E-Commerce Startups need a mix of logistic solutions
Last year, e-commerce sales rose 15.4% year on year. Total sales rose to $305 billion with this figure set to grow by 15% or more according to InternetRetailer.com. However, e-commerce only accounts for 6.5% of sales in the retail sector in the US. It’s clear there is still significant capacity for the US market to grow.
Any startup hoping to carve out their own corner in this promising potential market, will need to know a thing or two about logistics. While many of the old rules still apply, especially when it comes to merchandising, the emphasis is less on store operations and more on delivery. To an ever more demanding, increasingly savvy consumer.
While you may be tempted to cut corners to save on operational costs, logistics is one area of your business you cannot afford to neglect. Here are three tips to keep in mind when setting up the logistics and distribution side of your business.
Don’t be afraid to mix logistics solutions
While Amazon has one of the most advanced warehouse operations in the world, this e-commerce giant is happy to partner with couriers to deliver its goods. The company uses UPS, FedEx and the USPS to fulfill the majority of its orders. Amazon has invested heavily in its fulfillment centers, utilizing state of the art technology to pick and scan in record time.
By using reliable couriers the company has concentrated most of its efforts on distribution without having to worry about maintaining in-house logistics or its own fleet of vans. This may change as the company increasingly competes with Walmart. Amazon is said to be trialling its own logistic fleet for peak periods when its carriers cannot meet demand. The company’s program, the ‘Last Mile’ is being tested in the UK to bridge the gap between carrier capacity and delivery volumes.
Bottom Line: Don’t be afraid to mix logistics solutions. Few startups can afford their own in-house logistics, but it may be possible to mix models as Amazon demonstrates. As long as you are providing great customer service and fast delivery, your customers will be happy. An aggregated comparison parcel delivery site is an option that delivers multiple carriers, often at significant discount.
Offer Multiple Delivery Options to Increases Conversion Rates
Target currently offers its customers five shipping options. In addition to Free shipping and delivery subscriptions, the company also offers store pickup, rush delivery and the option to ship home. While Target has followed the lead of Walmart and Amazon, it has been playing catch up recently. These efforts have paid off, not only increasing conversion rates, but overall transaction numbers and value. Following the company’s aggressive digital makeover and expanded delivery options, the company’s takings over Thanksgiving, Black Friday and Cyber Monday rose 40% in 2014.
Target’s innovative subscription model allows customers to order everyday essentials, so shoppers never run out their favourite products. With subscriptions, customers save 5% on all shipping, plus 5% off if they use their customer loyalty card. The company’s Rush delivery services are only available in select cities like Boston and Miami. Target has decided to focus exclusively on the US market. However, Kmart offers international shipping to 100 countries worldwide through its Sears partnership. If the company wants to remain competitive it should consider offering international shipping options through larger retailers to match Kmart’s delivery services.
Bottom Line: Multiple delivery options can be combined with reward programs to offer an attractive mix to local and international clients, increasing traffic and sales.
Providing Tracking Info to Reduce Customer Service Emails
European retailer ASOS offers a masterclass in logistics. In Europe, the company partnered with DPD to offer state-of-the-art tracking facilities like the ‘follow my parcel service’ which reduces delivery windows to 15 minute slots. The service also gives customers the option to deliver their parcel to a safe place, collect from a depot or upgrade their delivery service.
Not only has the company managed to reduce the customer service workload, it has expanded into new markets. In the US, ASOS opened a fulfilment centre in Ohio. Customers can track their orders from their account once their parcel has left the warehouse. The company keeps an updated advice section on US standard shipping.
ASOS makes international returns easy by offering shipping labels and a link to arranging a pickup with USPS. Every service including returns is trackable for full transparency from start to finish.
Bottom Line: If you can’t offer the very latest tracking services, provide information to help customers arrange pickups for returns or customs. This will reduce the number of customer emails you get and improve operations.