The Amazon Effect and Changing Expectations for Shippers

The Amazon Effect and Changing Expectations for Shippers

The Amazon Effect on Shipping

The demands on shippers have evolved at a rapid pace over the last decade; changes that have often been associated with what has been termed as “The Amazon Effect.”

As a result of increased expectations from consumers, stemming from their experiences with Amazon, shippers must now focus on providing better shipping experiences while decreasing shipping issues.

The Amazon Effect is, first and foremost, a function of the greater reliance on eCommerce, as opposed to in-store shopping. Amazon, more than any other online retailer, has influenced the way consumers think they should be experiencing the shopping experience. In recent years, that focus on experience has extended to shipping.

eCommerce as a major driver of change

There has never been a period of prolonged growth in shipping than what we are experiencing today.

Compounded with the overall greater reliance on shipping as a result of a larger percentage of commerce happening online, the types of items being purchased are often unpredictable; The Amazon Effect, in part, represents the necessity for shippers to conform to Amazon’s methods.

Loyalty is the holy grail

In the age of The Amazon Effect, shippers are laser-focused on 2 challenges:

  1. Retaining existing customers
  2. Generating new business

Shippers need to ship smarter. In order to accomplish this, shippers must consolidate whenever and wherever possible. Additionally, they need to figure out the right DC, leveraging inventory management so that they can truly achieve The Amazon Effect and retain customers, as well as get new customers.

The “Amazon Effect” has permeated through all departments – from marketing to supply chain – turning everything towards making the consumer happier.

They used to say back in the early 1900s that you could get a novelty Ford in any color if it was black. Essentially the manufacturers were dictating the market. Today, the consumer is all-powerful.

When there is loyalty declining among consumers on who they buy from, especially as they have their expectations hard-set because of Amazon, how do shippers continue to compete in that environment to continue to retain customers in an ever loyalty-declining world?

Cross-Department Collaboration

Marketing teams are collaborating with logistics teams more than ever before; the major impetus seems to be that that the cost of customer acquisition, especially for first-time customers, is so high.

Previously, shippers never looked at how many customers were being lost due to delivery exceptions or a poor delivery experience.

Think about it: when you go home and find that your package has been mashed into your mailbox along with all your other mail, it’s not a good experience as a consumer; when you open a package, if you don’t get the best experience in terms of how it’s supposed to look, you’re likely to not use that same service again.

All these things go into consideration when a consumer decides if they’re going to continue using a product or to take their business elsewhere. When marketing and logistics teams co-ordinate, issues like this can be mitigated and even turned into a competitive advantage.

Managing exceptions

Managing exceptions is an increasingly important and difficult challenge for shippers, particularly when it comes to accessorials. As a result of changing customer profiles, as well as the need to ship to residential locations and trying to achieve The Amazon Effect, accessorial charges will continue to increase.

The question shippers must ask themselves is what does your profile look like as a shipper and have you negotiated the best contract with your carrier?

Before a shipper can negotiate any contract and go back to the carrier with any information, they must understand their data.

Shippers are best served by leveraging a third party with vast industry experience to renegotiate their carrier contracts. When deciding on such a service, shippers should look for a company that can provide a benchmark for every single one of their carriers. It’s really meant to give them the ability to be more productive when they have conversations with the carriers. It’s important because the carriers are going to come and they’re going to give you their story and it’s important for you as a shipper to have your own same set of facts.

Between that approach, you can really collaborate to reduce exceptions, and hopefully, reduce how much you’re paying for each shipment. You mentioned something before that I thought was very interesting which was the delivery exceptions.

Controllable Issues

It’s easy to point a finger at a carrier for having the highest amount of exceptions and threatening to leave them unless they figure out how to lessen them. What really needs to happen is to shift that mindset; instead, look at every single exception and say “well, who can fix this?”

The challenge then becomes understanding which issues are controllable vs. noncontrollable, and really zoom in on the issues that are controllable.

Controllable issues could be connected to the carrier, shipper issue, or end-customer:

  • Carrier Issue

    Carrier issues might arise if internal data indicates that an increasing number of shipments routed through a particular hub have exceptions.

    When these exceptions are identified they must be benchmarked and added to a scorecard, a meaningful conversation with a carrier can then take place; and, with that data, they can go back and try to reduce it.

  • Shipper Issue

    A perfect example of a shipper issue would be damaged packages. Other examples might include printing labels that aren’t readable by the carrier, or poor packaging.

  • End-Customer Issue

    Lastly, there are issues that are a result of actions taken (or not taken) by the end-customer. These include incorrectly submitted addresses or address correction issues. Additionally, a customer could be unavailable at the scheduled time of delivery.

Whatever the issue is, unless a shipper can understand their data and have it broken down in a way that is actionable, they aren’t going to be productive.

This post was taken from a conversion between Hannah Testani, COO of Intelligent Audit, and Adam Robinson of Cerasis. To listen to the podcast, click here

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