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New Fulfillment Frontier: Going the Last Mile in Package Management

package

New Fulfillment Frontier: Going the Last Mile in Package Management

We are moving into the traditionally high-volume shopping months—back-to-school,  Black Friday, Cyber Monday, the holidays, and post-holiday sales. All this increased activity will be layered onto the already higher-than-ever levels of pandemic online shopping we have experienced for the last few months. According to the National Retail Federation, parents report plans for record-breaking back-to-school spending, with a particular emphasis on laptops, tablets, and headphones.

With more students and parents staying home,  multifamily properties should take their package experience of the last six months and work to create a package management strategy that will carry them through the peaks of the next online shopping wave.

E-Commerce Grows Double Digits

Growth in e-commerce over the last few months isn’t a blip or even a spike. It is more like a Teutonic shift. Thanks to the shop-from-home impact of the Covid-19 pandemic, e-commerce is poised to grow 18 percent by the end of this year. There are more Internet shoppers than ever before, and those shoppers are buying more. That means more—many more—package deliveries to multi-family properties.

From Millennials and GenZ to Boomers, all generations are in the game. More than 75 percent of the American population has purchased goods online, ordering literally everything—from toothpaste and diapers to televisions and dishwashers—from an estimated 12 to 24 million e-commerce sites. This tsunami of brown boxes has forced managers and staffs of multifamily properties to become an essential part of the “last mile” of the e-commerce supply chain.

What Is “Last Mile” and How Does It Affect Property Managers?

In the shipping and delivery industry, last-mile traditionally refers to the final step in the delivery of a product from a warehouse to the customer. This final leg, which can range from just a few blocks to fifty or a hundred miles, is often the most costly and challenging segment in the entire logistics flow—especially as online customers have come to expect rapid-fire delivery—often same or next day.

Whether it be for security or logistical reason, national carriers such as UPSFedEx,  DHL, or USPS,  deliver to a property’s designated receiving area; making the multifamily property staff the de facto last step of the last mile. Your team then has to log, notify, and deliver the avalanche of packages. They lift and carry, stack, stash, and store and are responsible for the safety and secure delivery to the correct recipient.

Think Like a Carrier

Managers of multifamily properties can take a cue from these national carriers. Here are three tips to help you develop a proactive package management strategy that prepares multifamily property staff to handle last-mile deliveries like the pros.

1. Assess Current Delivery Operations: The volume and variety of deliveries over the last six months has been a graduate course in delivery management. You and your teams already know much more about the impact of last-mile deliveries than you did a year ago. Take a moment to document the last six months of experience by gaining insights from all involved in the process:

-Residents: What aspects of delivery are your residents asking (or complaining) about? Typical priorities are security, convenience, 24/7 accessibility, and adequate receiving space. Since COVID,  contactless solutions are at the top of the list. What else do your residents want?

-Staff: How are deliveries impacting your staff? Do you have enough temporary parking or are delivery trucks monopolizing the receiving dock or precious curbside front entrance? Are shelves and boxes ruining lobby ambiance? How are deliveries impacting efficiency or morale?

-Delivery Carriers: Reach out to the drivers and route managers at companies that deliver most frequently to your building—both national and local carriers. Talk to them about delivering to your property. Are other comparable properties on their routes handling deliveries differently? Do they have suggestions for your specific property?

2. Let the Data Drive: Go back to the basics to get ahead of this growing delivery tsunami. Work with your staff to create a process to identify, collect, and report the data you will need to make effective decisions about future package delivery. Here’s a get-started list:

Delivery 

-Package types, sizes, weight

-Packages per delivery and per 24/hours

-Pickup and delivery times/frequency

-Carrier information – Amazon, UPS, USPS, FedEx, DHL, independent carriers

-Local delivery information – Dry Cleaners, Grocers, Food Delivery

-Odd- and over-sized deliveries (skis to TVs)

-Perishables

-Returns, waste management, and recycling

Building Logistics and Demographics

-# of units, average # of residents

-Elapsed time between delivery notification and resident pick-up

-Delivery path: docks and bays, driveways, pathways, controlled access to building

-Mail and package handling

External Data and Information Sources

-Industry associations (property management, retail, and others) for benchmarks, best practices, and trends. Example: NMHC or NAA

-Industry consultants, suppliers or vendors

-Managers of comparable properties

3. Technology: E-commerce delivery giants reinvented the delivery industry from the 1960s on with technology. FedEx revolutionized time-sensitive and urgent delivery. Decades before the iPhone, UPS drivers broke ground with hand-held tablets. Amazon Prime takes first place in warehouse automation. Now, these companies are testing sidewalk robots, drones, and driverless cars. On the residence side, leading-edge property managers can apply technology to the “last mile” with software, smart locker solutions and access-controlled package rooms that deliver convenient and secure 24/7 access for their residents.

