eCommerce Logistics: The Retailer’s Guide to Outsourcing Transportation Management
The increase in eCommerce sales over the last few years has created a nightmare for transportation management. Not only did supply chain disruptions and out-of-stocks hit retailers hard, they came at a time when many eCommerce retailers were in the midst of digital transformation. Unprepared for the modern, cloud-based integrated ecosystems that a true omnichannel retail experience requires, suddenly, retailers had customers expecting their orders delivered in two days, from multiple fulfillment options, with less staff, and in an uncertain and quickly changing environment.
To meet these delivery expectations and the surge in volume, retailers needed to be able to:
- Streamline inventory and shipping data from disparate sources
- Manage multiple carriers and services, including newly contracted ones
- Communicate in real time with suppliers and manufacturers
- Deal with cross-border delays, customs, and documentation
- Track delivery status globally and keep customers notified in near real-time
None of these things are easy to do. But to deliver on customer expectations today, eCommerce retailers must be able to do them well.
Why? Because customer experience — and customer loyalty — depend on it. And, because your true competitors are doing it well. So, whether you lead in your industry for a great delivery experience or you are up against those who do, getting the delivery experience right is essential to retaining customers.
The question is: do you invest in what it takes to handle transportation management in-house or do you outsource it to an eCommerce transportation management partner?
In-house: Transportation Management System
To handle it in-house, you’ll need to invest in a cloud transportation management system (TMS). A TMS connects to all other systems and tools in your supply chain to provide a single system to work with in optimizing, integrating, and managing transportation and parcel delivery.
It should be cloud based, come with pre-built integrations to your existing systems, be easy to use and configure, and deliver real-time visibility into every aspect of the transportation and delivery process. It tracks shipping volumes, costs, carriers, shipping labels, documentation requirements, carrier rates, timelines, and delivery events. It should also provide data analytics and reports that show you where you can make improvements or manage budget. Ultimately, it should enable you to achieve higher on-time delivery rates, keep customers notified of their parcel status, and automate reverse logistics.
Think of it like an air traffic control tower. It can handle all the data and track the information you need, but like an air traffic control tower, it needs someone to manage it.
Investing in a TMS may be the right approach to managing transportation for your eCommerce business if you have the staff and resources to devote to managing it full time, and an IT team available to support you quickly when glitches happen.
Keeping transportation management in-house is often the right move for businesses that:
- Have the budget, staff, and skilled resources to invest in a TMS and manage it 24/7
- Are small enough to have manageable order volumes with minimal peak seasons/events
- Are large enough to fully build, own, staff, and manage a transportation function within the business
- Are not anticipating fast growth or unexpected surges in sales volumes
Every eCommerce retailer that is concerned about their capacity to handle transportation management well — or the resources it requires — should consider the option of outsourcing it before making a decision to keep it in-house.
Outsource: Transportation Management Partner
In a partnership, you must be able to trust your partner to fulfill their obligations and be true to their values. Before we talk about what a transportation management partner can do for your business, let’s talk about trust.
Many eCommerce retailers pause at the thought of handing over such a crucial part of their business to an outside partner. This is partly out of fear of forfeiting control of the customer experience (CX) to someone else. Your CX is your most valuable asset. It is the one thing that differentiates you and no business should take entrusting it to another company, lightly. Any partner should be thoroughly vetted to be sure they align with your CX promise, values, mission, and their ability to deliver CX that aligns — or exceeds — with your own.
Leading transportation management partners have tenure in the industry, are innovative and forward-moving in their embrace of technology, and they invest in their infrastructure, people, processes, and partnerships. They take a service-partnership approach, work collaboratively with you, and measure their success by yours.
Outsourcing transportation management to a trusted partner may be right for you if:
- Demand has outpaced your ability to deliver orders on time. Most in-house logistics and transportation management teams cannot scale fast enough (through hiring or additional shifts) to keep pace with the growing surge in demand.
- Your technology has not been updated and integrated to the cloud. On-premises and insufficient cloud transportation management systems (TMS) struggle to remain up-to-date and often do not integrate with other systems easily. This can cause blind spots and data silos in your supply chain logistics process.
- Customer experience is taking a hit. Customer satisfaction drops when there is a lack of visibility into the shipping and delivery process, and when deliveries fail to arrive on time. In-house teams that are overwhelmed by the transportation management process find that it’s increasingly difficult to meet customer experience KPIs and service level agreements.
- You’re not getting the best rates with carriers. It’s difficult to get the best rates during contract negotiations with carriers if you’re using spreadsheets or do not have real-time visibility into the logistics functions and transportation services. If you’re working directly with carriers, you likely aren’t benefiting from the better rates you can receive when you outsource transportation management because of providers’ extensive relationships and volume discounts.
- Your shipping costs are getting out of hand. Shipping is a huge part of an eCommerce business and, as transportation costs have increased along with a burgeoning demand for faster shipping, it’s easy for shipping costs to spiral out of control. In addition to managing shipping costs, outsourcing transportation management optimizes final mile delivery, increases speed to market, and meets the ever-evolving demands of consumers.
