The most critical time of the year is upon us. The holiday season is the biggest opportunity for ecommerce brands to make enough revenue to expand their operations and product offerings for the next year.
The challenge with the holiday season is how unpredictable it is.
There are numerous challenges that can threaten a budding ecommerce business–fee hikes from large delivery companies, running out of capacity, or ever-increasing fulfillment and storage costs.
Everything gets more expensive during the peak shipping season months and that creates a lot of friction and high costs for ecommerce brands. While sales skyrocket, if a brand loses its margins then it could break even or potentially go out of business. This is especially true this year, where the U.S is facing increasing supply chain concerns.
In this post, we go over some of the best tips on how ecommerce brands can control their margins and streamline their logistics in 2022.
Control Your Shipping Expenses
One of the biggest challenges for ecommerce brands is shipping costs. Shipping becomes increasingly expensive during the holiday season with all the major carriers running out of capacity and hiking up their fees.
There is also the issue of zone-based pricing, which means that shipping carriers price each order according to the geographical zones that it’s crossing to get to the customer. This makes it increasingly expensive for ecommerce brands to ship products to coastal areas like New York and California, which generate significant demand for ecommerce products.
X Delivery™ enables you to reimagine delivery with no hidden fees or surcharges, which means shipping costs remain the same throughout the year. Our flat-rate shipping and zoneless pricing model provides ecommerce brands the ability to reduce, control, and predict shipping costs, which significantly impacts the accuracy of business forecasting.
Brands no longer need to worry about calculating the cost to ship something across multiple zones. They also don’t need to strategically place warehouses in different zones to lower their shipping costs. With X Delivery, brands can lock-in their costs and enjoy predictability and peace of mind.
Minimize Operational Costs
Another challenge that brands face during this time is a decrease in the available capacity. Large carriers and delivery companies simply run out of capacity to ship products because of the high surge in demand. Many brands receive a record-setting numbers of orders, but no shipping carrier to ship them.
The solution for that is to use carriers that have no capacity limits, such as X Delivery, that uses a network of in-motion supply chain assets and a sophisticated shipping API to vastly increase available capacity and delivery performance. We use smaller carriers all around the country that keep costs low and delivery times short. This allows brands to better predict operational costs.
Find Ways to Scale Fulfillment
Most brands across the U.S use several warehouses and fulfillment centers to store their products. They do this to both avoid the zone-based fees as well as to greatly reduce delivery times. The challenge with managing an extensive network of warehouses is that it increases costs and makes the entire operation much more complex. Brands often need to shuffle products between warehouses to meet the demand for a specific product in different areas.
As ecommerce brands try to compete with 2-day delivery times promised by large retailers and large marketplaces like Amazon, they feel increased pressure to open up new warehouses and shipping facilities. The challenge here is that with all the fee hikes, a brand can find itself stuck with too much infrastructure for the holiday season and start losing money.
This makes it very difficult to scale fulfillment across different zones. Instead, brands should reduce fulfillment centers and save on operational costs. The way to do that is by using a company like X Delivery, which uses one fulfillment center for all the operations of the brand and sophisticated AI parcel shipping software to distribute products to the right location at the right time.
This allows ecommerce brands to provide 2-day shipping nationwide from one location and the ability to really scale fulfillment operations moving forward. This can help companies compete with some of the large online marketplaces that use their extensive delivery networks to achieve that coveted 2-day shipping. Brands can do the same with X Delivery, nationwide.
We’re in Q4, and it’s officially the holiday season. Ecommerce brands have already ordered their products and have chosen their marketing channels. Everyone is gearing up for a busy time ahead. Brands should be aware of the dangers of unpredictability and the challenges of working with large shipping carriers.
In order to avoid losing profitability and to control their margins in 2022, brands should:
- Control shipping rates through a zoneless, flat-pricing model.
- Lock-in capacity for the year by using a network of smaller in-motion supply chain assets.
- Scale fulfillment by using one fulfillment location and unlocking 2-day shipping & delivery.
Ready to control your margins and get predictability in 2022? Sign up to start shipping with X Delivery.