Plan for the Future

For properties receiving packages, many days already feel like Black Friday and Cyber Monday all rolled into one. From forecasts and consumer behavior, we can only expect deliveries of all types to increase. By utilizing interviews, data collection, and adding technology, property managers can build an effective and flexible package management strategy that will continue to scale into the future.

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Donna Logback is marketing director for Package Concierge®, the trusted provider of automated locker solutions for the modern world. By combining industry expertise and cutting-edge/leading technology, Package Concierge seamlessly automates package management for multifamily properties, student housing communities, retailers, and office buildings. As the only vertically integrated solution, Package Concierge® products are built in the USA and powered by proprietary software to deliver on security, design and functionality. With over 75 million package transactions, Package Concierge® collaborates with customers to address their evolving needs by optimizing operations and enhancing user experiences through its scalable smart locker solution. For more information, visit www.packageconcierge.com.

holiday season

How to Prepare Your Online Store for the Holiday Season During COVID-19

We’re already getting super hyped for the holiday season. From delicate snowfalls to generous gift-giving to spending time with family and loved ones, it really is the most wonderful time of the year.

But if you work in retail, the holiday season can mean something VERY different. Many boutique owners find themselves busier than ever during the holidays. Most years, the holiday season means long lines at malls, loads of crowds, and tons of in-person sales. But this year’s going to be totally different.

Online stores have steadily grown in popularity over the years – but COVID-19 made the shift to e-commerce accelerate at its fastest ever rate. This holiday season will be totally dominated & led by e-commerce stores. Many believe the 2020 holiday season will be the single biggest e-commerce event in HISTORY.

If you own an online boutique, that’s great news for you! It means you’ll have the chance to capture all kinds of new and existing customers looking to buy gifts for their loved ones (and take advantage of the great deals for themselves, too). But it also means you’ve got to brace yourself. Things are about to get WAY busier.

Whether you’ve already made it through many a holiday season as a boutique owner before or this will be your first one, read on to learn how to prepare your online store for the holiday season during COVID-19.

Make it easy for your customers to buy online

Make sure you’re totally prepared to accept online orders – and that your website makes the online buying experience as soon as possible. Go through your online store as though you were a customer and make sure the entire buying process is crystal clear. Take a moment to work out any kinks you find so you can provide a seamless buyer journey. If this is your first time selling online, make sure payment solutions are totally ready by running a few test purchases.

Once you’ve done that, update your website for the holiday season. Update your inventory so in-stock items are clearly marked. Promote seasonal offers and holiday deals throughout your website. Clearly display your boutique’s shipping and return policies, especially if you’ve modified them for the holidays. The easier it is for your customers to make a purchase (and take advantage of awesome holiday deals), the more likely they’ll be to do so!

Plan & stock your inventory in advance

And by “in advance,” we mean ASAP! It’s always a good idea to start stocking up on holiday inventory early, but this year it’s more important than ever. Many shipments have been delayed due to the pandemic, so the sooner you can order your inventory, the better.

Make sure you choose to work with a reliable supplier. While the increase in high demand affects retailers like you, it also affects manufacturers, distributors, and wholesalers in a big way. Order early and choose a supplier with great customer service. Supplied is a great option for online boutique owners looking for a wide variety of wholesale boutique items, flexible payment terms, and free shipping (yes, even during the holidays!)

Schedule out promotions

Many customers pretty much expect great holiday promotions from the brands and boutiques they love. Start planning out what sorts of promotions you’ll run and when you’ll run them. Stagger promos and marketing efforts carefully so you have a flow of ongoing sales instead of a few huge peaks. It’ll make it easier for you to fulfill orders and provide great service.

With COVID-19, it’ll be difficult to predict exactly how long shipping times will take. To make it easier for you to ship items out well in time for the holidays, incentivize early buying with sales. Experts predict that Amazon’s October Prime Week will cause many buyers to purchase holiday gifts earlier than ever before. Consider offering a sale during it in an effort to pick up some of that traffic.

