The Rise of eCommerce & Its Impact on the Shipping IndustryWritten by Neal Willis
The rise of ecommerce is having a ripple effect within the supply chain and the shipping industry. With regards to shipping, the convenience of online shopping has altered customer expectations and consumers are more demanding than ever. Along with fast, low-cost shipping options with flexible choices for specific delivery times, consumers are demanding visibility of their orders all the way from the dock to delivery. Retailers are struggling to meet consumer demands and facing challenges of their own, including route optimization, technology and returns, and trucking companies are facing their own set of problems, including higher delivery costs as a result of increased residential deliveries.
Consumers want their merchandise as soon as possible. In some cases, they are even demanding same day delivery.
Consumers want to know when their items are going to arrive. Knowing when to expect delivery is important to people with busy, demanding agendas, and the ability to tell when their shipment is going arrive can be just as important as the speed in which it gets there.
People want flexible options, like knowing the cost of next day delivery versus second day delivery. With this information, consumers can make more informed decisions about how much or how badly they really need their orders. For example, knowing that next day delivery costs $100 and second day delivery costs $29, a consumer may decide that they can wait an extra day and save $71, rather than having it delivered via next day service.
Consumers want the ability to see where their shipment is at all times, just like they’re able to see where their Uber ride is en-route.
Retailers are working to fulfill customer orders generated online from brick and mortar inventory warehoused at multiple locations across the country, and they are struggling to keep systems and processes compatible. For example, a retailer might have the stock for a particular customer order located in a facility right near the customer, but they aren’t able to see it in their inventory because of antiquated systems not being compatible and able to “talk” to each other throughout their network of locations. Rather than shipping the order from the closest stocking location, which would cost less, they instead ship it all the way across the country from their main ecommerce fulfillment site at twice the cost. More online orders has translated into more shipments, and many of these shipments are being delivered to residential addresses, rather than to a brick and mortar store where customers have traditionally purchased and/or picked up their merchandise. More deliveries to homes means higher costs of delivery to trucking companies. It costs more to deliver to a residential neighborhood than it does to a store with a dock. Narrower roads with tighter areas for turning increases the risk for potential problems and damages. Delivering to a home is almost guaranteed to take more time than delivering to a commercial address and, more than likely, the residential delivery is going to require lift-gate service, since most people don’t have forklifts or heavy equipment readily available at their residence to help offload the merchandise.
Some retailers are segmenting their customers into certain categories, such as by cost, criticality and customer status, and they are prioritizing deliveries based on which category their customer falls into. However, even when retailers meet customer expectations of delivery, they are facing the challenge of managing returns and exchanges. While the rise of ecommerce has been a hit with many consumers and business alike, it continues to present its own set of unique challenges to the supply chain and shipping industry.