When Free Shipping Is Not Enough!

Posted on Oct 9, 2012 9:25:00 AM

Regional parcel carriers give you the next-day delivery edge!

Last week our Director of Business Operations, Mark Magill, spoke at the Council of Supply Chain Management, where more than 3,000 professionals in logistics and supply chain management met at the Annual Global Conference to learn how to cut supply chain costs, network with colleagues from all over the world, and discover new and innovative supply chain ideas.

Mark MagillHis presentation included information on the online retail industry and gave shippers an idea of what to do when offering free shipping is not enough.

The online retail industry passed the $200 billion mark in the 2011 revenue estimates released last month. Projections show it will grow by another 60 percent in the next five years and cross the $300 billion threshold by 2016. These are staggering figures when you consider that e-Commerce still only comprises about seven percent of retail sales.

This has had a profound impact on the parcel delivery market. An industry once dominated by the commercial segment has been inundated by business to consumer deliveries. At last count, it had exceeded 40 percent of all shipments and it is relentlessly approaching the halfway point. The fiercely competitive e-Commerce landscape has caused free shipping to become an almost standard offering on most websites. This has caused the volume of postal consolidators to spike up sharply because they are the lowest cost shipping method. But what are your alternatives when free shipping is not enough to satisfy the demands of your customers?

The seven to ten day delivery commitment offered by postal consolidators may be a satisfactory option for inexpensive items ordered online (sometimes humorously referred to as “cheap and cheerful’). But what are the realities when your customer is ordering an expensive piece of apparel like a $700 leather jacket? Is it worth the risk of buyer’s remorse with that type of high margin item? And what about the risk of shopping cart abandonment if they need the apparel for a special occasion and balk at the high cost of the express shipping option on your website? These issues become even more critical when dealing with the Generation Y/Millennial consumers who have an expectation of overnight delivery without being willing to pay extra for it.

However, there are viable solutions to these issues in major metropolitan areas of the United States. To gain a sharper insight into these solutions, let’s first examine the term Mega-region.  A Mega-region is a geographical area where a large portion of the U.S. population is concentrated. A good example of this is California. It is home to more than thirty seven million people.  Other examples are the Phoenix Sunbelt, Cascadia (the Seattle/Portland I- 5 corridor), the Front Range of Colorado and the Boston to Washington D.C. Corridor. The population of these Mega-regions totals nearly 200 million consumers and the overwhelming majority of e-Commerce deliveries are shipped to them.

The solution to your faster time in transit requirements are the regional parcel carriers that are located in most Mega-regions. These carriers have a next-day Ground delivery footprint that is much larger than that of UPS and FedEx. They offer guaranteed next-day delivery to Zone 4 destinations as far as 800 miles from point of origin. For example, with a distribution center in Reno, NV, you could provide your customers the option of, not only overnight delivery in Nevada, but overnight shipping from Seattle to Phoenix. The best part about it is these overnight deliveries are performed at Ground rates. This makes free shipping with faster time in transit a much more cost effective advantage to offer to your customers.

OnTrac Service AreaLast year I had an in-depth conversation about online delivery needs with the vice president of a very large e-Commerce company. When I asked him his opinion about regional parcel carriers, he mentioned that the regional carriers should talk about nothing but faster time in transit because it has become such a competitive factor. He wanted me to talk about , or ground shipping in Arizona. The largest Internet retailers are continually raising the bar with faster deliveries. Not every company can afford to locate a distribution center in every state, but every company that wants to remain competitive can strategically place two distribution centers in the most effective locations to take advantage of the faster time in transit that the regional parcel carriers provide. Some of the regional parcel carriers linking those Mega Regions are OnTrac in the seven largest western states, Eastern Connection in the Northeast, Lone Star Overnight in Texas and SpeeDee Delivery in the Midwest.

 

To learn more about our overnight delivery service, please visit any one of our OnTrac Ground information pages.

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