{"id":3843,"date":"2017-11-19T11:50:27","date_gmt":"2017-11-19T09:50:27","guid":{"rendered":"https:\/\/gcelogistic.com\/?p=3843"},"modified":"2024-09-22T12:53:51","modified_gmt":"2024-09-22T12:53:51","slug":"e-commerce-grows-retailers-find-fulfillment-costs-rising-step","status":"publish","type":"post","link":"https:\/\/gcelogistic.com\/e-commerce-grows-retailers-find-fulfillment-costs-rising-step\/","title":{"rendered":"E-Commerce Growth Drives Rising Fulfillment Costs for Retailers"},"content":{"rendered":"

Online retail is booming, global e-commerce revenue is projected to hit $6.3 trillion in 2024, a significant 8.76% jump from the previous year<\/a>.
\nAs more and more customers move online, everyone from brick-and-mortar chains to virtual stores is finding it necessary to optimize. From website interfaces to warehouses and carriers, supply systems are being updated to meet evolving global customer demands.<\/p>\n

With shipping costs often reaching 25% of business expenses, services like FedEx, UPS, and USPS are keen to capture their share. According to EKN Research, 18 percent of every dollar gained through online sales goes towards fulfillment costs. As rates rise, businesses need innovative solutions to lower fulfillment costs.<\/p>\n

Customers Expect More with E-Commerce<\/h2>\n

In large part, these costs are being driven by E-commerce behemoths such as Amazon and Walmart. Both companies vie for the best rates, with Wal-Mart offering free two-day shipping on orders under $35. Amazon has matched these rates and also offers free two-day shipping on all items to subscribed Prime members. Explore further by checking out Deliver Imports to Amazon FBA<\/a><\/p>\n

With more customers flocking to these sites, other retailers are also offering similar incentives despite the cost. For smaller businesses, however, dealing with these costs while remaining profitable is a difficult ask.<\/p>\n

Strategies to Manage Fulfillment Costs with E-Commerce<\/h2>\n

Match Carriers to Customer Requirements and Business Objectives<\/h3>\n

Use data and analytics tools to identify customers that form the most profitable market for your offerings. Align your fulfillment systems to meet their needs; same-day or two-day delivery may not be necessary. Once you identify your key market, optimize your supply chain and shipment network to reduce costs.<\/p>\n

Stay Lean<\/h3>\n

Many businesses make the mistake of keeping excess inventory at distribution centers to compensate for demand fluctuations. Stock-outs can damage your reputation and increase last-minute supply costs, while excess inventory has its drawbacks. It drives up operational expenses including labor and equipment costs to account for the increased load. Rather a balance must be struck between holding too little, and too much stock.<\/p>\n

Companies should invest in scalable workforce and storage solutions to handle demand fluctuations. Enlisting demand planning experts to analyze trends and market data can ensure effective workforce planning.<\/p>\n

Get Your Packaging Right<\/h3>\n

Shipping carriers want your packages to be compact and heavy, and they prefer them to be delivered to destinations that are already part of their delivery routes. Unfortunately, online retailers often ship to incredibly diverse geographic locations, and because items can differ so greatly; packaging is often inconsistent too. Because of these issues carriers now charge based on dimension, as well as weight.<\/p>\n

Instead of boxes, see if you can deliver your goods safely using plastic or paper bags; as many fashion retailers are doing. If you have to use boxes try and opt for corrugated ones, rather than more costly inserts. Make sure that you have multiple-sized boxes to fit the requirements of your product; ungainly oversized boxes will bring unnecessary shipping expenses. This may entail investment in customized boxes, especially if you have a unique and varied product range, however, the ultimate savings you\u2019ll get will more than compensate for the up-front investment.<\/p>\n

For more in-depth information, read our related articles:<\/strong><\/p>\n