Your idea is great. Your service rocks. Your customers love you. Your team is smart and driven. You’ve invested substantial financial resources into the business, so the last thing you want is for shipping to bring the whole operation to a screeching halt.
The competitive environment in e-commerce and shipping is difficult, but continued success is possible and well within your grasp. Here are eight ways you can start making gains in efficiencies and cost, so your business thrives for the next decade-plus.
1. Assess strengths and weaknesses of the shipping process
Before making any changes to your processes, you need to know your strengths and weaknesses. By assessing your current systems, costs and opportunities for scaling, you have a base from which to develop a strategy for growth. Any strategy should reflect industry best practices.
2. Hire a professional for carrier contract negotiations
Carrier fees are complex, but they can make or break a shipping business. Professional contract negotiators, many of whom are former FedEX and UPS employees, are worth the cost. Carrier fees are negotiable and typically not fully realizable without the sophisticated software of industry pros that can analyze historical billing files.
In addition, you should always use software to manage carrier tariffs because carrier contracts are too complex to manage manually. If carrier discounts have been negotiated, software will ensure you realize the negotiated discounts.
3. Maintain accurate and complete inventory data
There are plenty of warehouse management systems out there, both lightweight and robust. Buy one. Whatever you use, make sure you maintain accurate and complete data. Real item data is required to match each buyer’s unique order with optimal shipping carriers and services, which is imperative if you hope to access the lowest cost while meeting delivery promises.
4. Use comprehensive, multi-carrier shipping software
Use the multi-carrier rating software that is appropriate for your business stage. A $99 per month garbage-in/garbage-out approach will increase your per order shipment costs. If you are only shipping 50 orders a week, the savings will be in the software, so an inexpensive product is typically the right move.
As your volume increases, shipping overspend will far outweigh the cost of the more expensive software that will take a comprehensive approach to automating carrier and service selection.
5. Expect more from shipping API
Don’t skip the ship-spend analysis step if your business uses a shipping application programming interface (API) solution. The same rules apply to shipping API vendors that apply to those with interfaces and/or integrations. Compare the providers that are appropriate for your business stage. Have them analyze your ship-spend to see if you are properly/fully utilizing the APIs and if switching will reduce your costs and provide additional controls.
6. Stop promising customers carrier services by name
It only helps the carrier when you name your shipping services by their names. Don’t promise customers specific carriers; promise delivery times. Most customers don’t care about the color of the truck that pulls up to the house. They care about when their order is scheduled to arrive. Align your promises to those needs. Use one-day, two-day, ground and express labels and leave out specific carrier names. This gives you the leeway to meet the delivery promise at the lowest possible cost.
7. Analyze your returns processes
Remember that “replacing a damaged product can cost an e-commerce vendor up to 17 times more than the original cost to ship.” Do all items need to be returned? Does it make sense to partner with certain returns providers?
Take returns seriously, and don’t treat them as uncontrollable.
8. Optimize packing
Don’t assume your fulfillment workflow is the right workflow just because it’s always been done that way. Analyze automation components, picking accuracy and speed, carton and packaging selection, packing efficiency, order composition, ship-from locations, back order processes, mis-picks, damage and every component of the workflow.
Consider investing in box-making hardware. Use bin packing solutions. Use smart packing software to minimize carton sizes and carrier DIM weight charges. Use sustainable products and remind customers that more than 1 billion trees are cut down each year for U.S. shipment packaging, and you are helping to change that.
This column is adapted from the book, "Adapt or Die: Your Survival Guide to Modern Warehouse.”