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Ecommerce shipping: New study shows 3 ways SMBs can compete with Amazon
Making the right business decisions and applying the best shipping strategies can give you enough financial flexibility not just to survive, but to expand.
The doomsayers have already called the time of death. “Amazon killed small online businesses,” they say. “There’s no way to compete.” While this bleak outlook has some truth to it, a new study by the Colography Group for Pitney Bowes proves that small- and medium-sized business can not only compete with Amazon, but can even thrive side-by-side with the giant… as long as they follow the right shipping strategies.
The main takeaway of the study is that most ecommerce SMBs are making the wrong decisions with their shipping strategies, consequently losing money. Luckily, the study also brings to light 3 new insights on how SMBs can proactively turn their shipping strategies around while still satisfying customer expectations in the era of Amazon.
So how can your SMB remain standing after going toe-to-toe with Amazon? Consider these three shipping strategies…
1. The Multicarrier Strategy
Here’s the story so far… In the last few years, Amazon and other ecommerce giants have closed the delivery gap, using their enterprise clout to strike deals with delivery services and allow for more two-day and same-day shipments.
To keep up, most SMBs scrambled to match Amazon’s shipping speed by putting most (~65%) of their deliveries in the hands of commercial carriers like UPS and FedEx… but without enterprise-level resources, they actually end up paying more on unnecessary costs.
For example, some retailers find themselves locked into multiyear contracts with carriers who charge penalties if monthly or weekly quotas aren’t met. Sometimes these retailers fall victim to conditional charges like address correction or heavy parcel fees, even though these charges wouldn’t be an issue if they chose different carriers.
The solution isn’t to choose a different single-carrier, but rather employ multiple carriers. This enables SMBs to optimize their shipping strategies by utilizing the varying strengths of many different carriers, whichever is most applicable per order.
Most ecommerce companies rely on the major shippers like UPS, FedEx, and USPS (more on this later), but don’t forget the special benefits of smaller regional carriers like OnTrac or Lone Star that service individual states. Using one of these specialty carriers could save you a fortune, especially if you have a greater customer base in certain locations. Some carriers like Deliv or UberRUSH specialize in faster deliveries, and usually offer cheaper rates for same-day deliveries than the big carriers.
The point is, by choosing the right carrier for each order, you can save a lot more money than just using the same carrier for every order, even with any exclusivity deals. The multicarrier strategy also complements methods to reduce variable expenses in other areas, maximizing the amount of money your company saves overall.
The multicarrier strategy requires more micromanaging on your part, but the extra work pays off in the end. And remember, you don’t have to organize your carriers alone; automated software does a lot of the heavy lifting.
2. The Necessity of Automation
We’re not going to sugar-coat it; a multicarrier strategy means more work for the business owners. If you want to save money on shipping, the cost is your time. The good news, though, is that relying on automated software mitigates the amount of time and effort you spend organizing everything.
Ecommerce automation tools like an order management system and shipping software can orchestrate your shipping schedules for you, minimizing the amount of overseeing required to get the job done. Tools like these negate the main drawbacks of a multicarrier strategy by:
- Streamlining order fulfillment and automatically communicating between shipping status and sales channels.
- Integrating seamlessly with many of the top carriers, including USPS and their subsidiaries.
- Automatically creating shipping labels, lists, and slips.
- Processing and shipping all items from one central location.
For an industry like ecommerce where most of the workflow lies in organization and management, automation equals to free labor. Any tasks that you can automate are tasks that you and your team don’t have to handle yourselves, freeing up time to tackle the bigger, more important issues.
3. USPS: The Ol’ Reliable
Last but not least, the study highlighted the advantages of the United States Postal Service, which the data revealed to be tragically underutilized. Like a rom-com cliche, it seems the answer to a lot of your shipping problems have been right next door the whole time.
This is no accident: USPS saw the writing on the wall early on, and over the last few years have purposefully reorganized their infrastructure and sorting methods specifically for ecommerce deliveries.
For example, their sorting equipment and screening devices are designed for handling small parcels (5 lbs or less), which constitute the majority of ecommerce deliveries. This makes USPS the economic choice for most shipments under five pounds.
But that’s not the only reason to fall back on the USPS over commercial carriers:
- More cost-effective freight and accessorial charges match commercial carrier charges
- An extensive network of distribution points all over the country
- Access to USPS’s partners
- Delivery guarantees with reimbursement for delays
- Free packaging for most Priority Mail and Priority Mail Express products, including all at-rate shipments
In fact, if this study tells us nothing else, it’s that most ecommerce SMBs today can save a substantial amount of money just by using USPS for some of their deliveries. Take a look at their flat-rate shipping and compare it to your delivery data. Could you save more by making the switch?
We know it can be intimidating competing with a company like Amazon, especially if you’re just breaking into ecommerce. But intimidating doesn’t mean impossible. Making the right business decisions and applying the best shipping strategies can give you enough financial flexibility not just to survive, but to expand.
And don’t forget, you don’t have to do it alone, either. The software provided by ecomdash has a host of special features designed specifically for today’s ecommerce climate. In addition to the shipping benefits mentioned above, ecomdash also offers other helpful time-savers like inventory sync, which updates stock levels on all your channels automatically, and our omnichannel platform for managing all your channels and their individual entries in one central system. To see how ecomdash can improve your ecommerce business and make it more efficient, click here for a free 15-day trial now.
To learn more about the components of an effective shipping strategy leading to greater customer satisfaction, read Shipping as Strategy: How small and mid-size retailers can best meet customers’ delivery expectations in the age of Amazon.
About the author:
Nick Maglosky, CEO of ecomdash, is passionate about small to mid-sized businesses and all things ecommerce, and enjoys researching innovative ways retailers can compete online in an increasingly diverse market.