Online Retail Stores & Shipping Costs?
Online Retail Stores & Shipping Costs? –
This is an important factor for many online retail businesses who need to deliver
goods directly to their consumers. Shipping and logistics go hand and hand with
this type of industry, regardless if it is an online retail or not. However, since the transition
of technology in the workplace and marketplace, this is an important consideration to
review.
Why?
Online Retail Stores in the US?
Online retail sales in the United States are expected to reach $523 billion
by 2020, up 56 percent from $335 billion in 2015. This is according to many census reports
that track these numbers and figures. But, while this active
market offers great opportunities for small businesses and independent
online retailers, increased competition is making it harder for small- to
medium-sized businesses to stay competitive with online giants. One of the
main areas in which small businesses are losing money is in shipping
costs.
Additional Expenses? – Online Retail Stores
The fact that homes are approximately three times as expensive to deliver
to as business addresses leave retailers struggling to make ends meet, as
most consumers now expect free shipping in line with the services offered
by global retail giants like Amazon and Alibaba who can afford to do so. In
a recent Financial Times article, Alan Blackford, COO for an online outdoor
furniture retailer, states that shipping is his company’s second largest
expense after marketing, even ahead of labor costs, and that costs are
growing year over year.
Business Tip
A good business tip is to make sure your online business is keeping up with demand.
How can this be accomplished, very easy?
This can be done by having all inventory accounted for.
This means to take stock with online and in-house inventory.
This way you can have a better handle
on your business operations. This tip can work both
on and off the retail business game plan.
This is a good protocol for several reasons.
Online Profile – Retail Business Inventory and Stock?
So, instead of eating into profits using expensive air delivery services like
UPS and FedEx, how can retailers send cargo more cost effectively?
This is the ultimate question many online business owners are inquiring about.
In order to take a solid foundation in your business development, let us
look at some helpful techniques.
Online Business Tips
Here are some tips for saving money shipping with ground transportation:
- Use online load boards. – While basic, online load boards such as directfreight.com and
truckstop.com is a step in the right direction in terms of “sharing
economy” freight services.
Business Platform?
To put it simply, these business platforms allow brokers and individual transport owners to
post their routes online in advance to fill up any extra space available for
the journey. While these boards won’t help retailers with the home delivery
the dilemma, they can help reduce costs by shipping inter-state in a shared
transport, and then paying a local delivery service to make the home
delivery in the final leg of the journey.
Load Board and Transportation?
Using a load board allows shippers — those needing goods transported — to
move overflow freight. Using the boards, shippers can match their load with
empty carriers traveling from their base area to the desired destination.
Using this type of service is particularly useful for companies that do not
have a consistent group of carriers to choose from, or that don’t need to
ship frequently, such as a mom-and-pop store that does the majority of
business in-store but also offers online retail options.
Traveled Routes and Business Travel?
For Postmates, for example, it is the Future. Why?
Because on well-traveled routes, load boards allow retailers to shop around for the
best price by contacting a number of carriers at once. However, be aware
that 90 percent of freight brokers also use these services, which means
retailers will most likely receive offers from brokers, too.
Shippers Costs?
However, shippers should note that not all load boards are free; many
require paying a membership fee. Also, in the world of shipping, you get
what you pay for, so while sourcing transports on online load board is
cheaper, retailers will have to accept slower delivery times and added risks
in terms of security and insurance that are offered with leading air
freighters.
Business Tip Continued?
Keep an eye on “off-peak delivery” projects and travel destinations.
Despite traffic congestion and fuel consumption — and thus transportation
costs — being higher during peak hours, most land carriers still only haul during the day.
According to a recent study, 95 percent of deliveries in New York are made between
6 a.m. and 7 p.m., while only 5 percent are made between 7 p.m. and 6 a.m.
Prices Low, Demand High?
While prices are lower when the amount
demanded is equal to the amount supplied, demand is higher in peak hours
early in the morning when most retail supply occurs. Although daytime
shipping options are cheaper now than in the past, this method is still a
financial hit for retailers.
Off-Peak Travel and Business
Off-peak deliveries (OPD) have been trialed in cities like Chicago, New
York and Toronto and the results are extremely promising. Not only did
these programs reduce congestion in cities, they showed considerably
savings both in travel time and in the overall price of the journey due to fuel
consumption. A study of OPD in New York showed that implementing
various OPD policies would generate total savings of between $100 and
$200 million per year in travel time savings and pollution reduction:
Travel time savings to all highway users were estimated at approximately
3-5 minutes per trip.
Off-peak delivery is estimated to be 30 percent to 40 percent cheaper for
carriers (and thus shippers, too) than regular daytime deliveries.
Contract Carriers and Deliveries?
Carriers that switch to off-hours would save about 48 minutes in travel time
per delivery tour and 1 to 3 hours in total service time per delivery tour.
Considering the success of the projects in leading cities, local business
owners should consider petitioning their local authorities to trial similar
policies. Until that point, when contracting carriers for individual trips,
companies should ask about the carrier’s policy on OPD, and try to
negotiate lower prices for trips that will be made in off-peak hours. For
companies with regular land deliveries to make, it may be worth privately
contracting a driver, or using on-demand shipping services, that make
deliveries in OPD hours.
Website Auction Interface?
Use auction-like websites that auction freight.
Made famous by the popular A&E show Shipping Wars in 2012, Uship is
effectively the eBay of the freight industry. The platform features a network
of more than 100,000 trucking companies and owner-operators, who will
bid for any ground shipping jobs posted. The “winner” is the lowest bidder,
and who wins the contract to haul the freight. Similar platforms such as
Cargo Trax exist in Europe, but Uship dominates the market in the U.S.
After examining these statistics it is paramount that some questions be discussed.
For example,
How Technology Is Infiltrating the Old-School Shipping Industry?
Benefits of Online Retailers and Shipping
The benefit for retailers is that they can post a job and wait for carriers to
bid each other down to get the best deal. However, like using online load
boards, this method means sending freight with unknown drivers, which in
turn increases risk. However, compared to the prices of sending with
services like FedEx, the risk might just be worth it.
Concluding Thoughts: Mobile Revolution
As the retail market continues to grow, pumped up by mobile shopping,
shipping is only going to become more of a cost for small businesses using
traditional channels. For the time being, it is up to thrifty business owners to
assess all of the options available to them, to make sure their goods arrive
at their destination on time and in perfect condition, without having to break
the bank for the privilege. This is an important assessment of the overview of an
online retail business. This is because, shipping of goods, can make or break your operations
and hold on a niche group within your marketplace.
