the art and science of shipping · goods are delivered. in cross-border ecommerce, low-cost...

THE ART AND SCIENCE OF SHIPPINGHOW THE INCREASINGLY COMPLEX WORLD OF SHIPPING IS BEING SIMPLIFIED

IN ASSOCIATION WITH:

2 | THE ART AND SCIENCE OF SHIPPING

CONTENTSIntroduction ............................................................................................................... 3

1. Office Shipper: Shipping is just one of many roles ................................ 5

2. Retail Shipper: Shipping as a strategic advantage ................................ 7

3. Power Sender: Higher-volume outbound shipping .............................. 9

4. Superstar Receiver: Inbound package management ........................ 10

Sidebar: The Cross-Border Opportunity ........................................................11

5. White-Glove Shipper: A special approach for luxury stores ............12

6. Global Shipper: Embracing cross-border shipping ..............................13

Conclusion ................................................................................................................14

Acknowledgments.................................................................................................14

Shipping is a cost of doing business today, no matter how large—or small—a business may be. And in fact, thanks to a huge growth in parcel volume spurred in large part by ecommerce, ship-ping is growing in importance for many. From small offices where shipping is one delegated role among many, to college campuses dealing with a deluge of inbound parcels for students, to bur-geoning ecommerce growth accelerating the need to meet consumer expectations for out-bound package delivery, and even to established businesses looking to manage inventory control or capitalize on cross-border opportunities; what is shipped and how it’s shipped, tracked and paid for is fast increasing as a top priority across ver-ticals. With its fast pace and sometimes dated technology in use, the workflows involved are often convoluted and rely on a complex mixture of carriers, tools and processes to run. Shipping is simple in concept but quite complex in execu-tion. Without cost-effective, user-friendly tools in place, shipping can be a painstaking process that negatively impacts both the consumer expe-rience and your bottom line.

As more businesses follow the lead of etail giants like Amazon, and look to build simplified and cost-effective delivery capabilities into their busi-ness models, it is becoming quickly clear that shipping is an integral and important part of a con-sumer’s brand experience, as well as a way for the business to sell more locally and globally. Whether ship-to-home or ship-to-store—consumers want

to have options about how, when and where their goods are delivered. In cross-border ecommerce, low-cost shipping and returns are drawing inter-national customers to retailers in the U.S., China and the U.K., among other places. On the flip side, the high cost of shipping and high or unclear customs and duties are cited among top barriers to cross-border purchasing.1

The result is that shipping and delivery are becoming core components of the entire consumer experience as consumers demand to be kept in the loop every step of the way. “Shipping is integral to the ecommerce retail experience—it’s the final step in the buy-ing journey and is an important extension of a retailer’s brand,” says Rachel Martin, Pitney Bowes’s director product marketing, global ecommerce. “When you depend upon a third party for the final mile, it’s imperative to find the right one.”

Insights revealed in Pitney Bowes’s Horizon U.S. Shipping Market Assessment show that most small businesses and office shippers don’t yet have a shipping process in place; instead they cobble together a “temporary” solution that often becomes long term as core busi-ness needs take precedence. While a quickly developed solution might work in the short term, it tends to introduce a lot of unnecessary complexity that can leave people feeling like shipping is just another hassle to deal with.

1PayPal/IPSOS Cross-Border Consumer Research 2015.

INTRODUCTION

COPYRIGHT © 2016 FORBES INSIGHTS | 3


In response, the new breed of shipping solutions look to simplify that process for these send-ers. In fact, if—as Jeff Crouse, Pitney Bowes’s general manager SMB solutions, says—the sci-ence of shipping is bringing all the complex data and historical knowledge of the industry together, then the art is “pulling from that data and history and using that wisdom to create simplicity.”

