How to Counteract Shipping Rate Increases

How To Deal with Shipping Costs for Retailers

Today’s retailers face a dilemma: shipping costs continue to rise as consumer interest in paying them decreases. For the first time in 3 years, the United States Postal Service announced an across the board hike in shipping rates with average increases of 10%. This increase follows similar announcements from commercial providers UPS and Fedex, which both announced rate increases last year. Meanwhile, a recent UPS comScore survey recently found that 4 in 5 consumers consider free shipping to be an important factor in making a purchase online and 93% of shoppers take action to qualify for free shipping.

Not only do consumers prefer free shipping, but recent Deloitte research has also found that customers expect free shipping to be fast—and that they’re unwilling to pay for expedited service. Rather than risk turning away customers with increased shipping rates, smart retailers should instead implement supply chain technology to reduce the retailer’s cost of offering fast and free shipping.

By replacing outdated paper-based processes with voice automation technology, companies can help recoup fulfillment costs by increasing speed and accuracy for a variety of warehouse functions. Voxware customers that deploy voice for item selection regularly see an efficiency improvement of 30%, which helps companies increase fulfillment speed. When companies deploy voice automation for inbound fulfillment, returned items can be rapidly received and putaway, allowing companies to quickly prepare returned items to be sold and reducing the cost of offering free returns shipping.

Additionally, companies can also recoup costs by implementing new predictive analytics platforms purpose-built for the supply chain such as Voxware’s VoxPilot. This solution allows companies to reduce shipping costs by pulling real time data from multiple sources into a single platform. Armed with a complete picture of the supply chain, fulfillment managers can decide to reroute orders to leave from a distribution center closer to the customer’s home, thereby reducing shipping costs.

Whether next year, the following year, or at some other point in the future, shipping costs will rise again. The smartest retailers will adapt to this recent increase and future increases by implementing technology to streamline processes and reduce internal fulfillment costs. Those that pass the cost onto customers in the form of shipping fees and penalties risk sending their customers to more innovative competitors.

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