The stakes are high when it comes to shipping costs facing e-commerce retailers. UPS, the world's largest package delivery company, posted a $239M loss over the holiday season, which it attributed to the rise of e-commerce sales. They aren’t alone. According to The Wall Street Journal, FedEx’s Q4 profit was also “squeezed” as a result of the company’s investment in new facilities and resources to manage the holiday shipping influx.
As these shipping giants work to recoup their losses, you can cue the ripple effect e-commerce retailers can expect throughout the supply chain. With online sales continuing to grow – the National Retail Federation predicts eight to 12 percent – UPS and FedEx are both struggling to keep up with the extra costs and increasing prices to fill the hole e-commerce demands are digging into their bottom lines.
In fact, according to FedEx, its Express rates increased an average of 3.9 percent and FedEx Ground and FedEx Home Delivery increased an average of 4.9 percent. UPS Daily rates for UPS Ground service, UPS Air and International services have also increased an average net 4.9 percent respectively.
Ultimately for e-commerce retailers, higher shipping costs either translate into raising prices for consumers or hits to profitability. They may also feel pressure to relinquish control of their supply chain and migrate to drop shipping strategies or cut mission critical investments needed to improve in-house order fulfillment. While rising shipping costs may seem like a problem with no solution in sight, there are a number of different actions e-commerce retailers can take to keep operating costs low, without sacrificing customer experience or efficiency.
One of the most important things e-commerce retailers can do to counter shipping cost escalations is doubling down on technology to optimize order fulfillment processes within their warehouses. To offset shipping costs, your warehouse must run lean and mean, serving as more of a cost saver versus cost vacuum. While it might seem counterproductive to add another expense into the mix, adopting quality, cloud-based warehouse management software now can save your business a significant amount of money in the long run.
A far cry from add-on inventory management modules stitched into legacy ERP systems, or dare we even mention managing key warehouse operations via Excel, advanced software for warehouse management will give you in-depth, real-time visibility into what’s working and what’s not, with no second guesses. Critical and often costly areas like inventory and labor management, as well as return logistics become much easier to navigate with better data and intelligent tools at your fingertips.
With that said, selecting WMS software can be a difficult task. It’s a competitive space with several contenders gunning for your warehouse. Therefore, ask yourself the following questions when vetting solutions for your business:
- Does this technology give me clear line of sight into inventory?
The right technology will help you improve the flow of stock and orders through your warehouse, optimizing order efficiency and ensuring nothing gets sucked into a black hole leading to lost profit.
- How adaptable is this solution to my fulfillment needs?
The solution you choose should be flexible enough, providing multiple picking methodologies to handle diverse customer order and product activity profiles, including single order, batch, wave and zone picking. It also needs to flex up and down in line with seasonal variations.
- Will it improve how I manage and plan staffing?
The resource you select should help you forecast and predict peak periods and lulls, so you can avoid overstaffing your warehouse.
- Will managing returns become easier?
From a reverse logistics standpoint, the technology you choose should also enable you to process returned items quickly and efficiently, getting product back on sale in the shortest possible timeframe and eliminating any service hiccups with customers.
Snapfulfil Cloud WMS checks these boxes, but don’t just take our word for it. Companies like The Cotswold Company – a home furnishing and décor retailer, based in the UK – have seen vast improvements to e-commerce fulfillment operations after implementing our solution. In fact, they’ve become 30 percent leaner. Choosing the right WMS has bettered the retailer’s accuracy, efficiency and productivity in the warehouse and has enabled them to discontinue an unsatisfactory third-party logistics operation.
As shipping costs will only continue to rise, take a page out of The Cotswold Company’s book and explore new high performing WMS technology to cancel out added expenses.