According to a study by our team, many eCommerce shippers consolidate their small parcel volumes into a single source and, at times a dual source, but most lean heavily towards the former. Additionally, some carriers are excluded from participating in the sourcing process due to strong perceptions of inconsistent service performance. Although it would be ideal to select suppliers in a dynamic fashion, a key reason to not is the risk of losing significant carrier rebates if their spend volume does not meet minimum spend thresholds.
At DeepLogica we have worked with our clients to analyze millions of parcel transactions and have found many distinct opportunities to optimize speed and cost through real time carrier selection based on the most recent delivery performance of each carrier. Leveraging insights on current carrier performance can enable shippers to provide a better delivery experience for their consumer without increasing shipping cost. Typically, we have noticed that shippers can reduce their overall shipping expense if their decision making is based not on maximizing the rebate value, but rather on an optimization of each carrier’s speed and cost for a particular shipment.
The graphic above demonstrates when you compare the delivery performance and per parcel cost across three major carriers, we were able to repeatedly demonstrate that Carrier A and B had delivery transit times of about 3.25 days on average while Carrier C performed an average of 2.5 days. Based on their annual reports, Carrier A and B were priced almost the same at around $10/parcel on average and Carrier C at a rate that was 4.5% more competitive. Our study shows that the delivery variance of carrier C is the main reason the market is underpaying for a faster delivery product. DeepLogica enables shippers to leverage the best of these carriers in their favor rather than just commit to the “best” carrier and assess on an annual basis when shipping decisions should and could be made on a daily or weekly basis.
As consumers tighten their purse strings in 2023, delivery experience will have an even bigger impact on cart conversion and customer loyalty in eCommerce. Cost pressure will only increase with the persistence of inflation escalating the need for reduced expenses. Contact DeepLogica today to find out how we can help improve delivery speed, reduce your shipping costs and improve delivery date accuracy to provide a better buying experience for your customers.