A good customer experience (CX) comes from consistently meeting shoppers' expectations during ALL touchpoints with your ecommerce business. Things like the UX design of your website, the tone and content of social media posts & marketing emails, your returns policy, customer service interactions, and the unboxing experience are just a few examples of customer experience factors that e-tailers tend to prioritize. However, despite improved understanding and measurement of how supply chains impact customers, little progress has been made in recent years towards using this information to make CX better.
In a joint study from logistics companies, Convey and eft, designed to assess the importance of customer experience in last mile delivery, 96% of survey respondents said CX is a critical measure of last-mile success. Despite this, just 5% of respondents said their current supply chain management systems fully support efforts to improve CX, while 61% said their systems do nothing to improve CX.
For e-tailers who want to improve their CX through last-mile fulfillment, increasing the level of transparency into your supply chain is a great starting point. For one, you can’t make improvements to your supply chain unless you understand all of the moving parts involved – so building up your visibility into the chain should be a natural extension of your work to uncover opportunities for improvement. Secondly, sharing supply chain visibility and inventory levels with your customers can improve their shopping experience.
The result is a win-win scenario. By enhancing fulfillment visibility, you can improve CX by providing inventory levels on product pages, back-in-stock alerts, accurate order tracking, and other features that help remove friction and uncertainty from the buyer’s journey. On the fulfillment side, better visibility into your supply chain and inventory levels can help you increase process efficiency to provide faster order delivery.
Following in the footsteps of last year's rate increases from UPS and FedEx, the USPS enacted several rate increases of its own on January 27 this year. To help you estimate the impact on your business, we've outlined some of the key changes below:
Priority Mail Rates
Across the board, Priority Mail services increased by an average of 5.9%. Other changes of note include the elimination of balloon pricing for parcels shipping to Zones 1-4, and an average 3.9% increase for Priority Mail Express rates.
First Class Package Services
For the first time, First Class Package service rates will now be calculated based on Zone, similar to Priority Mail. Rates for this service will also increase by an average of 11.9%. First Class International rates will increase by an average of 3.9%.
Commercial Plus Flat Rates, and other services
Prices for Commercial Plus Flat Rate boxes and envelopes increased by an average of about 7% (but, if you disregard the very small 2% increase for Medium Flat Rate Boxes, all other flat rate containers actually increased by an average of 10%). In addition, Parcel Select Ground rates decreased by an average of 1.3%, while Media Mail rates increased by an average of 2.9%.
Changes to DIM weight pricing: Coming Soon
Originally slated to go into effect January 27, the USPS delayed the reduction in its dimensional weight divisor (DWD) from 194 to 166 until June 23 to provide shippers with more time to prepare. A package's DIM weight is calculated by dividing the cubic inches of the package by the DWD. The shipping rate for the package is calculated using whichever is greater - the package's actual weight, or its DIM weight. So, a lower DWD means that the DIM weight for all packages increases, making them more likely to incur a higher rate. However, that's not as bad as it sounds when you consider that both FedEx and UPS have been using a DWD of 166 since 2015.
It’s worth noting that although the USPS is raising many of its rates, it’s still an affordable option for lightweight packages traveling to residential destinations. Plus, the USPS doesn't add surcharges for things like fuel, regular Saturday delivery, or holiday “peak” season delivery – so it's still a valuable part of any shipper’s distribution mix. For a detailed review of all of USPS' prices changes, visit their website.
UPS announced changes to its rates for 2019 in December last year – giving customers a mere 3 weeks before they went into effect. With the holidays in full swing, the entire fulfillment industry was extremely busy at that time – so if you missed the announcement or didn't have time to process the details, you’re not alone. To help get you up to speed, we’ve highlighted the some of the most important changes in the list below. For full details and pricing information, visit UPS to read the official announcement.
- The rates for UPS® Ground, UPS Air and International services will increase an average + 4.9% (which follows the precedent set by FedEx's previously announced rate increases for 2019)
- The index for determining the Domestic Air Fuel surcharge increased +0.25% for all thresholds. In addition, fuel surcharges will apply to accessorials such as Additional Handling, Over Maximum Limits, Signature Required and Adult Signature Required.
