5 hard truths about implementing multi-carrier shipping
Multi-carrier shipping, without the right tools, can be tricky
The e-commerce market seems to be more demanding with each passing day (or delivery). Seemingly since the advent of Amazon Prime, consumers have become accustomed to constantly improving levels of affordability, speed, and convenience around e-commerce delivery.
To meet these rising demands, e-commerce providers are increasingly looking to adopt a multi-carrier shipping strategy. This has the potential to reduce costs, improve traceability, and boost efficiency, as well as give greater choice to the consumer. However, while multi-carrier shipping may sound great in theory, its implementation can throw up challenges. We’ve listed the five most common challenges and how to approach them.
“A multi-carrier strategy has the potential to reduce costs, improve traceability, and boost efficiency, as well as give greater choice to the consumer.”
1. Selecting carriers to meet growth
E-commerce sales were already on an upward trajectory but they have skyrocketed as a result of the COVID-19 pandemic. In the US alone, e-commerce sales grew 50% during the pandemic to $870 billion. How can retailers and logistics firms keep up with this growth? Sales growth naturally leads to added fulfilment pressure. Multiple carriers are key to mitigating this pressure but then the issue of choosing which carriers to work with emerges. While rate negotiation will be a major deciding factor when choosing your carriers, it shouldn’t be the only one. Customer satisfaction levels and finding a carrier that is the right business fit are also important to ensuring that the growth you are currently experiencing continues into the foreseeable future. By working with a multi-carrier platform, you have the flexibility to add, remove or change carriers based on your growth and pricing requirements, without the costly integrations.
“Using multi-carrier shipping can mitigate fulfilment pressure”
2. Meeting customer demands around flexibility
Customer demands around shipping have risen markedly in recent years (in no small part due to the “Amazon effect).” Approximately 70% of consumers said that they wanted more flexible delivery options when surveyed recently. Interestingly, this appears more important than speed. Polling conducted by YouGov found that while 45 to 54 year olds were driving much of the e-commerce industry’s recent growth, next-day delivery wasn’t that important to them – they wanted delivery that they could control.
The good news is multi-carrier shipping can help with this. It gives merchants the option of offering a range of delivery choices. It can also simplify cross-border e-commerce, streamlining your adherence to carrier standards all over the world, while offering consumers the local delivery experience that they may be used to. The bad news is flexibility can lead to development costs spiraling out of control. Plus, it is harder to guarantee a consistent level of customer service when you are offering a variety of delivery options, across multiple carriers.
Approximately 70% of consumers said that they wanted more flexible delivery options when surveyed recently
3. Hindering your internal workflow
Integrating software from multiple carriers will add significant complexity to an e-commerce firm’s operations. This could increase the administrative burden placed on their staff and significantly reduce productivity.
When working with multiple delivery companies, they will all have their own APIs, and tracking systems. For customer service teams, this means working with multiple back-end systems. For example, if a customer calls with a question about their shipment, your employees will have to work out which carrier it is being sent by before logging in to the relevant system. This can quickly become time-consuming to manage.
4. Fragmentation and complexity
Aside from causing damage to productivity, using multiple carriers can introduce system fragmentation that must be managed. Multiple carriers will each have their own rates and contacts, making it easy for delays and disruptions to arise. It’s a good idea for e-commerce providers to have at least two carriers per country they are operating in – especially for key markets – so they have a backup carrier to manage periods of peak demand.
Managing the different options provided by your carriers is not only about speed or costs either – cultural differences are also important for each market. For example, how consumers generally like to receive a shipment in Germany may not be the same as those in Italy. Don’t underestimate the complexity of multi-carrier integration.
5. Profitability with multi-carrier shipping
Margins are notoriously tight in the logistics sector, with customer demands for free shipping making profits a challenge. More than half (66%) of online shoppers now expect free delivery as standard. As such, the rates that e-commerce firms agree with their carriers are crucial to their bottom lines.
It’s worth bearing in mind, however, that working with multiple carriers could increase your costs at first. Many e-commerce firms select an individual carrier in the hope that by negotiating a single contract for large volumes, more cost-effective rates can be agreed upon. But when capacity problems or other issues arise, merchants are often left with the higher costs of not being able to deliver packages at all. When working Paazl, you negotiate your own shipping contracts and are then in a stronger position to negotiate since you can compare rates amongst providers.
Conclusion: Paazl can help you meet your multi-carrier challenges
The challenges mentioned above should encourage e-commerce firms to adopting a multi-carrier strategy, but with the help and expertise of an experienced multi-carrier platform. It’s an approach that has unlocked a multitude of benefits that simply wouldn’t have been achievable during a period of remarkable growth (and intense competition) for the industry.
With an integrated strategy, it is possible to embrace multi-carrier shipping without facing the aforementioned issues. For example, multi-carrier shipping allows e-commerce firms to compare rates offered by different carriers – meaning those costs that may have initially looked set to increase can actually be reduced. The deployment of a single UI, meanwhile, helps address challenges around complexity and fragmentation, leading to lower staffing overheads.
With a solution like Paazl, integrated multi-carrier shipping lets you enjoy the benefits without the drawbacks. Our integration goes beyond the checkout and encompasses back-end systems too. E-commerce delivery is more complicated than ever, so integration needs to be end-to-end, involving warehouse teams, carriers, and 3PL providers. All your relevant data needs to be aligned. This is what Paazl provides, allowing you to leverage a multi-carrier approach to deliver enhanced customer service.
Paazl is a leading shipping service provider (SSP) for brands & retailers in e-commerce. Its all-in-one, multi-carrier platform unburdens the delivery process across webshop, warehouse, customer service and returns. Paazl enables logistical flexibility, consumer loyalty, cost transparency and (inter)national growth. Customers include industry leaders such as G-Star Raw, Rituals, VanMoof, Tag Heuer, Leenbakker and Under Armour.