Expedited shipping used to be an instrument of last resort for most shippers – a sign that something in the supply chain had gone wrong and needed to be corrected, no matter the expense. But retailers, especially, now inhabit a new world where speed is at the top of the list of fulfillment priorities.
Research conducted last year by Deloitte found just 42 percent of U.S. shoppers now consider three-to-four day shipping “fast”, compared to the 63 percent who thought so during 2015. Indeed, 89 percent of shoppers say they consider fast shipping to mean delivery within two days or less, with an astonishing 97 percent of consumers expressing an interest in same-day shipping. Additional preferences include premium-level services such as evening delivery, delivery within a two-hour time slot, and Sunday deliveries. What’s worse is the expectation of “free” shipping now incorporates any level of delivery speed.
Customer expectations, to put it mildly, have taken a major hike upward. The message is clear: expedited delivery is the new norm, and the chance of charging more, or even anything at all for it, is fading.
But, as we all know, expedited shipping is expensive, and particularly so when rushing goods across borders. As retailers battle to differentiate themselves from competitors, the final mile has become a critical battleground. Final mile is the point at which customers are either satisfied, or they’re not. It’s also a significant cost factor for businesses, with the Council for Supply Chain Management Professionals noting 28 percent of overall transportation spend is on last mile services. In Canada, where transportation costs tend to be higher, one estimate puts last mile costs at 85 percent of total distribution spending. How do shippers – especially ones making sales across international boundaries such as the U.S.-Canadian border – make the numbers on expedited delivery add up?
One solution, exemplified by Amazon, is to move inventory closer to the consumer, and that trend is set to increase. This plays into the already identifiable shift toward making fulfillment happen through multiple channels. Take Nordstrom, which now allows pick-up of online orders at their stores, as well as returns of online orders. Thanks to good technology, the sales clerks actually seem to know what they’re doing. It’s easier to speed delivery to a consumer from their local store or from a conveniently located warehouse or supplier than from some distribution center in the middle of the continent. The demand for expedited delivery is forcing e-commerce companies, retailers and even B2B businesses to look much more carefully at how they fulfill orders and from where. One clever move is to use former retail outlets as fulfillment centers, re-purposing a large building with delivery docks out back that’s also close to a dense population. But the future of expedited delivery is not about real estate; it’s about the technology that will support that distribution model. You may see some downsizing of retail real estate, but the money gained or saved is not going to the bottom line; it’s going into technology. This is not a nice-to-have factor. It’s essential for competition. The longer retailers wait to research, invest in and install smart inventory management and omnichannel fulfillment technology, the lower the odds of succeeding get. Retailers are way behind the ball if they haven’t already started doing so.
What matters now, and will matter even more in the near future, is knowing exactly where your inventory is and how to position it for maximum speed of delivery to its final destination. Technology is at the heart of that.
But most likely, staying abreast of cutting-edge logistics management IT is not your core business. It may be incredibly important if you’re new to a market, or have been serving a market for some time but finding new challenges, but it’s hard to keep up in-house. Whether you’re in the retail or B2C business, the demands of low-cost, expedited shipping are not going to get any less. The best plan is to align with a logistics partner who has met these challenges and helped customers do so, all the while staying well-informed of new technologies and strategies.
Those delivering goods across the U.S.-Canada border are particularly in need of assistance. Although common, border clearance delays can be greatly reduced by using an experienced Customs broker or logistics provider who fully understands the intricacies of cross-border clearance. With regard to expedited services, there are several options for ensuring Customs does not slow down a critical shipment – beyond ensuring that all paperwork and documentation are properly filled out and submitted. These include an on-the-ground courier – a local representative who will meet the shipment and hand-carry it through the customs process. Another factor is choosing a more efficient point of entry. A shipment can be routed to avoid a border entry point with a notoriously inefficient clearance process, and instead clear Customs at a more remote entry point, with a less hectic process. All in all, choosing a third-party partner with a worldwide network of resources to tap into at a moment’s notice may well mean the difference between something turning up on time or not.
A third-party service provider can help figure out the best place to keep your inventory for speedy fulfillment. Canada is immense geographically, and a DC in Toronto is going to be less attractive for fulfilling an order to Vancouver than many U.S. West Coast locations. Another way a third-party can help you change the way you fulfill orders is by consolidating your order with another customer’s. This can be especially useful with returns, which often cost as much as four times the original delivery.
In the end, in the mission to improve delivery speed while keeping control of costs –especially when engaging in cross-border fulfillment – it is important to open your mind to new ways of doing things. One very attractive approach is to enlist the aid of an experienced partner to help you put all that together and figure out the best solution that boosts your competitiveness.
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