Delivering the Goods: Managing Your Inbound and Outbound Shipping

February 17, 2016
Jason Alvarado
Blog, Shipping

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February 2016

Running a profitable business requires balancing a variety of priorities—from ordering inventory to client prospecting to sales conversions. With all of these complex processes to manage, shipping costs are likely the last thing on your mind. But in today’s on-demand economy, shipping can make or break your business. Unfortunately, many companies put little thought into their shipping strategy or avoid it altogether.

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Outbound Shipping

The variables that help determine your outbound shipping strategy include your industry, the items you are shipping, how much you ship, and what your recipients expect.

What do you ship?

This question is the foundation of all the considerations that follow. Shipping is, at its core, the transport of physical objects. So, understanding what you will be transporting is crucial to developing your logistics plan. Do you ship mostly documents or goods? If you are shipping goods, are they fragile, perishable, or oversized and, therefore, require special handling? Ask these questions first, and your plan will take shape from the answers.

What do your recipients expect?

Your shipping strategy depends largely on the recipients’ expectations. For example, if you are an e-commerce retailer, most customers (85%) are willing to wait five or more days for an order to arrive. However, the availability of expedited delivery is fast becoming a differentiator. A legal firm, on the other hand, may need to ship documents overnight. In addition, recipients want to be able to track their shipments and receive updates. In deciding which shipping options to offer, weigh what your recipients want against the administrative burden and cost of offering multiple options.

What is your expected shipping volume?

Having a good sense of how much you expect to ship can influence decisions like when and where you plan to drop off your items, how many boxes you should purchase, whether you should coordinate carrier pick up on a regular schedule. Given that 40% of consumers prefer having multiple items consolidated for delivery, consider aggregating multi-item orders.

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Cart Abandonment:

In 2014, U.S. online shoppers cited shipping issues as four of the top eight reasons for cart abandonment, including 28% who passed on purchases due to shipping time.

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Inbound Shipping

Businesses tend to overlook how much cost is buried in shipments from customers or vendors. In fact, depending on industry and size, a business can spend more than 40% of its annual freight budget on inbound shipping. A more efficient inbound freight program can reduce supply chain costs, improve predictability and reliability, and boost service.

Most companies have 7% of their operating budget tied up in transportation expense. Paying more attention to inbound freight—including converting shipments to bill collect—can help your business reduce these costs by enabling better material control, better product flow, and shortened sales cycle times.

Freight Management:

75% of companies surveyed by the Aberdeen Group report that inbound freight management is a key focus point. Total freight spend is between 3.6% and 5.2% of surveyed companies’ total sales.

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Shipping Solutions

There’s more to shipping than simply getting a product from point A to point B. By working with Innovatix-contracted supplier FedEx, you can create a strategy that has the potential to save you up to 73% on costs and help you better control your inbound and outbound shipping.

Additionally, your business can save up to 20% on FedEx SmartPost, a reliable, convenient way to grow your business with residential customers. Because FedEx’s integrated national network picks up, sorts, and delivers your packages directly to key USPS entry points, you benefit from a streamlined process that minimizes handling and maximizes savings.

You can further reduce overall carrier spend while better controlling your shipping strategy through Innovatix contracted supplier STI, a shipment auditing and parcel data management service. In addition to discounted pricing, Innovatix members retain 65% of all costs recovered by STI.

While no single shipping vendor or strategy fits all, taking the time to assess your outbound and inbound shipping needs is a great starting point for developing a plan that works—and enhances your margins.

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