News

As COVID-19 changed the way the world operates, e-commerce became an explosive growth avenue for many companies. Many merchants closed their brock-and-mortar locations and channeled their business through e-commerce. Many dynamics changed including shipping costs that went through the roof. Here are 3 ways to mitigate these increasing costs and help you maximize your e-commerce profits.

1. Know Your Shipping Costs

As all savvy business owners know, knowledge is power. The more you know about your data, the more you know about your business. Leverage your shipping costs to have more problem-solving discussions with your carrier rep. They should be happy to keep your business, but more importantly, they should work to continually earn it. When you meet your carrier rep during your Quarterly Business Review (QBR), ask to go over your last 6-12 months of shipping history. Ask them what else they can do for you. For example, spending 9% of your total shipping costs on Address Corrections should raise a flag for you. Make sure you know the impact of one-off offers: an additional 10 percent discount to a zone 8 might sound really enticing to accept, but it won’t do much for your bottom line knowing that 80 percent of your shipments are in zone 4.

2. Extend Your Shipping Experience to Your Customer (Segments)

Some companies feel like everyone now has to follow Amazon’s ‘free shipping’ mandate. For some type of merchants, free shipping on a high average order value with relatively low weights could yield a good strategy. Many merchants today take an ‘all-or-nothing’ approach to their free shipping programs. But perhaps a deeper look into aligning your various shipping options to your customer segments may be a better fit. More and more merchants segment their customers based on various attributes, i.e. lifetime value, profitability, first-time customer, promotion, etc. As there are many shipping options to choose from, i.e. overnight, ground, signature services, free shipping, etc. Savvier merchants are aligning these shipping options to their customer segments, thus extending the appropriate customer experience beyond the UI/UX and shopping cart checkout, but also to how the customer experiences their product, at the time of delivery.

3. Refunds are Back! Well, partially…

One relatively unexplored opportunity is guaranteed-service refunds. FedEx and UPS provide a money-back-guarantee for overnight and ground shipments, assuming these shipments are outside of the carriers’ “service level agreement” (late deliveries) and you file a claim within a specific time period. For larger companies with a full shipping department, this could seem like a worthwhile function to perform. However, for the majority of small and midsize companies, the task of auditing every parcel shipment, comparing against the published service level, and filing claims could end up being very time-consuming. The carrier suspended the refunds in March 2020 due to the pandemic, but have since May 2021 partially reinstated them. To get these refunds, you can file claims online or call the carrier’s customer service department.

Lastly, but not least importantly, is to keep an open line of communication with your carrier. As the saying goes, you don’t get what you deserve, you get what you negotiate.