You’ll also want to make sure you take advantage of Black Friday. Many of the largest retailers have already announced that their stores will be closed for Thanksgiving weekend, meaning there will be far fewer in-person Black Friday doorbuster deals. Try and capture some of that excitement online by offering a great deal for Thanksgiving weekend.
Expect delays

During the 2020 holiday season, getting packages to arrive on your customers’ doorsteps on time will be tricky. Encourage people to buy early. Be transparent about shipping delays you’re aware of and do your best to manage your customers’ expectations. As tempting as it may be, don’t promise a delivery date you can’t guarantee.

Once the guaranteed holiday shipping deadline passes, offer virtual gift cards that can be instantly delivered and used towards any item in your shop. This provides a way for last-minute shoppers to still support your shop.

Prepare for fulfillment & delivery

A lot of online boutique owners are out there running a one-woman show – but during the holiday season, you might want some help. If you usually do shipping and fulfillment operations all by yourself, consider enlisting a friend or an employee to help with the busy season.

If you have a brick-and-mortar location or a lot of local customers, offer in-person pickup to allow customers to save on shipping costs – and to allow you to package and mail fewer orders!

To sum up – to prepare your online store for the holiday season during COVID-19, you’d best get started now. Start ordering wholesale boutique items now so you have plenty of time to prepare for any delays, update your inventory, schedule out promotions, and allow your customers to order their gifts as early as possible.

Supplied members enjoy up to 75% off of wholesale prices on over 100,000 wholesale boutique items. And with free shipping, flexible payment terms, and no minimum orders, it’s perfect for stocking up quickly in preparation for the holiday season. Become a member (it’s free!) and place your first order today.

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Joseph Heller is a small business expert and CEO of SuppliedShop.com. Supplied makes it easier for small boutique owners around the world to access high-quality, affordable wholesale boutique items, whether to stock their physical store or IG shop.

supply chain

How to Best Prepare for Current (and upcoming) Supply Chain Disruptions

Weekly meal planning is a recurring event in our household. Although this activity is not particularly exciting, every Saturday my wife and I sit down to plan out our family meals. This process helps us avoid the mid-week supermarket scramble, as well as sidestep overspending on items we don’t actually need. Sound familiar? Supply chain planning is no different when it comes to yielding efficient results, especially this year.

It’s no secret the way companies ship their freight has shifted due to COVID-19. C.H. Robinson is great at helping customers secure capacity and optimize their global freight across our suite of service offerings as their needs evolve. Due to COVID-19 market changes, our global team of supply chain experts has spent extra time securing expedited less than container load (LCL) capacity for companies that can work with extra lead time. Another big change is how many ghost or charter flights are used to make up for lost capacity from the mass decline in global passenger travel.

However, COVID-19 is not the only event putting pressure on the freight market now. And with passenger travel not expected to recover until 2024, proactive solutions are needed to avoid current and upcoming disruptions.

Prepping for peak shipping season and new tech launches

When it comes to maximizing your global freight, it’s important to take seasonality into consideration. Peak shipping season for global air freight historically begins in October, and we’re already anticipating a busy peak season due to the unbalanced relationship between supply and demand. Even if air freight volumes were consistent or less than previous years, there is a lot less capacity to work with. Additionally, ocean shipping is experiencing a busy peak season now as companies prepare for the holiday shopping surge.

Consumers are also eagerly awaiting new technology releases—including the iPhone 12, Sony PS5, Xbox, and more. High priced commodities, like consumer electronics, primarily ship via air. And while consumer tech launches are not uncommon during the holiday season, the lack of passenger planes aren’t helping the situation this year. This, combined with the volume surge in other commodities related to peak shipping season and continued demand for personal protective equipment (PPE) creates a tighter market.

What can global shippers do to combat tight capacity?

The key is to remain flexible and remember it’s never too late to start planning. Although some items, such as technology, tend to move by air, global shippers can consider shifting other commodities to expedited LCL or expedited full container load (FCL) service to mitigate disruption and stay agile in a tight global freight market.

However, for those shippers that truly depend on air capacity, shifting modes isn’t always an option. So, while ghost flights were a reactive solution for many this past spring, C.H. Robinson took our own planning advice and proactively chartered weekly 747 cargo flights from China to the U.S. from October to November, as well as Europe to the U.S. until the end of the year. Capacity on a 747 cargo aircraft can hold up to five times more freight than an average ghost flight. And our global network of experts knew proactively purchasing that space was necessary as global shippers face peak season, PPE from Asia, and a recovering economy out of Europe. We’re already seeing this approach drive solutions for our customers.