WHAT KIND OF SHIPPER ARE YOU?This paper outlines a series of common shipping sender and receiver profiles, as identified by Pitney Bowes, along with real-world examples of how both the art and the science of shipping has introduced simplicity into their lives. Scan the profiles and decide which shipper most closely represents your shipping challenges, and see how real clients excelled in solv-ing similar challenges.

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Office shippers face many of the same challenges as retail shippers but at lower volume and complexity

Existing Pitney Bowes Clients

Prospects

All report similar concerns around shipping.


1. OFFICE SHIPPERS: SHIPPING IS JUST ONE OF MANY ROLESSmall-office shippers exist in companies of all sizes: in small businesses and in branch offices of Fortune 500 multinationals, and every-where in between. These shippers are often the unsung heroes of an office, making sure the important goods and documents, whether sam-ples or contracts, arrive as intended. Shipping is often just one part of their overall job, but it’s nonetheless an important part—critical in some cases. When shipping goes smoothly, so do many other aspects of business communication

and transaction—but the costs and problems associated with not getting office shipping right are significant.

Jeff Crouse has been leading a Pitney Bowes team looking into the shipping challenges of this market. “One of the unique insights is that the complex-ity of their sending is growing, and it’s growing at a very rapid pace,” he says. It is true that shipping workflows have become more complicated, thanks to the involvement of multiple carriers, tools and


users, each requiring different processes, costs, training and administrative access. Add to that the complexity of tracking costs and charge accounts, and non-centralized data sets (like address books). Especially in offices where those shipping may be entry level or temporary staff, simplification is sorely needed.

One area where complexity is increasing is in the disparate areas where customer address information is kept, whether that’s in a number of different databases or handwritten on sticky notes at someone’s desk. “Doing small mail-ings,” says Crouse, “or even making sure you’re getting the bill to your client at the correct address this month, is something that’s very important to the revenue of small offices. And as solutions multiply, the level of inaccuracy in tracking and understanding where those addresses are today is growing in importance and pain.” Unreliable address data can have unintended impacts on a business’s bottom line, too. If addresses are even slightly incorrect, some carriers apply a surcharge to the delivery that can run upwards of $10 per delivery.

Parcel carriers themselves add complexity to the process, even when they’re trying to simplify things, by offering a multitude of options that vary based on often obscure rules about weight, delivery time and distance. “By the time you, as a client, stand back and look at all of the different options you have for managing your own send-ing of documents or products or samples, you’re faced with a dizzying array of complexity of services and prices, and time of delivery and reli-ability,” says Crouse. He recalls observing office workers swiveling between stations for different carriers that were owned by the same company but required different processes and paperwork. “It just brought to life the fact that the carriers are not making this easy for clients,” he says.

“There’s no one in the marketplace whose job it is to simplify sending. It seems like they’re doing what they should for the client, but it’s actually making it more and more complex every day.”

It is with these challenges in mind that SendPro software was developed. It is a tiered, subscrip-tion-based software-as-a-service style platform that integrates multiple carriers to take the hard work out of sending. “What we did is, we took our experience with small businesses and what we’ve learned in multi-carrier shipping for shipping professionals, and we’ve applied it in this realm to create the first small-office multi-carrier sending application,” says Crouse. “No one else has ever combined mailing and ship-ping in a seamless experience.”

The resulting web-based service pulls together the leading commercial carriers like USPS, FedEx and UPS into one platform. This allows users to choose the most cost-effective service for the delivery timeline they require, from one interface. A “stretch goal” for the service is to incorporate alternative shippers like UberRush and Shyp soon after. “The power of SendPro is really in simplifying sending,” Crouse says. “It’s in bringing all of these carriers into one place, with the technology layer on top.”

The team developing the SendPro user inter-face for its launch worked closely with a test group of users to refine the service to mirror actual sending workflows. There are functions to seamlessly manage addresses and verify them with the precision and accuracy Pitney Bowes is known for bringing to that task.

