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The True Value of Free Shipping

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More and more on-line retailers are establishing loyalty programs to gain critical information about a shoppers likes and dislikes.  This data is used to market directly to those shoppers who may want, but may not necessarily need that retailers products.  After all isn’t it the retailers job to entice the shoppers by constantly feeding them product information?  The result, expect more pop-ups and e-mails my friends!  In return for this wealth of information, the retailers are offering “free” shipping which as we all know has become, shall we say, the “standard” for on-line retailers.

The real question however for these online retailers will be as their actual shipping costs rise, (and they are rising continually), how will they manage to continue to offer “free” shipping to their customers.  The answer is and has always been, “the devils in the details.”  And what we mean by that is the retailers must have a wealth of statistical data gleamed from their actual “real time” shipping data to track their costs on an-on-going basis.  Without this data, and more importantly the ability to properly and comprehensively analyze that data, the retailers cannot be assured that their shipping costs aren’t eating into their profits.  Many have found out too late that is exactly what had happened to them.

In addition, the retailers must be willing to continually monitor service offerings as well as shipping costs that are available from various shipping companies who compete with the retailer’s current service provider(s).  While this sounds logical, you would be amazed at how many companies are “locked” into their current service providers and are not aware that shipping options are constantly changing and therefore need to be constantly analyzed.

Is single sourcing the best option for controlling freight costs, perhaps.  Many shippers refuse to “put all their eggs in one basket”, yet others have done so successfully for many years.  Perhaps it makes sense to “share” their annual packages with two or more carriers.  If that’s the approach, what percentage should each carrier receive?  How do these competing carrier’s service levels, rates, ancillary charges, rules and regulations stack up against the incumbent carrier(s)?

The reality is the right answer can only be reached after comprehensive analysis has been done to determine which carrier(s)selection is best.  Then once that selection has been made, it must be tested and challenged year after year to make sure it’s still the best option.  One and done routing decisions never work; not fully understanding continually changing carrier pricing levels will not work either.  And more importantly, if the retailer does not have the ability to perform these studies, and make solid business decisions based on this information, they will certainly be “leading” from behind.

Carts

Black Friday/Cyber Monday sales continue to surge

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Well, the Black Friday/Cyber Monday results for online retailers are in and they point to a significant year over year increase in these very popular sales days.  One factor that is clear this year is that these increased sales are less about individual sales days and more about a Thanksgiving week sales event.

What’s interesting about these results is that over the past several weeks there have been several negative financial reports, (stock market decline, threat of rising interest rates, fears of a recession, GM closing plants and laying off workers, etc.)  These factors would normally lead the average person to believe that we would be seeing a slowdown in consumer confidence and therefore those consumers might want to hold onto their money.  Obviously that is not the case and these online retailers are looking forward to a strong holiday shopping season.

So with that being said, a big challenge will now be squarely on the backs of USPS, FedEx, UPS and Amazon to deliver all of those packages on time and in perfect condition to keep everyone happy this holiday season.  Only time will tell if they can all meet this great delivery challenge.

Want a full breakdown? Read more here! 

UPS Logo

UPS Freight Customers Await Potential Strike

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LTL customers of UPS Freight are bracing for the worst with a potential Teamster Strike scheduled to take effect sometime within the next week or so, or perhaps not at all.  You see, workers will begin voting on Wednesday 11/7 on what the Teamsters Union called their “Final Offer” (whatever that really means).

An important point to make here is that if there is a strike by the Teamsters working for UPS Freight, UPS’ parcel network will NOT be affected as that group has already agreed to a new 5 year contract back in October.  We are sure many shippers may have been or perhaps still are quite confused between both of the UPS operations as it can be difficult sometimes to discern the difference between the two separate and distinct operations, LTL and Parcel.  We heard from many parcel shippers that had been panicking as we enter the Peak Holiday shipping period for parcel shipments.  They were pleased to hear that their shipments at least will be out for delivery.

To “aid” their customers, UPS Freight is planning on “emptying their network of freight within their system by Friday, November 9th”.  That means they will not accept any overnight freight pick-ups after November 7th.  Between now and then we believe it will be mass confusion as to whether a shipment already within the UPS LTL network will in fact be delivered.  Shippers would be wise, if they have other options in place, to tender their freight to other carriers and not UPS Freight until this labor issue is finally settled.