Looking forward to COVID-19 vaccines

COVID-19 vaccines are on the horizon. Once one or more is available for global circulation, it will likely create a significant ripple effect throughout supply chains. Even if your company is not directly connected to distributing or manufacturing a vaccine, the time to start planning alternative modes or routes is now.

Like technology, vaccines primarily ship via air to monitor the temperature and deliver them to market quickly. According to IATA, 8,000 747 flights would be needed to distribute a single dose of the vaccine to 7.8 billion people around the world. Although a vaccine with this large of a global magnitude is new, we can get a sense of the supply chain reaction by looking back at the height of global demand for PPE. Throughout the spring we saw airlines, 3PLs, carriers, companies, and government agencies go above and beyond, working extra hours and expediting products in order to create and deliver PPE around the globe quickly. It’s likely we’ll see the same comradery with the vaccine—pulling manpower and capacity away from other shipping needs.

Although we know air freight will play a vital role in distributing vaccines, last -mile is also an important area companies and logistic professionals are planning for. Last-mile planning will be especially important in countries where road or manufacturing infrastructure may be underdeveloped. However, keep in mind whether your company is involved in vaccine distribution or not, it’s still likely your supply chain will be impacted by higher transportation rates or additional capacity constraints across modes.

Final thoughts

As the pandemic spread across the globe, we saw air cargo rates rise to unprecedented levels. Airlines and cargo operators continue to adapt quickly to this dynamic market. Now it’s time for companies to evolve, too. Never before has a balance between proactive planning and flexibility been so important.

Planning ahead and using forecast data can be the difference needed to turn a dysfunctional supply chain into a strong, agile one that is ready to face this volatile market. We know logistics can’t exist in a world of absolutes. This makes it difficult to prepare for today’s (and tomorrow’s) disruptions—or even to know where to begin. That’s where C.H. Robinson comes in. Utilizing our information advantage, you can rely on our people to bring you smarter solutions across your global supply chain. Reach out to one of our experts today to start the conversation.

e-commerce

UPS, FEDEX, AMAZON, TARGET, WALMART AND BEST BUY ARE KILLING IT IN E-COMMERCE. HERE’S HOW.

COVID-19 has sped up e-commerce adoption across all industries as many businesses emerge from the global pandemic battered and bruised. At the end of 2019, e-commerce represented 11.3 percent of total U.S. retail sales. This percentage inched up to 11.8 percent at the end of the first quarter of this year. For the second-quarter, some estimates suggest this percentage could double, at minimum, as businesses closed, and consumers stayed home because of COVID-19.

Indeed, while increased online sales is not a new phenomenon, the speed with which new generations of customers have gone online is and has led to a change in demand that is unlikely to reverse quickly according to McKinsey & Company’s latest COVID-19 Briefing Materials: Global Health and Crisis Response (June 1, 2020). McKinsey estimates that 20-60 percent more U.S. consumers are digital as a result of COVID-19. Stickiness of digital, localization, and selectiveness in spending are major trends that businesses will need to address as the pandemic alters the way business is conducted.

McKinsey also found that consumers are shopping online more and are more willing to switch across brands. This can be seen in one the biggest “winners:” groceries. According to Adobe’s Digital Economy Index, online groceries grew 110 percent in daily sales between March and April. However, there were delays in last-mile deliveries as companies including Amazon, Walmart and Instacart had to hire more workers to assist with the increased consumer demand.

In March, Amazon had to restrict non-essential shipments from third-party sellers and other retail vendors and focus on receipt, restocking and delivery of essential products that were most in demand. Meanwhile, Walmart touted not only its online store capabilities but also curbside pickup. The result was a strong first-quarter earnings for the period ending April 30 with comparable-store sales up 10 percent and e-commerce sales up 74 percent. Strongest sales were in food, consumables, health, and wellness.

Retailer Target also noted strong first-quarter sales. While comparable-store sales increased only 0.9 percent in its first-quarter ending April 30, e-commerce sales jumped 141 percent with 80 percent of e-commerce orders fulfilled in Target’s stores. Food and beverages rose over 20 percent, essential and beauty 10 percent, and home rose in the single digits.

