The Hidden Costs of Parcel Shipping System Downtime

Posted on Aug 18, 2020 By tpawelka Share:

Have you thought about the true costs to your business when your shipping system goes down?

You know it costs money if any of the solutions that help you ship within your enterprise technology stack is down for an hour, a day, or even several days and you can't get product out the door. There's no doubt it's a bad situation in the short term, but have you considered the longer-term consequences and the less obvious, intangible costs?

You could be losing more than you realize. Shipping system downtime is more than a minor inconvenience. It can cost you a fortune! Let's look at the risks of system downtime — as well as ways to protect yourself.

The Painful Consequences of Downtime (and Why They Matter)

Make sure you’re taking all these potential costs into consideration when you measure how downtime affects your parcel shipping.

1. Slower Shipping Times

If your shipping system is down, product isn't being shipped. Business is stalled and your backlog builds. Every missed delivery promise is lost revenue, and potentially a loss of recurring revenue. If your customers can't get what they want or need, when they need it, they're likely to go elsewhere. Maybe to your direct competitors, maybe to other retailers who are better prepared.

The solution? Fast, reliable shipping requires high-performing technology that can handle unlimited shipping requests from unlimited locations and real-time processing of complex business rules and rating logic. Slow, clunky systems are out, and advanced shipping functionality is in so you have the quickest shipping execution times in the game.

2. Higher Customer Churn and Lower Satisfaction

Missing promised delivery dates tarnishes your reputation. That's one of those hard-to-quantify intangible consequences. Customers want fast shipping and give their loyalty to companies that can provide it. Some may be more forgiving in light of recent logistics challenges, but if there are alternatives who can fulfill their orders more quickly, you can bet they're going to use them.

While system down time may not be your fault, you're the one whose reputation is going to suffer. The solution? Choose a software vendor with proven speed and reliability and impress your customers instead.

3. Higher Inventories

Are you missing out on opportunities to move more inventory faster? Do you have the infrastructure in place to support new ways of doing business when a portion of your shipping lines are down?

If you're using a home-grown solution, relying on free carrier systems (like UPS, FedEx, etc.) or struggling with a shipping software vendor who can’t easily queue up and scale ship-from-store, you may be at a disadvantage.

The solution? Many traditional retail stores have been repurposed as micro fulfillment centers. There are several ways to transition. You can choose one or a combination of:

  1. Open to customer foot traffic
  2. Open for BOPIS/Curbside pickup
  3. Ship-from-Store

Make sure that your multi-carrier shipping software can handle an advanced and scalable ship-from-store strategy in order to avoid unnecessary high inventory counts, speed up your delivery times and improve profitability.

4. Greater Risks During Peak Season

Top Parcel Shipping Peak Season MistakesSpeaking of inventory, shipping windows are short for many seasonal items. If your parcel shipping goes down during peak season, you may miss out completely on opportunities to ship seasonal products and end up eating that inventory or selling at a huge discount.

More importantly, a surprise downtime during peak season can leave you with panicked personnel, time spent reaching out to your shipping software’s shoddy customer service, and even additional fees and surcharges. It’s also important to note that customers who receive late packages during peak season may hold a lengthy grudge, request refunds and never shop with you again.

The solution? Prepare now to mitigate the risks. Reach out to your shipping vendor for a peak preparedness assessment, test it thoroughly and take detailed notes through it all so you’re better prepared for the next peak season. [On-Demand Webinar]: ProShip and Manhattan Associates Discuss Peak Season Secrets

5. Increased Overhead and Wasted Resources

Overhead costs pile up when your system is down. You still must continue to keep the lights on and pay your employees while keeping them productive, even while no revenue is being generated. Your costs (labor costs + revenue lost) can easily reach thousands or tens of thousands of dollars for every hour of downtime. It's not an exaggeration to say that downtime can threaten your organization's viability.

Downtime also affects employee morale. Teams panic (as do C-level execs), and the frustration can seep through in customer service interactions. The solution? A multi-carrier parcel shipping solution with proven top-notch reliability and responsive support.

6. Compounding Risks of Slow Software Support

Your downtime risk increases when your current software provider doesn't provide regular updates that correct frequent system failures. Best-in-class vendors stay on top of product updates and enhancements. Has your software vendor decided to sunset certain products and leave you out in the cold? Do they provide quick, responsive customer support when problems do arise? Or do they take a long time to respond to and fix errors? The longer you wait for support, the more your costs add up. The more those costs add up, the less budget you have to invest in better technology. [Infographic: Why Buy New Shipping Software Now Rather than Later]

The solution? The best support responds within the hour and isn’t outsourced. It’s in-house software and logistics experts with access to a dedicated account manager and service engineering team.

Minimize Downtime with Proven Technologies

The stakes have never been higher. Retailers must find ways to optimize their distribution centers, utilize drop shipping and third-party logistics partners and most importantly, use their own stores for e-commerce fulfillment.

Retailers that already had the capability — or who have pivoted quickly — have been able to continue to move in-season product, keep employees working and become the “go-to” for their customers. Less responsive retailers are sitting on inventory, furloughing workers and watching their customers shop with better-prepared competitors.

Protect your profits and your reputation with the best available parcel shipping solution. Don't wait until your system goes down. Get prepared now.

Please reach out and talk to our experts, and avoid painful and costly downtime.

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