Every retailer except one is fighting the Amazon effect: customer expectations of free two-day or same-day shipping. It is rapidly becoming the standard best practice to offer free shipping and free returns to ensure a stellar consumer experience.
While good for the consumer, this practice often leaves retailers with a low margin or none at all. To make matters worse, expedited shipping is even more expensive than standard.
With this shipping struggle already a pain point for retailers, the latest news that a popular shipping provider is raising their rates hits home for retailers and can cause them to rethink their plans. How will they stay afloat?
The best way to handle increased shipping rates is with two omnichannel strategies that allow you to leverage your brick and mortar assets: ship-from-store and in-store pickup.
Solution No. 1: Ship-From-Store
Ship-from-store is the retailer’s secret omnichannel solution to combat high shipping costs. The premise is simple: Ship an item directly from a nearby retail store, instead of a far away distribution center. On average, dealers are 47 percent closer to customers than warehouses or distribution centers, making shipping costs and shipping times lower because the product doesn’t have as far to travel. The customer has no idea where their item is coming from, they only know they are getting it quickly.
For example, a customer visits your store looking for a specific item, but the product is out of stock. A world-class store deploys its great mobile point of sale technology to make sure the customer can order his desired item right then and there in store.
But how will it get to the customer? The most cost effective option is to utilize the distributed order management software to locate the item at a nearby store and have it shipped to the customer’s location of choice. And, as is commonly known: the closer the store, the faster and less expensive the shipping.
To be clear, implementing this solution must be done correctly. Some companies may attempt omnichannel with a warehouse management solution, a point of sale system or other solution. True omnichannel capabilities come when using a distributed order management system because the solution allows for accurate order routing that truly saves on shipping costs and pleases the customer.
Solution No. 2: In-Store Pickup
Many retailers are already implementing in-store pickup, or have plans to implement this fulfillment option in the next year because it is a customer favorite. Additionally, in-store pickup is an attractive option for retailers because it eliminates all shipping costs and drives traffic into stores. Why incur shipping costs when your customer will come pick up at their own cost?
Again, this is where your commerce technology plays a pivotal role. With a robust front end website that is tightly integrated with your order management system, you can provide accurate information on purchases how and when the customer wants. An order management system will inform and identify when the desired inventory is available for pick up at a specific store, and once the order is placed, the store associate will be notified to prepare the order for pick-up. Once that is accomplished, the customer comes into the store to pick up their order: at literally no shipping expense whatsoever to any party involved.
In-store pickup is the gem of omnichannel solutions because customers are already participating in this behavior. No programs need to be run to inform and entice the customer– they are doing it already. In fact, 43% of US shoppers prefer in-store pick up as their main fulfillment method.
Beat The Rate Increase
Omnichannel, when done right, serves the customer as much as it serves the retailer. Shipping rates will continue to inflate, that is a certainty. Retailers don’t need to be caught in a catch 22 trying to best serve the customer by providing free shipping, but being financially unable to provide that service and still maintain a viable business model. Instead, provide customers with omnichannel services like ship-from-store and in-store pickup. Not only does the customer benefit from omnichannel initiatives, but omnichannel provides insurance against future shipping rate increases.
