Many businesses are hit with price hikes across the board in a high inflationary environment, including AusPost price hikes. The higher cost of doing business is placing an incredible amount of pressure on small businesses, who are already pressed for margin or do not have the scale to command strong negotiating power like their larger competitors. This puts small business owners in a precarious position – absorb the margin hit or pass this cost onto consumers with the risk of impacting demand? At Shippit we strongly believe that a retailer’s delivery proposition is the most effective way to drive customer loyalty and repeat purchases outside of selling great products. It has never been more important for retailers to deeply understand their delivery experience and how to price it effectively.
There are two primary ways to save money on shipping; either renegotiate with your existing carrier or implement a multi-carrier strategy (ie, leverage rate structures across multiple providers). Putting your eggs in one basket in a high inflationary environment exposes your operations to significant risk. From our experience, retailers that implement a multi-carrier see 2x faster growth and save up to 20% on freight spend while maintaining service quality.
Distance and the uncertainty around successful on-time delivery drive up costs in the delivery process. With this we have seen retailers move their inventory closer to their customers through their physical store footprint or micro-fulfilment hubs. A cost effective method for small businesses that are unable to do this can look at offering a click & collect proposition through PUDO (Pick-Up Drop-Off) providers.
Finally cost recovery on shipping fees is becoming more common – taking a portfolio based approach to pricing is critical. For example, paying for on demand delivery or imposing a fee on customers that live in regional or rural locations whilst offering free and fast delivery for set basket thresholds.
Given the growing presence of foreign marketplaces that prioritise free, fast, and dependable delivery, we strongly encourage all Australian retailers to prioritise and invest in enhancing their delivery experience during this era of uncertainty.
Contributed by Rob Hango-Zada, Co-Founder and Co-CEO of Shippit