As more workers work from home, electronics and furniture sales also increased. Best Buy noted in the eight days ending March 20, sales jumped 25 percent as customers purchased work-from-home-related items. As stores closed, online sales increased more than 250 percent, with half of those orders using curbside service available at most Best Buy stores.

For small parcel carriers including FedEx and UPS, the e-commerce volumes proved to be a boon. Both carriers have been preparing for rising e-commerce volumes by introducing such service offerings as seven-day deliveries, faster delivery times, later pick-up times, returns solutions, fulfillment solutions designed for e-retailers, alternative delivery pick-up and drop off locations and more. By all accounts, FedEx and UPS appeared prepared to handle the sudden e-commerce volume increases.

Just as the COVID-19 impact was being felt in the U.S., UPS noted in its first-quarter earnings that March volumes were 70 percent business-to-consumer (B2C) with April trending similar. FedEx also noted a similar trend with higher than usual B2C volumes.

The result was a sharp increase in residential volumes for both carriers and delays occurred. It should be noted that residential deliveries are typically more costly for FedEx and UPS versus business-to-business moves in which batches of parcels can be picked up and delivered at once.

A number of consumers took to social media to voice their frustrations and share photos of overflowing packages at carriers’ facilities. However, not only were carriers faced with higher than normal volumes, but they were also dealing with the coronavirus itself, affecting an unknown number of FedEx and UPS employees who would otherwise be sorting packages, loading and unloading delivery vehicles and delivering packages. Networks slowed as a result.

Having temporarily suspended all service guarantees and implemented international peak surcharges in March to handle a surge in international volumes, FedEx and UPS introduced new temporary peak surcharges to address the U.S. domestic situation.

UPS’s latest surcharges took effect on May 31 and addressed Residential, SurePost, and Large Parcels. Meanwhile, FedEx’s domestic temporary peak surcharges took effect on June 8 and addressed Residential for FedEx Ground and FedEx Express parcels, SmartPost, and Oversize Parcels for FedEx Ground and FedEx Express parcels. Keep in mind, these temporary peak surcharges are in addition to already existing surcharges and individual shipper’s contracted rates.

Besides surcharges, FedEx also capped some shippers’ volumes. This is a similar approach to what the carrier does during the holiday season if a shipper exceeds agreed-upon volume commitments. However, this is not the traditional holiday season and many shippers were caught off guard by this tactic. UPS also took a page out of their holiday season playbook and dispersed managers and supervisors across the U.S. to pitch in and help at sorting facilities and deliver parcels.

The rapid increase in e-commerce parcels seemed to catch FedEx and UPS off-guard and significantly impact their lower margin service, Residential. Moving beyond the COVID-19 crisis, e-commerce will play a bigger role in B2C as well as B2B. Businesses will utilize a number of creative ways to handle the last mile – curbside pickup, buy online, pickup in-store, residential, third party locations for pickup and delivery, and more. FedEx and UPS will need to work closely with customers to share capacity availability and concerns.

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John Haber is the founder and CEO of Spend Management Experts. With more than 25 years of supply-chain experience, John has helped some of the world’s leading brands drive greater efficiencies through their supply-chain operations while reducing transportation, distribution and fulfillment costs. He began his career at UPS, where he held various executive level positions in corporate finance and corporate strategy and was instrumental in developing profitability and costing models. He also managed the carrier’s National Accounts Profitability Group where he audited the pricing and profitability of UPS’ top customers. John’s finance background combined with decades of experience working with high-volume shippers enables him to offer unique insights on strategic supply chain planning, including distribution model optimization, transportation cost analysis and carrier contract optimization and compliance.

delivery

Is your Ecommerce Caught Between Delivery Delays and Voided Service Guarantees? Strategies to Survive this Situation.

The pandemic has disrupted ecommerce businesses in unique ways. While a few ecommerce stores went bust, others doubled their revenue overnight. Regardless the parcel volumes continue to soar. The parcel volumes are so high that even major shipping carriers like FedEx and UPS are overwhelmed. For example, FedEx alone saw a 35%-40% increase in B2C deliveries. An unprecedented rise in shipments has forced both the carriers to resort to undertaking stringent actions.