- You need to focus on other core competencies of the business. Along with high costs, shipping consumes a ton of focus and time for eCommerce companies as they try to streamline supply chain logistics. This eats away at time that needs to be spent on the core business, such as product development, merchandising, sales, and customer care.
- Peak season order fulfillment anxiety is keeping you up at night. Peak season is a high-pressure time for the eCommerce and supply chain logistics industry, and there is no room for error when it comes to keeping customers happy during the holidays. Having a trusted and dependable transportation management partner that will handle all the logistics details needed to achieve your goals during peak season is a solid strategy for success.
If this hits home, then it’s time to dig deeper into what a transportation management partner can bring to your business.
Transformation management partners bring expertise, infrastructure, and relationships to your business that are very difficult to organically develop on your own. Because their business is specialized in eCommerce fulfillment and logistics services, they hone a level of experience across a broad swath of retail customers that retailers on their own cannot obtain. This deep experience enables them to establish highly efficient best practices that they use to manage your transportation management needs.
One of the questions to ask yourself before deciding if outsourcing is right for you is whether or not your business can obtain, create, or gain the same depth of expertise and refined processes — and at what cost — as an outsource partner.
Here are 9 ways a partner can support and enhance your customer experience:
- Strategic Fulfillment Locations. Customers expect two-day or less shipping speeds. To meet that expectation, retailers must keep inventory as close to the customers as possible. For many this means regional warehouses. It may also mean shifting to a store fulfillment options or mini distribution centers. However, warehouse real estate is increasingly difficult to obtain and expensive to build. An outsource partner will have distribution centers in strategic geographic locales to support faster delivery times. They will also support store fulfillment options. Letting an outsource partner own, rent, staff, and manage the physical real estate infrastructure for order fulfillment can significantly save retailers money and resources.
- Modern Cloud Technology. Keeping up with the evolution of technology is challenging. It requires continual awareness of the latest tech stacks and tools, costs, training, and budget to implement or upgrade to modernize tech infrastructure. This takes time and in-house IT teams often are stretched thin to manage infrastructure and tech support. An outsource partner will have invested in a modern cloud stack that facilitates integration, automation, and streamlined workflows and processes. They will value their tech investment and prioritize it as a chief differentiator for their customer’s success.
- Automated Best Shipping Option. In the myriad of shipping and carrier options that retailers have, automating the best shipping option based on inventory location, distance to customer, and fulfillment option type are crucial for an omnichannel streamlined customer experience. Outsource partners use the latest TMS that automatically calculates and recommends the best shipping option to customers during the checkout process. This ensures lower shipping costs and better delivery timeframes.
- Carrier Management. Only the largest retailers have the power to negotiate the best rates with carriers. However, outsource partners like Radial build and maintain strong networks and relationships with carriers that optimize service levels and costs for their customers. Radial’s high-volume parcel network offers final mile solutions typically reserved for the largest shippers. An outsource partner should be able to get you better rates and improve relationships with carriers.
- Dropshipping. Some outsource partners, like Radial, will offer dropship solutions to let you leverage dropship suppliers’ inventory and resources to fulfill online orders directly to your customers. By automating dropship operations, you eliminate human error, decrease required resources, and deliver the product to your customer’s door faster. Radial has more than 12,500 dropship suppliers readily available and globally positioned to provide the fastest time-to-market.
- International Shipping. International shipping can quickly get complicated with customs, documentation, and carrier requirements. An outsource partner will manage all international shipping for you. Radial’s cross-border economy and express shipping options through its network of carriers include both delivery duty paid and delivery unpaid —enabling retailers to save on international shipping while meeting customers’ delivery expectations.
- Reverse Logistics. eCommerce retailers typically see around a 30% return rate. An outsource partner like Radial can handle your entire reverse logistics process, including hassle–free, cost–effective shipping alternatives to provide your customers an efficient reverse logistics experience.
- Final Mile Optimization. The final mile is typically the costliest. Outsource partners, like Radial, have the experts and transportation solutions to design the perfect blend of carriers and service levels to meet your unique needs. This will help reduce your final mile costs while ensuring customers get their parcels as expected.
- Reporting & Analytics. Data drives better business decisions and can improve CX. Data from your transportation management is critical to improving CX and course-correcting across the supply chain during order fulfillment and delivery. Radial Reporting and Analytics provides a holistic view of your operation to help you optimize order fulfillment and transportation operations with insights into cross-business intelligence delivered in easily accessible reports and dashboards. An unparalleled level of visibility enables you to make proactive changes that improve margins and reduce customer churn, efficiently manage retail operations, adjust fulfillment options to avoid overwhelming specific stores, and improve carrier management.
Outsource transportation management partners provide added value and work with you to cultivate an exceptional delivery experience for your customers. They will help you save budget that can be reinvested in other areas of the business, and can elevate your business in ways that are difficult to organically do on your own.
Radial provides comprehensive transportation solutions that include a comprehensive network of national and regional parcel carriers, final mile network optimization, and extended holiday cutoff programs that allow you to keep your promises to your customers every time.
Learn how Radial can support you.
