Of all the stages of direct-to-consumer fulfillment, it’s shipping that causes some of the biggest headaches for merchants.
Whether it’s delayed deliveries or expensive rates, shipping is the root cause of many fulfillment-related challenges. When successful shipping is key to a positive customer experience, it’s vital that merchants are able to design a flexible shipping strategy that’s rapid and cost-effective.
But we all know that this is a lot easier said than done. Ecommerce shipping is full of pitfalls that affect profitability and cause friction in the post-purchase experience, especially when merchants are fulfilling orders themselves.
In this post, we’re going to address the common shipping challenges faced by D2C brands – and how partnering with a direct-to-consumer ecommerce provider can help you to overcome them.
It’s no secret that both emerging and established brands are turning to direct-to-consumer ecommerce in huge numbers. This comes as 55% of consumers say that they prefer to buy from a brand directly, rather than through a stockist or intermediary seller.
So, how else can merchants benefit from selling direct to the consumer?
But like any selling strategy, D2C ecommerce has cons as well as pros. As we’ll expand on below, having direct control over the brand experience means that everything is on your shoulders – including order fulfillment.
Many D2C brands opt for a self-fulfillment approach, rather than partnering with a third-party logistics (3PL) provider. This means that the merchant is responsible for managing order processing and fulfillment from beginning to end, including sourcing the labor and storage space they need to keep pace with order volumes.
Almost every direct seller starts out by self-fulfilling orders because they don’t have the order volumes or inventory complexity to make outsourcing ecommerce fulfillment cost-effective.
It’s also very easy to get started. All a merchant requires is storage space for inventory and packaging materials and somewhere to pack orders; a garage or even a spare room will do. Moreover, having direct control over the fulfillment process in the early days of your business can be valuable when you’re still ironing out the details of the delivery experience.
However, self-fulfillment does have come with some major caveats. As well as dealing with a lot of hidden costs and difficulty scaling your operation, you’re also on your own when it comes to dealing with the challenges of D2C fulfillment.
In this blog, we’re focusing on the common shipping challenges that D2C brands face as they grow – and how a direct-to-consumer ecommerce fulfillment provider can help you to overcome them.
Ecommerce merchants are under immense pressure to offer rapid delivery – and most consumers expect to get this for free. According to Shopkick, 94% of customers said that free shipping was the perk they wanted most when shopping online, followed by fast shipping (60%).
And it’s not just outbound shipping that your business needs to worry about. When a customer wants to make a return, they expect to be able to do this with as little hassle as possible – and this doesn’t include paying for return shipping.
In fact, 71% of consumers say that restocking or shipping fees would prevent them from purchasing from a retailer in the first place, which doesn’t spell good news for your customer acquisition.
But keeping up with the likes of Amazon is an impossible burden for many small vendors. This is why merchants use a variety of different strategies to make offering free shipping cost-effective.
Using cheaper economy shipping methods or only offering free shipping under certain circumstances, such as minimum order thresholds or as a loyalty reward, helps to lessen the burden of shipping costs.
But if free shipping is slow and/or has strings attached, this runs the risk of displeasing customers who expect seamless and lightning-fast delivery.
By partnering with a D2C fulfillment provider like Whiplash, you gain access to wholesale shipping rates with both domestic and international parcel carriers due to the size of your partner’s network. By keeping your shipping costs down, you can invest in offering free shipping more widely or via faster methods that increase customer satisfaction.
It’s difficult to know when your brand will suddenly break through the noise and gain recognition from your target audience. But when order volumes suddenly start increasing, merchants will find themselves having to grapple with a variety of one-off and fixed costs to stay ahead.
You need more people to execute picking/packing, more warehouse space for your inventory, and technology to give you better visibility over orders. In sum, trying to set up a fulfillment operation from scratch is a costly and time-intensive undertaking that easily outweighs the cost of outsourcing fulfillment.