Carriers Suspend Service Guarantees

FedEx and UPS have suspended money-back guarantee for ground and priority services. Let’s take a minute to understand what this means for merchants. An escalation in order volumes directly impacts the carrier’s on-time delivery performance. It is almost a given that merchants will experience a minimum of 20% increase in delays. An explosion in sales, impatient customers, and shoddy delivery experience. Add to it, COVID uncertainty and unaccountability resulting from voided service guarantees. Sounds like a disaster in the making?

When delays are imminent

With the growing volume of residential deliveries clogging their network, carriers may redirect traffic to relieve congestion. Suspension of guarantees also means that FedEx or UPS can switch your priority shipments to lower-cost ground mode without notice. Expect more delays for overnight and priority shipments. While you pay for a premium service there is no way you can hold carriers accountable.

Watch out for COVID-19 Surcharges

In order to mitigate the strain on their delivery network, UPS followed by FedEx has come up with peak volume surcharges. A $30 surcharge as additional handling charges and $0.40 for services like FedEx SmartPost or UPS surepost. But the surcharge that retailers must be most concerned about is the residential area surcharge. A surcharge of $0.30 will be levied on all orders that are to be delivered to residences.

Strategies to survive

The disastrous combination of delivery delays and rising shipping costs can ruin your sales revenue. It is crucial to take steps to mitigate the impact of COVID on your shipping costs as well as customer experience.

Here are a few strategies to follow:

1. Re-negotiate your shipping contract: UPS or FedEx can’t spring a surprise charge. Especially during these trying times. Work through your shipping profile to figure out the impact of these charges on your costs. Negotiate with your FedEx or UPS rep and draw up a special contract for the COVID situation.

2. Consider charging for order delivery: Free and fast delivery has been your brand’s USP. However, if including a shipping fee helps your business stay afloat, don’t shy away. Don’t let the additional surcharge eat into your profit margin.

3. Delays should not deter you: Factor in for delays while revisiting the estimated date of shipments on your shipping page.  Communicate well in advance to your customer support team. Mention the changes to delivery times due to COVID On your home page.

4. Over-communicate with your customers: Let your customers know at all times where their package is. Stay on top of your orders at all times. Act quickly in case of a delivery exception.

5. Audit your invoices: Businesses are slashing all the excess spending. As for ecommerce, you should start by auditing your shipping invoice. It is more critical than ever to examine each and every line item on your invoice. This can help you save 10%-12% of your shipping costs.

The peak volume surcharges and service guarantee suspension are supposedly temporary. When things go back to normal, FedEx and UPS are likely to reinstate these service guarantees. However, with no clear timeline in businesses must prepare to navigate the status-quo as long as it lasts.

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Simon Perkins is a Shipping Cost Management expert at AuditShipment.com, a real-time parcel monitoring and AI-powered audit service that provides businesses with deep shipping intelligence and actionable cost recovery insights.

two-day shipping

Two-Day Shipping or One-Day Order Processing: What Wins?

Your average customer doesn’t know much about logistics, so every e-commerce company faces a unique concern for giving customers what they want. Do you offer two-day shipping for when an order is processed, or speed up your processing, all in order to meet their demands for quick products?

From the customer perspective, two-day shipping obviously sounds fantastic. However, it stops being so great when things take far longer than two days. Imagine if your order processing takes a week — how would customers feel?

In the same light, if an order is processed in a few hours, but shipping takes weeks, people might not even click “buy” if you’re upfront about how long it’ll take to get to their door. Google will lead you to many people who are disappointed with shipping times, regardless of the promise they were made.

So, what’s an e-commerce business to do?

Two-Day Shipping Changes

Adding two-day shipping is all about speed in your warehouse. As soon as this team receives an order, they get to work picking, packing, and sending it off to the customer. Buyers have a clear understanding of when things will arrive after the order is shipped and they’ll hold you to it.

To achieve this, you’ll need a streamlined warehouse with quality technology and practices, optimized to move orders as fast as possible. You also need enough people to prevent a backlog. Warehouse management tools are a tremendous help for this labor planning, plus they can ensure you’ve got the inventory of products as well as boxes and packaging materials to keep you ready.

The good news for a business is that you can keep your shipping promises even when inventory runs low because you’re guaranteeing delivery after order processing. 

Making the most out of two-day shipping requires you to be transparent. Customers need to know that the two days are when the product leaves your warehouse and arrives at their door, not when they click “buy.” Companies often address this by providing an estimated arrival date and then following up with an email once the product is shipped.

