'Tis the season for small businesses to stress over shipping.
Though the holidays are a traditionally a time for merriment and cheer, merchants instead have visions of the great shipping debacle of 2013 dancing in their heads. Beset by a smaller holiday shipping window, a last-minute crush of online orders, and icy weather, both UPS and FedEx failed to deliver some gifts by Christmas; this prompted outrage on social media.
"Carriers had a lot of trouble handling the demand," said Jarrett Streebin, founder and CEO of EasyPost, provider of a shipping application programming interface (API) that lets retailers quickly add shipping and tracking to their apps and online stores. But it wasn't just the carriers that had to face a horde of angry customers.
In an example of the "better never than late" attitude held by today's online shoppers, retailers were forced to ramp up their customer service efforts, offer refunds, and process returns, putting the squeeze on their year-end finances. Even ecommerce giant Amazon took a hit, prompting the company to issue gift cards.
Holiday Shipping on Track in 2015
In 2014, UPS and FedEx "invested a ton of money to make sure they can handle the volume," Streebin told Small Business Computing. He estimates that UPS and FedEx spent $1 billion and $300 million, respectively, to upgrade their infrastructures, roll out new technologies, and refine their business processes to avoid a repeat of 2013.
So far, those investments seem to be paying off. "Barring horrific weather, you're not going to see them handling the high volume" of packages that ruined Christmas for some people two years ago.
That's good news for small and midsized businesses (SMBs) banking on a lucrative holiday shopping season this year. UPS, FedEx, and other carriers expect to deliver as usual.
For success during the holidays, and during the rest of the year, a dependable carrier is only part of the equation, argues Streebin. He offers the following ways that SMB merchants can upgrade their shipping practices and improve their bottom line.
Holiday Shipping Tips for Small Business
1. Harness the Power of Free Shipping
Whenever possible, offer free shipping, advises Streebin.
Consumers are more "shipping-sensitive than price-sensitive," he said. They're more inclined to complete their purchases when they don’t have to deal with surprise shipping costs during the checkout process.
Instead, raise prices a little to compensate. It's a strategy that works particularly well for retailers and boutiques with niche and unique goods since shoppers will find it tougher, if not impossible, to compare pricing.
2. Stop Shipping Air
Breathing room is healthy for people, but it's wasted on packaging.
"Most businesses ship a lot of air," Streebin said. If you've received a USB flash drive or an iPhone screen protector in a shoebox-sized container, the vendor shipped mostly air.
"They don't optimize their packaging," he said. Weight is only one factor that determines shipping cost; another is package dimension. By selecting the right packaging before slapping on a shipping label, small businesses can save big as the orders start piling up.
3. Obey Shipping Cut-off Times
Adhering strictly to shipping cut-off times is one of the best ways to get the most out of your shipping dollars, said Streebin.
A missed pick-up or drop-off can cause shipping costs to skyrocket, particularly when a business uses two-day or next-day shipping to make up for lost time. "Focus on the efficiency of the fulfillment process," he added. In short, start preparing a shipment as soon as the order comes in.
"People tend to focus on the price of shipping, but speed is half of the equation," said Streebin. In addition to satisfying customers with timely deliveries, businesses can save upwards of $10 per package by avoiding last-minute rushes; that's enough to hire a helper or two during times of high demand.
4. Provide a Tracking Number
As basic as it seems, many small merchants skip this crucial step.
It not only leaves the customer left in the dark—a customer-service faux pas if ever there was one—it creates more work for the merchant during this hectic season. "Customers will probably ask for a tracking number," said Streebin. It's better to furnish it from the get-go than to drop everything you're doing to answer customers' inquisitive calls and emails.
5. Add Friction to the Return Process
It seems counterintuitive to make your customers jump through hoops to return a product, but what works for Amazon and Zappos doesn't necessarily work for most small businesses.
"You don't want to make returns too easy," said Streebin. "You want just enough friction" to dissuade returns from all but those who are truly dissatisfied with a product. This helps "avoid frivolous returns" from folks that use online shopping sites to borrow items for a short while with no intention of ever paying for them.
Streebin suggests never including a return label with the packaging. For customers with valid reasons for returning an item, he has two words: "Email us."
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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