Newgistics CFO Discusses Online Shipping Trends
Earlier this year, Austin, Tex.-based Newgistics, a returns management provider for retailers like J.Crew, Neiman Marcus, Overstock.com and Eddie Bauer, acquired Cornerstone Shipping Solutions, a small package shipping solutions provider. As a result, the company now has both a forward and reverse logistics offering.
Given Newgistic's expansion in the marketplace, eM+C asked its chief financial officer, Michael Twomey, to shed some light on shipping and delivery trends for online businesses.
eM+C: How have the needs of e-businesses changed over the past few years as online shopping has become more commonplace?
Michal Twomey: It is the consumer who is driving the demand for world-class and hassle-free delivery and returns processes. As consumers spend more, they become more discerning about shipment costs and quality, as well as focusing on hassle-free return policies. We've had a number of surveys, including a Harris [Interactive] survey that Newgistics funded, which indicate the importance of an easy return policy and process, for example.
Consumers overwhelmingly indicate that they demand and are loyal to e-businesses that provide quality and cost-effective shipment, and hassle-free return policies and practices. We continue to see direct buying over the Web grow at a significantly faster rate than purchases made at brick-and-mortar stores, so management of the delivery and return processes has become more critical for shippers.
eM+C: What are some shipping and delivery trends you're noticing for e-businesses?
MT: Probably the most interesting trend we're seeing is that some e-businesses are offering free shipping as an enticement to customers. However, most businesses are still charging their customers to ship products, but they're offering a variety of shipment options, including next-day delivery, two-day delivery and five- to seven-day delivery. In addition, certain e-tailers are offering free shipping upgrades, such as two-day shipping for the cost of standard shipping in order to capture customer loyalty.
Returns policies are following the same pattern. For example, a few retailers are offering free shipment on returns and very generous returns policies. However, most e-business retailers still charge for returns, although they continue to focus on hassle-free returns policies and processes.
E-business retailers are also very focused on meeting delivery commitments, and giving their customers the ability to track the package from shipment on to delivery.
eM+C: Can you offer our readers any best practices in terms of shipping/delivery for e-businesses?
MT: Sure. Let's do it in order of the process. Offering a variety of shipment options and prices to consumers is important, in addition to making those options crystal clear on their Web site. Giving customers the ability to track their orders 24/7 is critical. Consumers feel more at ease when they can see the physical movement of their parcel online.
Of course, pre-payment is a given. E-businesses need to measure their overall costs. They may get a better "grid" rate, but when assessorial charges are added in, the shipper could be seeing significant hidden costs. We were consulting with one potential client recently who had experienced a 49 percent uplift because of assessorial charges that were in the fine print on their price grid. So e-businesses need to capture and measure the all-in costs.
Delivery performance measurement is also a key success factor. E-businesses need to ensure that their logistics and transportation partners are performing as intended.
Now, you can't separate the delivery process from the return process. They're both equally important in the consumer's mind. So having a low-cost, hassle-free return process is important. Stating your returns policy and "how to" return process on your Web site is a great first start.