Thoughts on One-Day Order Processing

Order processing, simply put, is your ability to verify and use a purchase order to create a warehouse shipment order.

Most customers just don’t think about order processing when they’re making a purchase. Some don’t really understand the concept because they’re treating your business like a brick-and-mortar solution where they walk in, ask for what they want, and then you (the business) immediately know and can start on their order.

The behind-the-scenes actions of verifying orders and payment, checking inventory, creating an order for a warehouse, and getting it all in line when your staff is there simply blow by without a thought. You can see this in the wide range of explanations, FAQs, and responses to customer complaints about package deliveries and times. Even Comcast has to explain order processing times on its support pages.

If you’re able to streamline all of those activities, it’s a boost that customers will love, even if they don’t realize it. Processing every part of an order in a single day, or on the same day, allows your team to pick, pack, and send faster. It’ll improve the speed of all orders you receive, not just those that select expedited shipping.

Most of this is done via technology like warehouse management systems, which allow you to better control costs and understand revenue as well as inventory. What you’ll like about using a WMS is that they process orders quickly enough for you to insert them in the workflow where they need. So, if you get two orders — the first at regular shipping and then another an hour later with two-day shipping — the system will automatically move the two-day shipping to the front of the line.

The Customer-Driven Choice

Choosing between these two options requires one more consideration: where are your customers unhappy?

Unhappy customers won’t buy from you again and are likely to leave negative reviews that can impact other sales. When concerns are around your shipping, read them carefully. Ask if you can best respond by processing an order more quickly and reducing long wait times or if they demand immediate satisfaction with the two-day turnaround.

In general, customers are more likely to understand two-day shipping on your website, so if the issue is clarity or complaints around not knowing when goods will arrive, this might be a better course of action. On the other hand, if they don’t like how their order disappears for days or weeks before they get a notice about it being shipped, order processing can be the right solution.

Shoppers on the e-commerce behemoth Amazon will sometimes gripe that their Prime packages still take a week to arrive. Often this is because the seller’s order processing systems and inventory levels have issues. Because customers are paying for two-day shipping, they can feel cheated. It’s a direct sign for where those companies should focus their next warehouse investments.

Both two-day shipping and one-day order processing can improve your operations. When possible do both. When not, pick the one that your customers will understand and appreciate most based on the feedback you already have available.

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Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others. 

FedEx

FEDEX, UPS, & AMAZON SCRAMBLING IN THE AIR FOR FAST, FREE SHIPPING

Christmas came in May for Amazon Prime subscribers, who were informed the platform’s tens of millions of items would be available for free same-day delivery and two-day shipping. 

“Prime Free One-Day is possible because we’ve been building our network for over 20 years,” reads a company statement. “This allows Amazon to work smarter based on decades of process improvement and innovation, and to deliver orders faster and more efficiently.” 

Customers reap the benefits as Rakuten Intelligence research shows that over the past two years, the time from purchase to delivery has been slashed from 5.2 days to 4.3 days on average. And yet, Amazon is faster still, at 3.2 days.

Other retailers took the Amazon news like a lump of coal, with Walmart scrambling to unveil free one-day shipping without a membership fee. Target already had such a program for card-carrying loyalty shoppers. FedEx revealed it was parting ways with Amazon for “strategic reasons.”

Meanwhile, industry watchers caution about the hidden baggage that comes with rapidly delivered packages.

Competition is Fierce

Despite the cheery one-day news, Amazon still faces competition from Walmart, which boasts more than 4,700 store locations and an extensive network of warehouses from which it can deliver packages. Another worthy contender is XPO Logistics, which is among the largest third-party logistics providers with 90 facilities across the country. 

During his December earnings call, FedEx CEO and founder Fred Smith said his company views Amazon “as a wonderful company and service and they’re a good customer of ours. We don’t see them as a peer competitor at this point in time.” 

Mere months later, FedEx severed ties with Amazon and partnered with Dollar General on package delivery services, with expectations to offer the service in more than 1,500 stores by late in the summer, building to over 8,000 stores by 2020. 

“We believe this move is an attempt to increase delivery density in lower population areas,” states the Morgan Stanley Research on the move. “… The Dollar General partnership follows a series of headlines including FDX’s AMZN customer loss, move to seven-day ground delivery, and incentive compensation modification ahead of their June 25th fourth quarter earnings release.

