GUEST COMMENT How retailers can best manage rising supply chain and delivery costs

With late deliveries costing retailers over £3.5bn per year each year, it is clear that getting delivery right has a big impact on costs. Given the current economic conditions, and the end of the pandemic-related ecommerce boom, many companies are seeing now how it is critical to scrutinise every operating cost.

The ability to satisfy online shoppers changing expectations of delivery is a key differentiator for brands. Buyers expect a range of delivery speeds and types of service such as timed delivery slots, greener options, expedited shipping, and click and collect. Offering them a choice of delivery services is vital, in today’s competitive online marketplace, while there is still early mover advantage.

Having multiple delivery services in place helps meet these customer expectations, but it can cost thousands for each new integration. Adding additional carriers without the unnecessary cost, and additional complexity, is one of the biggest benefits of using a delivery management platform. You also have to consider the budget that will be required to maintain carrier connectivity.  

Carrier fees are a major expense for any retailer. One of the main issues with relying on a single carrier is not being able to negotiate better rates. Being able to add new carriers cost-effectively and quickly and switch between them, gives you a negotiation point.

If a particular carrier is unavailable, or a service disrupted, you need to use an alternative carrier. With a delivery management platform, you can spot any delivery disruptions and easily switch between carriers whenever needed. This saves on the cost of missed deliveries, reputational damage, customer support issues, and the potential for refunds and compensation. 

Tailoring delivery choice at the online checkout to fit buyer behaviour and preferences also allows for some customisation while ensuring that customers are presented with the most relevant alternatives to pick from. This might include things like their basket value and size, loyalty programme membership, the time of purchase, and the variety of delivery services offered.

Another aspect of the delivery process that could undergo further optimisation is often the labelling process of goods. If your label booking process is disconnected, it consumes needless resources just to keep your head above water. When delivery difficulties emerge, your customer care staff is put under severe demand. ‘Where is my order?’ questions rise, and if your carrier and customer systems are not linked, your level of assistance may suffer. When their package is delayed, 79% of customers want a more attentive client experience. With real-time customer and delivery data, you are less likely to lose consumers, which means your shipping prices will not go up. Additionally, inputting shipping information into different carrier systems might affect shipment preparation times and fulfilment speed. 

Returns are one of the main issues resources are squandered on. It is thought that ecommerce returns will cost UK retailers an estimated £5.6bn by next year. One surefire way to save money is to stop offering free returns. However, this will likely affect your conversion rate too.

The impact of returns

As a result, it is critical to assess the impact of returns on your shipping expenses. If your return rate is more than 20-30%, various solutions can assist you reduce the excessive cost of reverse logistics. While merchants have a difficult struggle to reduce the average return rate. They also have a plethora of technologies and tools at their disposal. In the last several years, we’ve seen AR and AI play the role of the expert store assistant, answering product queries and assisting consumers in making wise purchase selections.

Review software assists companies in collecting client feedback as well as information on certain attributes. These include size, comfort, and quality, all of which may help customers choose the correct goods. Browsers may see products in real life thanks to user-generated content such as consumer videos and images. It may enhance professional product photographs and add the context that customers need.

Retailers and brands should actively consider their future returns policy. This entails setting short-term and long-term goals, as well as developing an active plan to deal with returns. Returns may be a necessary evil, but if more plan ahead, the tide of returns may eventually begin to shift.

Having control over how your goods are delivered, and building resilience into your logistics infrastructure, is the best way to reduce risks, and minimise costs.

Fergal O’Carroll is CRO of Scurri