So what do we see as the sticking points between labor and management?  For one thing, UPS’ profits as a whole have been skyrocketing, who wouldn’t want a larger piece of that pie?  And, while the economy is still humming why not put as much financial pressure on management as you can.  Another point is that capacity remains tight and LTL rates have been rising in recent months, that is obviously another reason to press on for more.  Bear in mind however that the UPS Freight division is ONLY responsible for 5% of UPS’ sales.  Not only that, the LTL freight division has the lowest profit margin for the company, so really, how much more can UPS afford to give to the UPS Freight workers.  Only time will tell and the answer may very well be in the union’s “Final Offer!”

Visit Transport Topics to find out more

Walmart storefront

Is the “Walmart experience” going virtual reality? 2 new patents say yes!

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You heard me right.

I said virtual reality shopping.  

I hear you. I mean, c’mon, … Walmart?

Who doesn’t love the already incredibly pleasant trip to your local Walmart Supercenter? What, with the overcrowded parking lot, the long lines, the crowds –that make your experience particularly enjoyable?

But c’mon, who doesn’t love the bargains?

Furthermore, where else can we buy a car battery and a frozen pizza in the same place?

Even My Mom, having been somewhat sheltered from the phenomenon, upon her first visit to the famous superstore, adoringly made the observation, “It’s a one stop shop”!

This is interesting, folks.

According to CBINSIGHTS.COM, 2 new patents introduced by Walmart are in the works, signaling the idea to eventually replace much of the  brick and mortar, moving to a more comfortable customer experience, and, perhaps equally as important, Walmart might enjoy a huge savings in real estate, and, of course, those pesky employee salaries.

Walmart’s new vision will have you imagine a shopping mall, or a college campus, perhaps even an office building, could be your office building, in which a Walmart “POD” would entice you to share in  a “virtual reality” shopping experience, devoid of crowds, long lines and overcrowded parking lots

Picture it.

Virtual reality headsets, sensor gloves, robots in a fulfillment center, monitoring  of a customer’s movements, picking and pulling items for immediate delivery, while monitoring inventory, in real time.

Make no mistake. This is not the internet shopping we’ve come accustomed to.

Heck no. Walmart is committed to the fact that they value maintaining a physical presence. Albeit, a virtual one.

Who among us sees a trend here? Heck, I do!

Business People Sitting in an Office Building Chatting

Is Blockchain The New Supply Chain?

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Blockchain!  The new hip and technical term everyone is hearing more about; what is it exactly and how will it affect your Supply Chain in the very near future?

Throughout modern history, the majority of anything involving the sale/transfer of goods and services between two or more parties was recorded on some form of a physical ledger. With the development of the computer and the internet over the last several decades, technology has proven that the use of a physical ledger is no longer efficient and can be highly risky for business.

Technology dictates how we buy and sell and keeping records of that has become increasingly more complex and leaves too much room for inaccurate data and in some cases, even fraud.

Take for example, a widget manufacturer; the company’s supply chain can be vast.  Sourcing materials from multiple vendors, assembling products lines and having third party logistics providers transport product direct to customers. Without Blockchain technology, a company is forced to rely on transactional data from multiple intermediaries who own and control their data.  This is inefficient as parts of the data can be changed by various owners and therefore, visibility for the manufacturer and other parties in the supply chain is highly limited.

And here’s where Blockchain technology can be a game-changer– as every transaction or data input occurs, it would be placed into its own “Block.”  When another Block of data is created it is then linked to the previous Block.  All parties have permission to see the data Blocks and once they are created, they cannot be changed, moved or deleted unless all parties involved review and agree to the changes. This is HUGE for transparency. Who doesn’t love transparency? Especially with your own business – honesty is the best policy, I always say.

As technology continues to develop there will be more and more room for error and fraud.  Blockchain is a simple and efficient solution to provide value and security for companies, consumers and logistics providers to ensure that the data they operate off of is correct and tamper proof.

WSJ

No longer your father’s supply chain!

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It’s obviously no longer your father’s supply chain!  We have all been witnesses of what we consider significant changes to traditional supply chains.  The Wall Street Journal is now reporting that Kellogg Company will remove the leg of actual store deliveries from its traditional supply chain to retail grocery stores and just deliver their sought after goods directly to the grocery store warehouses.  This means the grocery chains will now have the responsibility to handle the actual store deliveries.

So what’s the impact here, well for Kellogg, they intend to close 39 distribution centers and will eliminate approximately 1000 jobs.  So for Kellogg workers this is certainly a major blow.  For the grocery chains, this means more goods moving through their distribution centers for actual store delivery; obviously at additional costs.  We also wonder if the reduced costs Kellogg will benefit from by making these changes will be passed onto their customers in terms of reduced prices for the “delivered” goods.  Somehow we don’t think that will be the case however.

Here is a link to the full article.