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Overview
The Challenge
After identifying your warehousing strategy and addressing the compliance/tax/legal considerations, the key challenge is to get a plan in place for your transportation strategy and execution. This will directly impact the end customer experience and therefore overall growth and conversion.
The Aim
To have a transportation strategy and execution that exceed customer expectations while meeting your cost targets.
Transportation is a fairly complex space and for purposes of this document, we have divided it in 3 sections:
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Inbound – since most of manufacturing across products happens in Asia, having a solid air, Ocean and rail strategy to get products from Asia into in-region is necessary.
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Outbound Parcel – relevant to Merchants with an e-commerce presence. Typically, Outbound parcel Transportation costs is a key contributor to the Logistics
P&L and hence there is a need to focus on optimizing it while improving speed to customer.
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Outbound LTL/TL – relevant to Merchants who deliver to Retailer DCs, Stores or their own Retail shops. Also relevant to shippers looking to deliver to last mile carriers. This transportation leg represents the largest volumes and therefore highest risk in the network. Procuring smooth operations in the domestic distribution is the base of a solid supply chain. Understanding the landscape of the players by market and mode will also help with the best alternatives to meet delivery requirements that retailers may have at their DCs or Stores. Choosing the right partners will power your network with flexibility and scale.
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 expect 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 be divided into two parts. Last mile and first mile strategy on the forward side and Returns Transportation.
Forward:
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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.
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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.
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Pricing for parcel delivery should be optimized for the specific product profile (weight, size) and distance to customer.
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It should be fast followed with evaluating if a combination of courier and postal options is needed to optimize for cost.
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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.
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Next step would be to understand the local transportation players in the market and add them to the portfolio of parcel carriers.
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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:
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For Returns Transportation, ability to offer options to make drop-offs easier for customers would be the key
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Consider starting off with couriers and then optimizing via using postal first mile and courier last mile
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Evaluate utilizing portfolio of return carriers based on product profile to enhance customer experience
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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
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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