Sashank RavindranathThe truth of shipping becoming a defining factor in the customer experience, especially during the holidays, cannot be stressed enough.
This is because most of the orders during the holiday season are by customers who rely on timely gift-giving deliveries. These customers are so invested in them that a single instance of delay or any other delivery issue for that matter can lead to customer churn and lost costs.
Consumers expect holiday gifts to be delivered quickly, with 29% expecting delivery within 2–3 days.
While this is an issue that needs to be addressed, shippers are also put into face with rising shipping costs (due to shipping carriers straining capacity) during the peak season that can quickly eat into profit margins.
With an overwhelming surge in orders and inevitable delivery issues, success in terms of holiday shipping is dictated by balancing managing costs and ensuring reliability.
However, given today’s highly competitive marketplace, balancing these factors is no longer a luxury — it’s a necessity.
That said, there are several complexities that e-commerce businesses must navigate in holiday shipping to strike the perfect balance between cost and reliability and enjoy success. Let’s take a look at some of the major challenges and how you can address them.
Frequent Challenges of Holiday Shipping
1. Carrier capacity constraints
Customers tend to shop more during the holiday season, leading to high order volumes. This sudden influx of orders leaves carriers often struggling to meet demand, leading to delayed pickups, lost packages, and missed delivery deadlines. Customers who face the brunt of these issues are prone to hold you accountable and are more likely to churn.
2. Increased shipping costs
To manage the higher demand of order volumes, carriers typically impose surcharges on select services such as expedited shipping and oversized packages. The costs of these surcharges are borne by you, the e-commerce businesses as low-cost shipping has to be a standard offering for your customers. However, bearing these costs can result in your last-mile delivery skyrocketing and thereby squeezing your profit margins.
3. Lack of visibility and communication
Delays and disruptions are inevitable during the holiday season. However, customers are supportive of businesses that make the effort to let them know of the issue and preemptively resolve it. However, most e-commerce businesses lack real-time order tracking and proactive communication, thereby amplifying customer frustration, which leads to negative reviews and a loss of trust.
How to Balance Cost and Reliability During Holiday Shipping
While the challenges of holiday shipping are significant, businesses can take strategic steps to optimize both cost and reliability. Here’s how:
1. Understand carriers' shipping deadlines
In order to manage high shipping volumes without straining their capacity, shipping carriers come up with service deadlines (last days to ship) before important holiday season days. You can stay updated with these dates and communicate it with your customers to encourage last minute shoppers to plan their purchase accordingly.
2. Stay updated with carrier delay rates
Carriers strain their capacity during times like the holiday season. Understanding their delivery performance can help you choose the best carrier based on service types, locations, etc. Here’s an e-commerce report that delivers unbiased insights on UPS and FedEx on-time performance, highlighting delivery trends, operational challenges, and consumer expectations for speed and reliability for the upcoming 2024 holiday season.
3. Diversify carrier partnerships
Relying on a single carrier during the holidays is a risk. Diversify your carrier network to include regional and local couriers, which can often provide faster and more affordable last-mile delivery. This flexibility allows you to manage capacity constraints, negotiate better rates, and pick reliable shipping partners based on their strengths.
4. Offer smart shipping options
Not every customer requires overnight delivery. Provide multiple shipping options at checkout, such as economy, standard, and expedited shipping. This empowers customers to choose the shipping speed that suits their needs and budget, while also helping you manage costs.
5. Implement proactive communication
Customers are more forgiving of delays when they’re kept informed. Use automated notifications to alert customers of delivery updates, delays, or disruptions. Clear and proactive communication enhances the customer experience and reduces WISMO (“Where is My Order?”) inquiries.
6. Communicate delivery exceptions
Track your parcels in real time to monitor delivery performance, identify issues as they unfold, and automate resolution processes. This ensures reliable delivery while minimizing the cost of failed shipments or customer dissatisfaction.
7. Optimize packaging strategies
Carriers often base shipping costs on dimensional weight. Optimize your packaging to reduce unnecessary bulk and avoid oversized package fees. Additionally, well-secured packaging minimizes the risk of damage, improving reliability.
8. Plan for returns
The holiday season often brings a spike in returns, and a seamless return process is just as important as delivery. Offer pre-paid return labels and easy-to-navigate return portals to provide a hassle-free experience that builds trust and loyalty.
9. Audit your shipping invoices
While most carriers either suspend or extend their money-back guarantee for late deliveries, your invoice may still contain 50 other carrier errors (service failures and billing errors) that are eligible for refunds. Auditing your invoices gives you the opportunity to claim refunds for them. Remember, manual auditing can be a tedious process — make use of an automated parcel audit solution that does this on your behalf.
10. Make data-driven decisions with shipping intelligence
Regularly auditing your shipping invoices, among other things, gives you fulfillment insights such as on-time delivery performance, shipping spend analysis, etc. You can leverage these insights to make precise, data-driven decisions that enhance operational efficiency and reduce costs.
Prepare in Advance for the Holiday Rush
E-commerce holiday shipping is a delicate balance between managing rising costs and delivering a seamless, reliable experience to your customers. By diversifying carrier partnerships, leveraging automation, and communicating proactively, you can overcome the challenges of the holiday rush while delighting your customers and protecting your margins.
The holiday season presents both challenges and opportunities — those who master their shipping strategy will gain not just satisfied customers but also a competitive edge in the market.
Balancing cost and reliability isn’t just about reacting to challenges — it requires proactive planning. Less than a week to go until the holiday season to officially kick off — which means as an e-commerce retailer, you have to make use of the little prep time left to get better equipped to handle the holiday rush. Here are some tips categorized via different stages of the customer journey to help you get ahead of the curve.
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