- A new processing fee (+$2.00 per package) will be charged when Package Level Detail (PLD) is not provided to UPS prior to delivery.
- The Additional Handling charge for all packages will increase by $2.25. Any U.S. domestic package exceeding 70 pounds in actual weight (i.e. not DIM weight) will incur an Additional Handling charge of $4.00.
- The Address Correction charge will increase +$0.50, and the per shipment maximum will increase +$3.50.
- The Large Package Surcharge will increase +$15.00 for U.S. Domestic commercial packages, +$25.00 for U.S. Domestic residential packages, +$15.00 for International packages.
Emerging technologies are a hot topic in the world of distribution and fulfillment operations. From advancements in mechatronic picking to new types of cloud-based WMS software, it's easy to come away from an industry conference feeling awestruck at what the future might hold. However, the recent DC Measures Study from the Warehousing Education and Research Council (WERC) indicates that the actual adoption and integration of these technologies is slow, with little signs of popularizing any time soon.
According to WERC's survey of 549 industry professionals, more than two-thirds of warehouse managers said people (not technologies) are the most important assets in their operations. Reflective of that, 35% of the fulfillment centers surveyed said they currently do not use a warehouse management system (WMS) – instead relying on "manual means such as Excel and disparate modules" to handle typical WMS functions. When asked about technologies they expected to implement over the next 10 years, more than 25% of those surveyed said they were “not likely to incorporate” sensors (e.g. RFID) or robotics/automation equipment. More than 50% said they were not likely to incorporate 3D printing, blockchain, drones, or driverless vehicles.
So, what types of technology are warehouses using? According to WERC’s survey,
- 25.8% have installed voice-directed picking (up from 5.7% in 2008)
- 18.3% use radio frequency identification (RFID)
- 12% use pick-to-light
- 11.1% have installed automated storage and retrieval systems (AS/RS)
- 75% use some type of barcode and RF scanning system
- 42.7% plan to implement “some form of real-time data and analytics” in the next 1-2 years (it’s worth noting that certain types of WMS, like the one we offer, have these features built-in)
- 33% plan to implement mobile technology within 1-2 years
- 26.6% plan to implement Internet-of-Things (IoT) technology within 1-2 years
While warehouses’ adoption rate of technology has certainly not been fast, it may not be as slow as this report indicates. After all, technology that is growing, like WMS solutions and IoT technology, are prerequisites to successfully deploying more advanced systems like robotics and automation equipment. Perhaps this is a case of “learning to walk before you run.”
Expanding your ecommerce business by opening more distribution centers (DCs) can be a beneficial strategy for reducing shipping costs and delivery times. However, more isn't always better. The expenses associated with opening, operating, and integrating additional DCs can easily negate the cost savings and logistical advantages they provide. To figure out if the numbers will work in your favor, you should consider the following variables.
Number of SKUs vs. Order Volume
In general, the more SKUs you have, the more it will cost to coordinate with your suppliers to maintain inventory levels across multiple DCs. However, those costs can be offset if your order volume is high enough. As we previously mentioned, a new DC can reduce shipping costs (assuming it's closer to your customers, of course). The greater your order volume, the greater your savings on shipping. When determining the cost-effectiveness of acquiring a new DC, you'll want those shipping savings to exceed the added inventory and warehousing expenses.
Average Shipping Weight
The average dim weight of your orders should also be included in your cost/benefit analysis. Heavy orders will generate bigger cost savings when shipping from multiple DCs. Conversely, you may see minimal or no cost savings on lightweight orders.
Multiple systems may need to interface in order to properly count and route orders to the right distribution center. Can your order management system incorporate a new distribution center?
Improving your distribution network's size and efficiency by opening new centers can be a solid strategy for maintaining a competitive edge - but only if the pros, cons, and costs have been thoroughly vetted. Alternatively, a third-party fulfillment provider may be a better solution. You can reduce transit times, cut shipping costs, and increase order volume without taking on the risk of opening and operating a whole other distribution center. At Fulfillment Works, we utilize customized solutions to provide clients with full-service fulfillment including logistics management, data solutions, warehouse services (with facilities strategically located in Nevada and Connecticut), and much more. Contact us to learn how we can help with your distribution goals.