How to approach transportation strategy and execution

How to approach transportation strategy and execution

3 Outbound Parcel

Parcel Delivery Experience is consistently rated as one of the key items that influences customer retention and drives e-commerce growth. Developing a parcel strategy can be complex as the customers faster delivery speed while there is constant pressure to drive down Transportation costs. The parcel strategy should be country specific to reflect the expectations of the customer of that country.

Overall, parcel strategy can divided into two parts. Last mile and first mile strategy on the forward side and Returns Transportation.

Forward:

  • As you consider expansion into a new region, initial approach could be utilizing a national couriers (like UPS, DHL, Fedex) to address both the first and last mile parcel delivery.
  • In some regions, the above approach might need to be changed if it is dominated by local players. For example: Japan is dominated by Yamato, Japan Post and Sagawa.
  • Pricing for parcel delivery should be optimized for the specific product profile (weight, size) and distance to customer
  • It should be fast followed with evaluating if a combination of courier and postal options is needed to optimize for cost
  • Understand customer expectations with respect to: express deliveries, differentiated delivery options (like: Click and Collect via stores and lockers, scheduled delivery etc) will help adjust offerings on the front end and choice of carriers to help support the offering
  • Next step would be to understand the local Transportation players in the market and add them to the portfolio of parcel carriers
  • In order to further optimize the last mile, the Merchant could own the first mile using TL carriers and inject directly into the last mile carriers final hub further optimizing for speed and cost

Returns Transportation:

  • For Returns Transportation, ability to offer options to make drop-offs easier for customers would be key.
  • Consider starting off with couriers and then optimizing via using postal first mile and courier last mile.
  • Evaluate utilizing portfolio of return carriers based on product profile to enhance customer experience
  • Key would be to enable faster refunds to customers and then can be enabled as soon the product gets to the first return hub via carrier tracking data.
  • In order to further optimize the last mile, the Merchant could own the first mile using TL carriers and inject directly into the last mile carriers final hub further optimizing for speed and cost