Undeniably, eCommerce has grown in size and popularity steadily during the past decade. Nevertheless, in the wake of the COVID-19 pandemic, its growth has exploded dramatically.
According to Digital Commerce 360, US consumers spent $861.12 billion online in 2020, up 44% year over year, the highest annual U.S. eCommerce growth in at least the last two decades. This exponential growth is showing no signs of slowing down even in 2021.
Although this sudden uptick in demand is seemingly great news for the eCommerce merchants, recent increases in carrier shipping surcharges are either eating into their margins or hurting sales.
Source: Digital Commerce 360, U.S. Department of Commerce
Inundated with elevated eCommerce volumes, container crisis, capacity constraints, labor shortage and shipping delays, major carriers have been increasing surcharges throughout the pandemic.
The trend continued in 2021 as well. Effective from January 2021, FedEx, UPS and DHL Express announced their general rate increases (GRI) with an average increase of 4.9% - while USPS increased prices for Priority Mail & Priority Mail Express services by 3.5% and 1.2% respectively.
And that’s not all. FedEx and UPS announced another round of increased surcharges, effective from June and July 2021 respectively. Important highlights include the following:
The majority of the shipping volume in the US is predominantly handled by FedEx, UPS, and USPS. In the face of rising surcharges, along with the growing capacity constraints of carriers and increasing consumer demands, a shipping & delivery technology platform like FenixCommerce can help alleviate the impact for eCommerce merchants.
It’s not too late to think about a multi-carrier strategy to combat the peak surcharges. Access to multiple carriers allows merchants to find the most cost-effective and optimal carrier services and keep their total shipping budget in check.
Choosing a platform like FenixCommerce offers a competitive advantage to merchants, by enabling live carrier rate shopping capabilities in the cart and at checkout. Our proprietary, live carrier rate shopping engine navigates through multiple-carrier rates, their respective delivery performance and surfaces the most optimal delivery options to the customer in the cart and at checkout. FenixCommerce clients have seen up to a 51% increase in shipping revenue while improving their end-to-end conversion rate by up to 14%.
Through various shipping-related promotions, FenixCommerce enables merchants to incentivize the selection of certain shipping options to lower shipping costs.
For example, 90% of consumers view free shipping as the top incentive that would encourage them to shop online more often. Yet, with the high costs of shipping, eCommerce merchants may wonder how they could afford to offer free shipping at all. Though it may seem counterintuitive, FenixCommerce makes it possible by setting up certain shipping rules. For instance, free shipping options can be limited to fulfilment locations that are closer to customers or to specific high-margin products. Additionally, by setting a minimum average order value, the intelligent shipping software incentivizes customers to buy more products to be eligible for free shipping.
Similarly, a broad set of shipping rules, which factor in a large range of data points, can also be created in the backend to minimize unnecessary losses and increase shipping revenue. FenixCommerce also enables customer-specific promotions on branded tracking pages to drive more sales.
Innovative options like curbside pickup, BOPIS and local delivery are a great way to serve local customers in a cost-effective way. According to Digital 360, Target reported that pickup in-store or at the curb saves them 90% of the cost of shipping an online order to a shopper’s home.
From the onset of the COVID-19 pandemic, many retailers and consumers are increasingly embracing contactless delivery formats, like a curbside pickup. According to Forbes, 75% of consumers report they use this option on a regular basis. For online-only merchants, major carriers offer thousands of access points where customers can pick up their packages. FenixCommerce enables such contactless delivery formats which helps to effectively combat increasing residential delivery surcharges.
Partnering with regional couriers for local deliveries will also greatly help in reducing shipping costs. Regional carriers have fewer surcharges than national carriers and come with abundant capacity. At a time when major carriers are putting in place extra volume-based surcharges, moving some volume of business to regional carriers makes good sense.
As online purchases continue to grow, so do carrier delays. Due to severe capacity constraints, there will be many instances of shipping delays. In such times, it’s better to be transparent and proactive. Let your customers know early and often about their order updates.
FenixCommerce enables retailers to proactively send automated and customized email & SMS notifications to customers, informing them about their order status. This helps in building trust & customer loyalty and in turn boosts customer retention.
Our order intelligence system also analyzes orders in real-time, monitors progress & initiates order-triggered actions – to avoid late deliveries and optimize operations. FenixCommerce clients have seen up to a 75% decrease in WISMO calls after integrating with our platform.
The pandemic will impart long-lasting effects on eCommerce and digital solutions. And rising shipping surcharges are likely here to stay with merchants unable to pass on 100% of them to customers. It may seem daunting to combat these surcharges manually with more carriers, shipping options, etc. Nevertheless, an automated shipping solution like FenixCommerce can be a no-brainer for merchants to alleviate many of these issues.
Want to learn more about how FenixCommerce’s AI-Powered Shipping Software can help you effectively combat surging shipping rates?