Amazon sure knows how to make a splash, sparking a broad range of fears and commentary with their recent $14B bid to acquire Whole Foods. Forbes contributor Steve Dennis had one of the more interesting reactions, asking whether we should worry if Amazon appears to be absorbing $7B+ in shipping losses per year to put the hurt on brick-and-mortar stores.
Competitive reactions were swift with some players like Walmart appearing to tell partners and suppliers not to run their software services on Amazon Web Services, while finance news outlets like CNN Money are speculating that we might yet see a bidding war for Whole Foods. Still others, like Forbes contributor John Wasik, have tried to put the focus on the “real Amazon agenda” of completely reinventing the delivery experience by massively optimizing the supply chain for yet another retail category.
Instead of worrying if your industry might be “next to get wrecked” by Amazon, now would be a good time to consider some lessons learned from Amazon’s success. Shipping that’s fast, free, and easy is clearly at the top of the Amazon list of differentiators, so what shipping strategies can other businesses use to get those same kind of difference-making benefits? Here are three strategies to get you started.
Price Shipping Based on Real-Time Information
Today’s shipment pricing contracts are so complicated that the only way to get predictably accurate prices for customers is to drive your calculations with real-time information. Even if you have a great carrier contract which eliminates accessorial charges or sets limited fuel fees, complexities like dimensional weights, residential addresses, and variations across geographies or service classes mean that the old days of on-premise, table-based software calculators are gone for good. To quote shipping prices that hit the “sweet spot” of low enough to win new sales but accurate enough to protect margins, your pricing strategy should use real-time costs from carriers in combination with smart estimates of shipment packaging, address status, and other factors.
Use Carrier Choice for Service and Cost Leverage
Over the last few years there has been a remarkable increase in the diversity of shipping service options as freight carriers start supporting parcel, parcel carriers get into freight, consolidators offer new services, and more. Today’s best-practice strategy for carrier engagement is to consider multiple options that help you create the best delivery experience while leveraging down your costs. And while there is more diversity of services available than ever, carriers still have their own unique cost and service structures, meaning your best-possible balance of service and cost will come from using a team of carriers. There’s nothing to lose and everything to gain by bringing in and trying out new carrier options, even if you end up validating your existing carrier costs and service levels.
Obsess Over Metrics That Drive Specific Results
It’s now easier than ever to get integrated multi-carrier reporting for all shipments with detailed data on the packages, items, costs, prices, accessorials, and other key shipping information. If you’ve not recently looked at how you analyze and audit your shipping spend and outcomes, now is the time to revisit your analytics strategy. Measure what you’re spending by carriers, how often your team is expediting, how often you use special services, the impact and opportunity for rate-shopping, and look for changing patterns across time periods. Today’s modern cloud systems can push analytics towards you, helping you more easily keep a constant eye on the key metrics that drive the results you want.
Pacejet transforms the shipping dock into a launching pad for profitability. This starts with a best-in-class cloud-based solution, surrounding it with the consultative support that enables customers to thrive in the 21st century shipping economy. For more information on Pacejet, visit http://pacejet.com, call 877-722-3538, or email firstname.lastname@example.org.