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How Shipping Rate Increases Will Impact Retailers This Holiday Season

Blog Post
We look at the impact these shipping rate increases will have and solutions you can implement to mitigate their effects during this year’s peak season.

Parcel carriers like FedEx, UPS, and DHL increased their shipping rates by 5.9% at the beginning of 2022—up from last year’s rate hike of 4.9%. When you factor in their additional adjustments to surcharges this year, the total increase is actually over 9%.

Unfortunately, these rate increases may expand even further once peak season is in full swing, wreaking havoc on retailers and eCommerce businesses and potentially result in their own price hikes to cover the costs. Let’s look at the impact these shipping rate increases will have and solutions you can implement to mitigate their effects during this year’s peak season.

The Unpleasant Reality: Someone Has to Foot the Bill  

When carriers raise rates significantly, retailers are traditionally left with two options: Either absorb the cost themselves or shift the bill to customers and risk that they’ll leave for a competitor. In either case, their bottom line will take a hit.  

It’s a no-win situation and, in many cases, it’s difficult to know which scenario would cause fewer problems for the business. Fortunately, by adopting an omnichannel order management solution like Radial, it’s possible to minimize the effects of this conundrum regardless of which option you choose. Here’s how:  

Kit and Bundle Orders Together 

At Radial, we enable your organization to easily kit and bundle orders together to minimize the number of packages you need to ship. For example, rather than shipping three separate packages to get a sweater, a pair of socks, and a dress to a customer, you can package all of these products into the same box.  

While this will naturally increase the weight of the single package, it will cut down on the pre-packaging costs and baseline costs per package (like size) that you’d ordinarily encounter.  

Track SKUs 

In addition to consolidating orders into a single box or bag, Radial can also decrease your shipping costs by helping you track your SKUs. It works by ensuring that no companion SKUs, like gift-with-purchase items, are shipped if the regular SKU is unavailable.  

This gives you more control over your shipping costs, as you won’t end up paying exorbitant shipping prices for tiny bottles of lotion or a single bracelet. The item will stay in your warehouse or fulfillment center until it can be packaged up with the product your customer originally purchased.  

Alternative Fulfillment 

One of the most overlooked, but helpful, solutions to the shipping cost conundrum is to minimize the distance packages have to travel. With Radial, you can accomplish this in a few different ways.  

First, you can keep tabs on inventory across your organization to make sure you ship products from the closest fulfillment center available. Knowing where the second and third closest warehouse is located is especially important as inventory levels start to dwindle in popular locations. You can also tap into alternative store fulfillment options like buy online, pickup in store (BOPIS), buy online, pickup curbside (BOPAC), and ship-from-store  to decrease costs while still providing customers with the convenience they’re seeking.

Either way, by minimizing the number of miles a product has to travel to get from your warehouse to your customer, you can also minimize expenses.  

Whether you run a full-fledged eCommerce business or simply face an uptick in eCommerce sales during the holidays, shipping products from warehouse to doorstep will be expensive this holiday season. Luckily, by working with Radial, you can tap into alternative fulfillment options, track your SKUs, and kit and bundle orders together, thereby successfully reducing the cost you and your customers need to pay.