Thanks to Gray Thursday, Black Friday and Cyber Monday, online retail (“E-tail”) sales have hit record highs in the US this holiday season. FedEx shipped a record 19 Million packages on December 10th of this year. UPS has predicted that they will ship over 527 million packages in the period between Thanksgiving and Christmas, as compared to 480 million packages total shipped in 2011. The increase in shipping volume is shocking, and it’s only going up.
The impact? Both carriers and E-tailers are beginning to realize that, if they intend on maintaining the same levels of customer satisfaction and quality control as shipping volumes increase, the current partnership dynamic will be changing in a big way.
The Impact on Shipping and Parcel Carriers
Shipping and parcel carrier companies are beginning to require their E-tailing partners to become compliant with their specific electronic data exchange standards for shipping activity. Without it, carriers will eventually be unable to maintain their current quality and service level standards. This would ultimately have a negative impact on E-tailer and the end customer’s satisfaction. Some smaller carriers have already started to reject business that does not comply with their specific electronic data interface (EDI) standards, due to their inability to keep up with order volume otherwise.
The Impact on E-Tailers
Unfortunately, E-Tailers will have to take on the costs and headaches associated with implementing systematic cha
nges, and re-training their affected workforce in order to comply with these carrier’s EDI compliance standards. But, the positives will outweigh the pains, and will ultimately allow businesses to continue profiting from the increase in e-commerce activity.
In the past, many E-tailers have chosen to partner with a single carrier company based on ease of procedure and negotiated contract rates. For businesses moving towards compliance with carrier EDI compliance, this will not likely be the case going forward, due to the ease of ability to connect with several carriers. Once connected to multiple carriers, businesses will have the ability to pick & choose the best service provider based on the specific shipment requirements or scenarios. For example, if a business is sending priority overnight shipments from California to North Carolina, it may be more cost-effective for a business to work with FedEx. The same company may find it more cost effective to leverage UPS for priority overnight shipments when sending orders from California to Texas.
The ability to select the best carrier for the specific shipping scenario will have a big impact on these E-tailer’s bottom lines.
The Result –Customer Satisfaction Focus Growing with Shipping Volume
Ultimately, the move to electronic data exchange for shipping will be beneficial to both E-tailers and their partner carrier companies. E-Tailers will save money through new real-time procurement capabilities, and both E-tailers and carrier companies will benefit from the increased competition for providing high quality service level capabilities that will be introduced with the new carrier technology.
The shipping world is getting a major makeover. Everything is moving to keep customers happy while businesses impro
ve their bottom line through their E-tail storefront. Sounds like a positive shift to me.
Blue Harbors can help businesses running SAP with this transition with the SAP Express Ship Solution, a native integrated SAP shipping solution that is simple, yet extremely effective in saving businesses time and money. You can read more here.