Achieving Sustainable Profits in a World of Shipping Uncertainty
Higher freight shipping costs are here to stay—and according to the United Nations Conference on Trade and Development, they’re only going to keep getting higher, to the tune of 11% higher global import prices in the next year. But it’s not just freight. Reporting by The Wall Street Journal shows costs on the rise across the sector, “including in parcel delivery, trucking, ocean shipping, and warehousing,” and increased by around 23% compared to the previous year.
For ecommerce businesses, this means an unavoidable new hurdle between them and higher profits. How should companies that sell most or all of its products online handle these increased costs? The key is a new mindset that’s better-suited for the new normals of our present moment—and a willingness to raise your game to keep up with rising prices. Here’s how you get started:
1. If reality won’t change, your business must
It’s easy to blame the current shipping woes on the global pandemic, but in many ways, it has only served to reveal the weaknesses in our supply chains. When international commerce depends on lean manufacturing, just-in-time inventory practices, and lightning-fast shipping, any mistaken in the process will cause the whole system to fall to pieces—such as when a single ship got stuck in a canal and held up $9.6 billion in trade. Smart ecommerce companies are diversifying their supply chains and looking for ways to build additional slack into the pipeline to ensure their products can always get to their customers as promised.
2. Stay on top of your data to keep ahead of the curve
If you’re concerned about rising costs, it makes sense to know exactly what—and how much—those costs are. Examine your entire logistics pipeline to find out where your money is going and you’re likely to find some excellent targets for optimization. However, you can’t stop at a one-time reorganization; make this part of your regular practice. Continuous improvement requires continuous understanding, and you need to make it an everyday habit for your company if you want your growth to outpace costs.
3. Match your services to your prices
Inevitably, increased shipping rates will eventually make their way to the consumer as businesses run out of ways to absorb the added costs. This probably won’t come as a big surprise, since everything’s getting more expensive, but to maximize customer retention as you have to hike prices, make sure to hike up your customer service as well. Shipping might be a headache for you, but if you can do everything to ensure it’s a premium experience for your customers from the time they order to the time they get their package, it can be a fantastic way to keep folks coming back for more.
It’s entirely possible to develop the mindset you need to stay profitable during trying economic times. The tricky part is doing it at the same time you’re handling day-to-day business concerns. This is where a 3PL like Rocket Shippers can help. Our wide range of shipping and retail partners ensure that your packages always have a path to your customers’ doors, while our subscription kitting and bespoke packaging services can make receiving a delivery a delight in and of itself. When you put that together with state-of-the-art inventory management tools that give you a complete, transparent view of the whole process, you’ll have everything you need to put your ecommerce business on the path to sustainable growth.