Online shopping provides consumers with a unique and convenient experience many have grown accustomed to. It allows people to purchase items without leaving the comfort of their homes and eliminates the need to visit multiple stores to find what they need.
However, when it comes time to checkout, you’re faced with deciding how much to pay for shipping based on how quickly you need the product delivered.
Should you prioritize faster shipping for a higher cost or opt for cheaper shipping with a longer wait? Let’s explore what’s happening in the backend of e-commerce logistics.
Navigating Shipping Logistics through Expansions
In recent years, DTC brands have significantly improved their e-commerce platforms. With the increasing accessibility of online commerce, we’re seeing a rise in demand for competitive pricing and streamlined shipping solutions.
Traditionally, brands rely on single shipping logistics companies, such as ShipStation or ShipBob, to ship their products. Depending on the product's final destination, these logistic services utilize various backend shopping solutions such as DHL, USPS, UPS or FedEx.
For those aiming to ship nationally and internationally, they often rely on companies such as ShipBob to facilitate global shipping. These logistic companies provide brands with detailed breakdowns of shipping costs for options like same-day, next-day and standard international shipping through APIs like DHL. They also showcase different rates for domestic shipments. The brand will then decide which service is best to offer depending on what their customers are willing to pay for shipping.
As merchants decide to offer global shipping, their shipping tech stack must evolve as they incorporate multiple integrations and face increased associated shipping costs. Shipping begins to play a more significant role in a tech stack and becomes a complex process of navigating shipping logistics.
In the typical tech stack, the backend often integrates with only one distributor. Merchants will incorporate APIs such as FedEx and DHL into their distribution software, leading to the reliance on third-party services and juggling three to four different tools simultaneously. This poses challenges when each shipping software has different shipping methods to different corners of the world. Similarly, each warehouse manages items differently and can create an even more disruptive shipping experience.
As a result, more shipping companies and merchants are looking to bypass traditional logistic companies in pursuit of more efficient and cost-effective shipping solutions.
A New Shift Toward Comprehensive Shipping Solutions for Merchants
Changes in the shipping and logistics industry are driven by merchants' needs. Companies are now building their own customer relationship management (CRM) tools to give merchants a solution that can centralize their various tools down to one.
Major shipping providers like FedEx have become active in building these CRM tools to provide direct shipping to consumers without the workarounds of multiple shipping companies.
Merchants can use AI advancements to make the most of various shipping services, allowing them to select the best shipping options for each order and provide optimal solutions. This approach allows merchants to engage directly with the distributor and logistic partner, eliminating the need for third-party logistics services and reducing unnecessary fees from additional tools.
Every shipping company and distribution software caters to various regions of the world in distinct ways. For example, when shipping to Europe, a basic AI model can suggest utilizing FedEx if it offers better rates than DHL.
The model can then determine the costs for those who will pay extra for faster shipping speed versus those who want to wait and get it at a cheaper price—a decision ultimately made by a customer’s preference.
Embracing AI and Flexibility in E-Commerce Logistics
AI implementation in e-commerce extends beyond shipping logistics to meet the evolving demands of e-commerce merchants. However, basic data sets and outcomes from shipping solutions are the clear next step toward modernizing e-commerce logistics.
Merchants constrained to one shipping partner will also be limited to a single data set and unable to compare shipping costs. Only through multiple data sets will AI play a strong role in conducting cost analysis to identify the best shipping solution for merchants and their customers.
Relying solely on one shipping partner means relying on one data set. Leveraging universal APIs to see shipping costs can help merchants set specific rules to optimize costs and have far more impact on their customers than a single distribution channel. Brands seeing abandon cart rates increase can integrate AI rules that will provide the cheapest rate for specific parts of the world. Then once shipping regions change, the rule can change to optimize costs. Alternatively, the rule can change to provide customers with the fastest shipping rate. Merchants will periodically adjust the rules placed on the AI as rates fluctuate across regions and optimize for costs and shipping speed.
Regardless of AI providing the additional tools and resources, merchants remain in control. They will also give their final approval of which shipping company they prefer to use based on their customers' desired outcome. Merchants who understand their customers and know what they care about will improve overall efficiency and increase online sales.
As AI continues to alter shipping logistics, companies are capitalizing on merchants’ desire for flexibility and the opportunity to be the primary shipping logistics provider without a third party. New CRMs can provide any brand, regardless of its size, with simplified and customizable access to shipping logistics, improving the tech stack and reducing costs for both merchants and customers.