By partnering with a 3PL provider, you get to leverage existing infrastructure and expertise to scale your ecommerce business, in addition to advanced technical support in the form of automation and software integrations. The Whiplash management platform offers integrations with all major ecommerce platforms including Shopify, making it easy and seamless to keep all your information in one place.
Peak Season Surcharges (PSS) are temporary surcharges that parcel carriers apply on top of their base rate during periods when demand is high. The purpose of Peak Season Surcharges is to cover higher than normal operational costs when networks are under pressure, such as hiring additional labor or investing more automation.
We’re all familiar with surcharges during the holiday season. But thanks to COVID-19, parcel carriers have been put under sustained pressure for the best part of two years due to the explosion of demand for home delivery. This has transformed Peak Season Surcharges into a year-round phenomenon that is nigh impossible for merchants to avoid.
Oversized items, residential delivery, and additional handling are just a few of the surcharges that are currently in place with major carriers (check out our 2021 Peak Season Surcharges blog for a full list). With residential delivery alone adding as much as $5 per package, your shipping costs can easily spiral out of control.
This is where it’s highly advantageous to have a fulfillment partner who can advise you on a responsive shipping strategy that helps you to avoid the worst of the surcharges, such as splitting volume between carriers or switching to a flat-rate shipping strategy.
Building a cost-effective shipping strategy isn’t just about the cost of shipping, but also how much time it takes for your business to compare carrier rates and find the optimum balance between cost and speed.
Between Peak Season Surcharges, general rate increases, and changes in how weight is calculated, shipping rates rarely stay static for long. If merchants aren’t able to pivot quickly when changes are made, you could end up paying a lot more for shipping than necessary.
But manually looking up shipping rates in real-time is a massive drain on your time and takes focus away from managing other areas of your business. This is why many ecommerce merchants opt for using flat-rate shipping methods for all of their orders – despite standardized rates often costing businesses more than regular shipping.
Partnering with an ecommerce fulfillment provider that offers a shipping API to get shipping rate comparisons in real-time frees up a huge amount of time for your business to spend on other tasks. Whiplash’s SmartRate selection tool allows merchants to both compare rates between carriers in real-time and receive recommendations based on their order history, enabling a truly dynamic and responsive shipping strategy.
The last mile refers to the final leg of the journey when a parcel is on its way to the customer. It’s also the most inefficient and costly part of the entire shipping process, hence the common phrase “the last mile problem”.
The difficulty of the last mile comes from the fact that the economy of scale achieved elsewhere during fulfillment doesn’t transfer to this final stage of delivery.
Because every ecommerce order has its own unique delivery address, this keeps transportation costs high while efficiency is low. For merchants using centralized fulfillment strategies, the last mile is more likely to result in poor customer experiences. Because if orders are distributed from one facility you’ll be close to some customers, but a long way from others.
If a parcel has to cross multiple shipping zones, there’s ample opportunity for disruption in the form of unoptimized route planning, traffic congestion, or delays between delivery depots before it finally reaches your customer – not to mention much more expensive shipping.
By partnering with an ecommerce fulfillment provider who offers a network of facilities, you can pioneer a multi-node fulfillment strategy where orders are allocated to the location closest to your end customer. The Whiplash network encompasses 18 state-of-the-art facilities in strategic locations across the United States. This reduces shipping costs by keeping transit with the same delivery zone while helping businesses to speed up delivery timeframes for happier, more satisfied customers.
A critical stage of direct-to-consumer fulfillment, shipping has some of the greatest impact on the customer experience and whether a consumer chooses to shop with you again. Being able to offer your customers fast and affordable shipping is the key to securing lasting customer loyalty.
By partnering with an experienced D2C fulfillment provider like Whiplash, your business can solve these common direct-to-consumer shipping challenges effectively through advanced technology solutions and affordable shipping rates. Merchants can achieve a more flexible, responsive shipping strategy that increases customer satisfaction – and free up more time to spend growing their business.
Ready to get started? Contact Whiplash today to find out how we can help.