With lower purchasing demand and rising operational costs, the e-commerce industry faces significant challenges in 2023. However, in this ever-evolving landscape, companies cannot sacrifice the shopping and delivery customer experience. Instead, companies must focus on improving their logistics ecosystems, processes, technologies, and customer experiences. This is essential to remaining competitive. One solution companies should consider is carrier diversification, combined with the use of AI-enabled platforms, to achieve short-term optimization while playing the long-term game of resilient, future-proof infrastructure.
Carrier diversification is the use of multiple delivery solutions rather than reliance on just one. By using multiple carriers, companies can choose the most cost-effective and efficient option for each individual parcel, resulting in short-term cost savings and long-term brand building and customer loyalty.
In the Central and Eastern European (CEE) e-commerce market, carrier diversification has become increasingly popular in recent years, with more and more companies recognizing the benefits it offers. Driven in part by increased cross-border trade, the use of multiple delivery solutions helps retailers improve delivery times, adapt to local market conditions, and keep costs in check. If you are still relying on one or two couriers to deliver your packages, it is time to rethink your logistics. Here are some reasons that you should consider.
For many retailers, this is somewhat counter-intuitive, as they try to reduce their transportation budget every time they renegotiate their contracts with their service providers, and all the volumes in one contract will bring larger discounts. But one cost does not fit all, and negotiating the lowest possible price is not enough. Refrigerators differ from laptops; fresh food differs from bottled water or canned goods; not all couriers are able and willing to deliver anything; and one-hour delivery differs from placing the customer's order in a parcel locker.
By using multiple carriers, companies can choose the option that is most effective for each delivery context: the type of product, the pick-up and delivery locations, the carrier's capabilities and specialization, the customer's options, and more. Costs can be instantly calculated based on actual delivery conditions and displayed in the shopping cart with the right platform that integrates all the necessary solutions and automates delivery allocation. This is increasingly important as inflation drives up logistics costs.
But there's more. With the last mile accounting for 53% of total transportation costs, e-commerce players need to increase their operational efficiency not only in terms of direct costs such as fuel, fleet management, or courier charges, but also in terms of indirect costs such as data entry and processing errors, labor inefficiencies, poor customer experience, or package returns. With margin pressure on the rise, every optimization point is critical to healthy cash flow and profitability.
Improved customer experience is another benefit of carrier diversification. Customers expect delivery journeys that fit their lifestyle, with different delivery locations (home, office, parcel locker, pick-up point, physical store) or times (express, next day, scheduled, with 3-day pick-up window). In the e-commerce market in Central and Eastern Europe, customer satisfaction is a key driver of customer loyalty and repeat business. According to a recent survey, 81% of customers in CEE said they would not buy from a retailer again if they had a poor delivery experience.
When customers receive their packages on time and in good condition, they are more likely to be satisfied and become loyal customers. In addition, businesses can provide a more personalized shopping experience by offering customers a range of delivery options to meet their individual needs and preferences.
This is even more important at a time when shoppers' willingness to spend has decreased due to unpredictable market conditions: inflation is still high, companies are struggling to remain competitive, and numerous layoffs in various sectors of the economy are creating a sense of unease. The customer will appreciate extra attention, and the provision of multiple delivery options and the ability to choose their preferred method (time, place) directly in their shopping cart will make them feel special.
As local markets shrink, more and more retailers are embarking on international expansion. There are a variety of strategies to do it right, depending on the products, customer segments, or financial power of the companies. They can choose to sell through their own website or through an international marketplace. They can opt for cross-border delivery from a regional warehouse, or they can localize their fulfillment and use local last-mile delivery.
Whatever their strategy, going international adds a new layer of delivery complexity, as the level of market development, vendor capabilities, and local buying habits vary from market to market. For example, next-day delivery is a standard service in Romania. In Poland, however, parcel lockers are the preferred option for more than 70% of shoppers.
With an integrated platform like Postis, new delivery options can be added, tested and scaled as needed, ensuring that any international expansion strategy is supported by the right logistics infrastructure.
With cost optimization, customized experiences and international growth comes an increased need for flexibility and control. By having multiple carrier options, companies have back-up redundancies and are no longer reliant on one or two providers, but can dynamically choose the option that is best suited to their needs at any given time.
For example, if one carrier experiences delays, congestion, or even API outages, companies can instantly switch to another carrier. This ensures that their customers receive their packages on time. This needs to be done continuously for every shipment being shipped. With granularity down to the city or even neighborhood level, the most efficient resources can be in place at all times.
Even better, constantly analyzing carrier performance will not only allow retailers to select the best available resources from the market, but the historical data will provide good tools for negotiating contracts when the time comes. And that brings us back to Reason 1: Cost optimization.
Complexity becomes difficult to manage with traditional processes when there are a large number of orders, types of products delivered, territories covered, or customer journeys. Therefore, it is important to use AI-enabled platforms to make the most of carrier diversification. These platforms use advanced algorithms to analyze data such as the size of the parcel, the weight, the destination, the delivery timeframe, the performance or the customer options. Based on this information and the retailer's business goals, the platform can select the best carrier for each package, ensuring fast, efficient, and cost-effective delivery.
In addition, AI-enabled platforms can provide a more seamless and stress-free shopping experience by providing real-time updates to customers on the status of their deliveries. In the CEE region, 48% of customers say that real-time updates are important to them. Companies that provide this level of transparency, predictability and communication are more likely to build brand loyalty and trust.
Currently, the e-commerce industry is facing lower purchasing demand, and the obvious approach would be to streamline operations and reduce the number of suppliers. However, companies must use this opportunity to improve their logistics ecosystems, processes, technologies, and customer experience. Carrier diversification, combined with AI-enabled platforms, offers a solution that can help optimize costs and improve delivery times in the short term, while building brand loyalty and customer trust in the long term. By embracing carrier diversification, e-commerce companies can not only survive, but thrive in the changing landscape of 2023.
If you are interested in learning more about how to diversify your delivery options, let's talk.
Photo by mariannebos on Unsplash
