justin Cramer, Global Project Management Director and Co-Founder of ProShip Multi-Carrier Shipping Software.

Digital Transformation of Shipping WebinarThe tough part about same-day delivery is that no carrier offers coast-to-coast shipping. While Instacart, Postmates, Shipt, Deliv and FedEx do offer same-day services nationwide, these services are for regional shipping only. They aren’t able to ship from Sacramento to New York. Even Amazon is still only testing this new service offering in two cities. “One way or another, you’re going to have to mix and match if you’re going to have a same-day delivery strategy for your customers,” added Bill Schroeder, Director of Strategic Alliances at ProShip. “But even if you mix and match, there is a lot of volatility out there. Uber Rush and DHL eCommerce actually pulled their same-day delivery options quickly after implementing them. With that volatility, you need technology that allows you to switch out between carriers.”

With 75% of consumers expecting same-day delivery from all retail brands in the next six months, shippers need to be prepared. It won’t be long until customers will also expect delivery anywhere: lockers, Starbucks or even a customer’s car.

Knowing the customer landscape and industry trends are the first steps to being successful in this tough industry with constantly changing consumer expectations.

  • 74% of shoppers generally prefer free over fast shipping – but it still needs to be fast. Gone are the days of delivery in 7-10 business days.
  • 65% of shoppers will increase their cart to qualify for free shipping – with Gen Z being more susceptible. Many retailers are requiring minimum orders for free shipping. Even Walmart requires a $35 minimum order for customers to receive free shipping.
  • It is important to note that only 65.4% of Top 1000 retailers offer some level of free shipping. However, just 17.5% offer free shipping on every order. This proves that not all shippers are trying to head-up with Amazon by offering free shipping for everything, but it is still important to remain competitive with other retailers.

Now that you understand what consumers expect, shippers need to use a mix of strategies to not only meet and exceed customers’ newest demands but compete with other shippers. This includes using the latest technology to save on costs and streamline order fulfillment. Not all shippers can spend $9.6 billion on transportation like Amazon. That’s why creating a unique shipping strategy with the best tools to fit your particular customers’ demands is vital.

Unfortunately, there is no one-size-fits-all shipping strategy. Shippers need to utilize a variety of methods and technologies in order to find the strategy that works best for them. This can include leveraging a variety of inventory sources. For example, most shippers are now using internal inventory sources, like warehouses and brick and mortar stores, to get orders to their customers. But others are expanding to external sources – manufacturers and 3PL’s – in order to remain competitive. In fact, 3PL’s are becoming platforms for small shippers. “Whether it is eBay or Shopify, small shippers can now compete with mid-size shippers because they can have access to stock at dozens of locations across the country in order to provide lower cost and final mile solutions for their customers,” added Cramer.  By using all of these sources, small shippers are able to reach more customers at shorter distances, meeting (or ideally surpassing) their expectations for fast delivery.

Another important part of the shipping strategy is the available technology. In the 90’s, ERP and WMS systems were the only technology shippers needed to succeed in the retail industry. This was easy since shippers only used a couple of carriers in order to get orders to their customers within 7-10 business days. Needless to say, that has certainly changed. Today’s largest shippers still can’t go a day without WMS/POS systems as well as ERP, but now they are utilizing OMS/TMS/CRM software in order to create a better customer experience. These systems allow shippers to retrieve customer orders, offer multiple shipping options and track profits to gauge profitability. However, these systems have been added one by one over a 30-year period and now we are demanding these systems to do things they were never designed to do. “What we have emerging today is figuring out the best way to ship something. And instead of from one distribution center, we have to find the best way to ship it from multiple distribution centers. Multiply that by shipping from hundreds of stores, and add on top of that, 28 or more shipping services you need to pick from. In the end, optimizing your shipping strategy has become a problem of numbers and time,” noted Cramer.

Digital Transformation of Shipping WebinarOne system that has become the core of the digital transformation of shipping and has allowed shippers to add on even more carriers and services in order to offer extremely fast delivery is shipping software. With shipping software, shippers are able to utilize all of their technology to streamline the order fulfillment process while also saving thousands in shipping costs. The software allows shippers to see where the closest inventory source is to the customer (whether they are at home or in their car), identify the best shipping method and carrier needed to meet the customer’s desired delivery date, and print accurate shipping labels in seconds. This core system integrates with all other technology to offer complete customer satisfaction and is scalable to keep up with the changing shipping and fulfillment trends, like omni order channels and omni carriers. The only tough part is identifying which systems are best for your business.

Like a poker hand, utilizing the right technology stack can make or break you. If you have a good hand, you’ll be able to reach an elevated level of distribution efficiency, implement new delivery options and find a deeper value along the supply chain that builds stronger-than-ever customer revenue streams. Without good technology, your business won’t be able to compete. Some of the largest retailers are sharing the solutions they use to stay ahead in the game.

  • Finish Line is a powerful brand that began shipping from their store before other shippers even started to use it. In order to do so, the company uses Oracle Retail in its stores while leveraging Manhattan Associates in its warehouses. Finish Line also utilizes ProShip’s multi-carrier shipping software for both in-store and warehouses to find the best shipping method for every order at the lowest cost.
  • GNC just started using ProShip’s shipping software to add ship-from-store functionality in 400+ retail locations. This solution integrates seamlessly with its other systems allowing GNC to leverage its current enVista’s OMS solution to see where to source its orders and with JDA as its WMS solution.
  • Kohl’s, a retailer who has done very well in the “retail apocalypse”, leverages IBM Sterling Commerce as its OMS/POS solution to organize and execute within its stores. The organization also utilizes Manhattan Associates as its WMS system to provide the appropriate amount of back shipping and automation within their warehouses. In addition, the retailer is taking advantage of ProShip’s shipping software to reduce the average delivery time to customer by half a day, greatly improving the customer experience.

In this latest webinar from ProShip on the Digital Transformation of Shipping, learn how other large shippers are stacking their facilities with the best technology and software to ensure a royal flush and success in this challenging industry. Justin Cramer and Bill Schroder will discuss how shippers can develop shipping strategies to keep up with customer demands and the tools needed to win. Watch on-demand now!

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