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True Carrier Rate Shopping: Investigating the Status Quo

Providing your customers with an experience they won’t forget in a hurry is the secret sauce that converts them into loyal repeat buyers. But creating that superior experience requires you to first get it right with shipping and delivery. 

Your ability to deliver in a way that matches customer expectations at all times is affected by two things:

  • How do you decide on shipping options and delivery timelines?
  • How much do you charge customers to keep your delivery promises? Charge them too low and your profit margins will take a hit. But charge very high shipping rates and they’ll abandon their carts, thereby hurting your conversion rate.

At the very core, shipping costs are affected by different factors, including:

  • Weight and dimension of the package. Different carriers will charge you shipping fees based on the dimensional or actual weight of a package.
  • Destination. The location where the package gets shipped will influence the shipping charge.
  • Insurance. Many retailers opt for shipping insurance for premium products which will definitely drive up the shipping charge.
  • Delivery timeline. This is usually influenced by customer choice. Some customers might be willing to receive their order by standard shipping while others might want expedited delivery.
  • Accessorial and Delivery Surcharges: Several carriers like UPS and FedEx charge delivery surcharges that can often be up to 20% of the total shipping fee for the package.

Putting all these micro factors, as well as other macro factors into consideration, will help you come up with the right shipping strategy. 

Once you’ve figured it out, you have to find the best carrier that can deliver customer orders faster and at the cheapest cost possible. That’s where Carrier Rate Shopping comes in. 

Implementing Carrier Rate Shopping

Basically, shopping rates to find the most optimal shipping service will require you to have accounts with two different carriers at the very least. But it makes sense to have more carrier accounts because that’s how you can get many price points and a broader range of shipping options. 

Various carriers offer different kinds of services and levels, which you’ll have to consider based on the shipping option your customer has chosen when making their purchase. So finding a service level that matches your customer’s delivery expectations (without hurting your margins) means you have to log into your different carrier accounts and key in the specifics of the package. 

In reality, that’s simply too much work to be done because you can’t keep manually rate shopping daily for individual orders that could number in the hundreds or thousands when aggregated.

Since manual rate shopping doesn’t cut it, the only way to keep up with these repetitive logistical processes that must take place at the backend to come up with the fastest and cheapest shipping service for any order is by automating the rate shopping process.

Gladly, automated carrier rate shopping is possible with the help of intelligent software.

How True Shipping Rate Shopping Should Work

Ideally, truly automated rate shopping involves using software or AI to compare shipping rates, service levels, and special offers across different carriers, and then intelligently select and display only the best and cheapest delivery options on your checkout page. 

Using automated shipping rate shopping helps you achieve two things:

  1. A simplified checkout page that eliminates all the expensive and irrelevant shipping options. So you no longer have a checkout page filled with too many unnecessary delivery options which could get your buyers overwhelmed. 
  2. Clear and accurate delivery timelines for every shipping option, ensuring you keep your delivery promises every time and build customer trust. 

To do this effectively, the software or platform must access your data such as inventory levels, warehouse locations, order operations rules, product parameters, and carrier contacts. 

Using all the information obtained from your upstream data, combined with artificial intelligence, the software can intelligently compare live rates and services across different carriers. It then selects and displays to the customer the cheapest shipping services that will get their order to their location by specific dates. 

Automated carrier rate shopping is the smart choice for fast-growing retailers and DTC brands because it totally eliminates the need to manually program different carriers and compare their rates to come up with the best choice. Besides being a difficult thing to do consistently for voluminous orders, you risk picking shipping options that are either underpriced or too expensive. 

Shipping rate shopping software allows you to display, very early in the customer journey, the lowest shipping charges and the best carriers that can deliver an order faster. That way, you save your retail staff from being burnt out by manually searching for the best rates.

Psychologically, it’s also beneficial to your customers because you save them from the overwhelming experience of skimming through too many shipping options in order to select the one they feel is best. Deep down, all your customers want to know is when their order will arrive and how much they have to pay. A rate shopping solution allows you to narrow down their choices at checkout.

The Rate Shopping Issues of Today’s Retailers

Many different carrier rate shopping solutions are available to retailers. But while these software solutions can help to automate certain aspects of the rate shopping process, the key question is –

Does your software solution really do true rate shopping as it claims?

As mentioned earlier, the perfect rate shopping solution should be able to utilize key data to search for the best rates and shipping options and then display them live on your checkout. 

If your solution isn’t displaying optimized shipping costs and accurate delivery dates at checkout, then you’re only just doing partial rate shopping, which could still be hurting your business in ways you cannot see. 

Here’s how most carrier rate shopping solutions today work:

Doing carrier rate shopping at the time of label printing

Most retailers using automated rate shopping do it only when it’s time to print the label in order to select the cheapest carrier service available. While that could help reduce shipping costs, they end up shipping with a service that doesn’t fit into the customer’s expectations, leading to late deliveries.  

By sacrificing the customer delivery experience just to ship cheaper, you create a horrible experience and end up losing customers in the long term. An Oracle Retail study shows that 13% of customers will not return to buy again after a late delivery.

Another disadvantage of label printing rate shopping is that the process still has a manual side to it, since the solutions are not intelligent enough to integrate with all your upstream data like inventory levels, fulfillment locations, etc. That invariably defeats the reason for introducing automation in the first place. 

Doing partial rate shopping at the checkout

Some rate shopping solutions manage to show delivery timelines and shipping costs at checkout. But the tech employed to do that can be time-wasting. How? 

First, the solution has to be integrated with different carrier APIs. Next, it has to keep calling the APIs in real-time to request shipping services and rates. Then, using all the information collected, the software decides which delivery options are more efficient before displaying them.

While that could work, calling APIs across different carriers and service levels for every order can be time-wasting and still hurt the experience for customers.

Superior Carrier Rate Shopping – A New Emergence

It’s clear that the majority of retailers are either not doing carrier rate shopping, or only doing it at the time of label printing. And even when they manage to do it at checkout, the experience isn’t really seamless. 

While the different ways to shop for carrier rates aren’t entirely bad, you want to make sure to keep improving your fulfillment processes in a way that elevates the customer experience. You can do it with rate shopping too.

There is a new emergence of brands that are now using a superior shipping solution that does true carrier rate shopping. The execution might seem hard, but these merchants know the value it brings in terms of unlocking strategic value from their shipping operations while compounding their long-term business growth. 

FenixCommerce provides retailers with a superior carrier rate shopping platform which saves both time and money for you and your customer, thereby elevating the experience and giving you a material advantage. 

Read our guide which explains how carrier rate shopping with FenixCommerce is superior and why we’ve become the shipping solution of choice for fast-growing retailers and DTC brands.


Author: Akhilesh Srivastava

Founder and CEO of FenixCommerce

Akhilesh is a Technology enthusiast who's passionate about creating a superior consumer shopping experience with technology innovations. He has deep expertise in envisioning and launching new products for eCommerce, Supply Chain Fulfillment and Logistics. To date, he has helped several large Fortune 500 companies including eBay, Walmart, Gap, Nordstrom, Nike, Polo Ralph Lauren, adidas, Petco, Staples and Microsoft among others.

Akhilesh Srivastava

Author: Akhilesh Srivastava
Founder and CEO of FenixCommerce

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