So much for not seeing Amazon as competition. FedEx’s annual report, which was released on July 16, mentioned Amazon six times and included this context: “We face intense competition.”

“[I]f customers, such as Amazon.com, further develop or expand internal capabilities for the services we provide, it will reduce our revenue and could negatively impact our financial condition and results of operations,” the FedEx report states. “News regarding such developments or expansions could also negatively impact the price of our common stock.”

And how is this for sounding completely opposite to what Smith had said just seven months prior? “[S]ome high volume package shippers, such as Amazon.com, are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, and may be considered competitors.”

Look! Up in the Sky!!

“Amazon.com is investing significant capital to establish a network of hubs, aircraft and vehicles,” the FedEx annual report notes.

That’s striking when you consider the far fewer times FedEx rival UPS is mentioned in the same report. Keep in mind that UPS currently has 564 cargo jets and thousands of facilities and fulfillment centers around the world, while Amazon has one air hub and options on 100 planes—by 2021, according to a June announcement. 

Ditching Amazon as an air customer led to FedEx slashing prices to fill its planes, according to numerous reports.

As the shipping giants fight for the skies, benefits are being reaped on the ground. Hillwood, developer of the 26,000-acre master-planned AllianceTexas development near Fort Worth, announced in June it has acquired control of 600 acres of additional contiguous land. Strategically located between Fort Worth Alliance Airport and the BNSF Railway Alliance Intermodal Facility, the new Alliance Westport property increases Hillwood’s potential for more manufacturing, large-scale logistics facilities and aviation sites adjacent to the airport’s recently expanded runways.

Alliance Westport is already home to more than 8 million square feet of industrial and aviation development, including key logistics facilities for UPS, FedEx and Amazon Air. When combined with BNSF Railway’s intermodal facility volumes, these three hubs will offer Alliance Westport customers unparalleled access to rail, highway and air shipping options, all within a one-mile radius. The railway and roads have direct routes to Mexico and expedited transit times to the West Coast ports of Los Angeles and Long Beach.

“This is one of the most significant land acquisitions in the history of AllianceTexas,” says Tony Creme, senior vice president of Hillwood. “As Alliance Airport and the BNSF Railway Alliance Intermodal Facility continue to expand and strengthen the foundation for AllianceTexas’ commercial growth, this new property in Alliance Westport will serve as a strategic link between these two pieces of critical logistics infrastructure and offer unparalleled connectivity to our customers.”

 But What About the Planet?

As efforts intensify to move products faster, speedy deliveries are taking a toll on the environment, according to Patrick Browne, director of Global Sustainability at UPS

“The time in transit has a direct relationship to the environmental impact,” Browne told CNN Business on July 15. “I don’t think the average consumer understands the environmental impact of having something tomorrow versus two days from now. The more time you give me, the more efficient I can be.”

A van schlepping goods to e-commerce customer doors does remove from the road the vehicles of those who would otherwise be driving to brick and mortar stores, but a 2012 University of Washington story found that advantage is erased if the delivery route begins far away and items are coming immediately, because the ability to lump orders together is diminished. 

Last-mile services such as Amazon Flex and Walmart’s Spark Delivery often deliver only a few items at once in personal vehicles or small vans. A new option called Amazon Day, which offers discounts and rewards to customers who choose “no-rush shipping,” does allow for the consolidation of orders, however.

Amazon’s competition can take solace in the fact that Amazon was already absorbing added costs for fast deliveries before the Prime one-day announcement, which included news of an additional $800 million investment in logistics infrastructure.

FedEx To Raise US Domestic, Import, Export Rates

Memphis, TN – The FedEx Ground and FedEx Freight subsidiaries of the FedEx Corp. have said they will increase their shipping rates effective January 5, 2015.

FedEx Express will increase shipping rates by an average of 4.9 percent for US domestic, US export and US import services.

FedEx Ground and FedEx Home Delivery will increase shipping rates by the same rate, while FedEx SmartPost and FedEx Freight will also increase their shipping rates by an average of 4.9 percent.

The rate change applies to eligible FedEx Freight shipments within the US including Alaska, Hawaii, Puerto Rico, and the US Virgin Islands; between the contiguous US and Canada; within Canada; between the contiguous US and Mexico; and within Mexico.

FedEx previously announced in May 2014 that it will apply dimensional weight pricing to all FedEx Ground shipments. That change also takes effect January 5, 2015.

09/23/2014