In today’s rapidly evolving e-commerce landscape, periodically reevaluating your shipping approach is essential. Shipping has transformed into a crucial component of creating customer loyalty. The last mile, which signifies the final leg of the e-commerce supply chain, offers a substantial opportunity for enhancement.

Supply chain leaders are no longer just cost managers but have become catalysts for growth and innovation within their organizations. A golden opportunity lies in redesigning the supply chain, with the most significant potential for improvement residing in last-mile delivery. Research from McKinsey found that logistics costs make up 12% to 20% of e-commerce revenues and are projected to grow to 15% to 25% soon, with over half of e-commerce fulfillment costs linked to last-mile delivery.

A recent analysis highlights the significance of seizing this opportunity. It showed that by improving on-time delivery shipments (OTD) from 92% to 99% and introducing real-time text message communication, a leading e-commerce brand achieved a 61% reduction in refunds and a 19% increase in repurchases. There have been three significant trends identified in shaping the new era of e-commerce shipping that everyone should be aware of.

Trend 1: Accelerated Carrier Diversification

The surge in online shopping triggered by the pandemic resulted in increased costs and decreased service quality from national carriers. In response, leading brands have diversified their carrier portfolios. This strategic shift focuses on maximizing the strengths of each carrier within a parcel network.

Trend 2: The Rise of Gig-Economy Models

Amid significant investments in supply chain technology, gig-economy models have emerged as the most market-ready solution. Their flexibility allows them to precisely match shipping capacity to demand, even during peak seasons. This approach has gained traction among shipping platforms and major e-commerce brands, fostering continuous innovation and competition among legacy carriers.

Trend 3: Shipping as a Customer Loyalty Driver

While some brands are considering cutting costs by eliminating free shipping policies, market leaders are enhancing their delivery and return offerings to solidify customer loyalty. A recent consumer study highlights the importance of the shipping experience, revealing that negative delivery experiences deter 77% of consumers from repurchasing from a brand. Conversely, brands that provide premium returns and delivery experience increased customer loyalty and higher sales.

Steps to Implement a Best-in-Class Strategy

Transitioning to an advanced shipping strategy is understood to be beneficial, but it has to be executed well. Here are a few key steps that supply chain leaders can use to implement an improved approach to shipping. 

Step 1: Calculate the Profit Potential

Begin by assessing your current maturity level and annual shipping spend, examining cost and performance metrics. Evaluate the maturity and potential for advancement. Consider a hypothetical example: transitioning from a national carrier to a customer-oriented strategy can result in significant savings and enhanced customer loyalty metrics, ultimately boosting sales.

Step 2: Assemble Your Team

Building organizational capability is crucial for the success of your strategy. Form a dedicated task force, including a Data Analyst, Transportation Expert, and Customer Experience Manager, to unlock advanced shipping capabilities.

Step 3: Mitigate Risk

Diversifying carriers, especially concerning technology integration, can be risky. Employ risk mitigation strategies and consider technology solutions that simplify the process.

Embracing the shifting role of shipping in the e-commerce landscape is essential for business success. The competitive environment is evolving, and your shipping strategy can be a powerful tool to delight customers and drive growth.