The service also addresses other pain points for office shippers by allowing users to be quickly and easily added, deleted and trained on the soft-ware—reflecting typical office environments

Shipping workflows have become more complicated, thanks to the involvement of multiple carriers, tools and users, each requiring different processes, costs, training and administrative access.


2. RETAIL SHIPPERS: SHIPPING AS A STRATEGIC ADVANTAGEWhere office shippers often deal with shipping needs on an ad-hoc, as-needed basis, shipping in retail is not only done at high volume, but it is an integral function of the business. Retail shipping needs to take account of optimiza-tion, inventory, consumer experience and the

merging of both online and in-store experi-ences into a seamless journey. Retail shippers need an advanced, enterprise-grade, multi-car-rier solution to handle high volumes with faster execution times and lowered costs. In tandem they need to have complete visibility across the

where shipping often falls to short-term, contract and temporary staff. Its ease-of-use is a key point, says Crouse. “We’ve made this so easy to use that everybody can become a shipping professional.”

“SendPro doesn’t silo addressing in one place, tracking in another, with a separate specialized

product for printing postal labels,” he adds. “The magic of it is in actually bringing them together and knitting those really deep capa-bilities of Pitney Bowes into a single cloud platform—and delivering it in a SaaS way to make it available to millions of small busi-nesses. That’s exciting for us.”


supply chain to effectively implement the right business rules around inbound and outbound shipping management.

The benefits of getting shipping right in retail can be broad: increased sales, reduced costs and a better, more consistent consumer experience. That’s why we see so many retailers build-ing an omnichannel strategy, with seamless shipping and return options for their consum-ers, but the levels of complexity and logistics involved require an evolved and well-managed approach.

One illustrative example is the case of a nation-wide women’s workout clothing retailer in the U.S. As the retailer expanded to 275 stores, its inbound shipping and inventory became increasingly complex and difficult to man-age. Store managers had to rely on cryptic emails, often with incorrect timing and inven-tory data, for information about scheduled inventory deliveries. That caused problems in scheduling staffing to meet demand, lost sales

when promised inventory wasn’t in store, and sales staff becoming inundated with customer inquiries.

The retailer knew it needed to dramatically improve delivery visibility, and it chose an in-store visibility solution that connected directly with its warehouse management system: Pitney Bowes’s Enroute, which results in faster ship-ping, lower costs and real-time supply-chain visibility and tracking. It required no new IT integration and was rolled out over the course of a single weekend without major disruption or investment of resources.

The solution moved the retailer from a situa-tion that was complex to manage to one of simplicity and visibility. In three clicks, store managers could now access simplified deliv-ery data, from a calendar overview to a list of anticipated delivery delays. The visibility meant store managers could better coordinate and track shipments and schedule more appro-priate staffing levels.

The benefits of getting shipping right in retail can be broad: increased sales, reduced costs and a better, more consistent consumer experience.


3. POWER SENDER: HIGHER-VOLUME OUTBOUND SHIPPING In today’s e-commerce economy, shipping and sending is increasingly required to be a core competency of many businesses. This is as true for the company that sends 20 parcels a day through sales on Etsy as it is for the com-pany that sends 20,000 parcels a day through Amazon and eBay or its own site. Shipping vol-umes can fluctuate quickly and drastically—but meeting consumer demand, reducing costs and freeing up staff to work where they are needed is an objective for every business, no matter the size or platform it’s selling through.

In 2010, Linda’s Stuff was already a growing con-signment business through eBay, with a volume

of around 200 packages mailed each day. As an online consigner, the business had to deal with two sets of demanding customers—buyers and sellers—and never-ending shipping in the effort to meet eBay’s 24-hour turnaround requirements. Sending was obviously central to the process of managing all this, but there were challenges for Linda’s Stuff: printing mailing labels and packing and shipping took up several hours of every day, and a handwritten log of mailings meant there was little visibility into shipments when custom-ers called with an inquiry. CEO Fred Lightman (husband of founder Linda) says that meant they could rarely answer inquiries on the first call. It was very “1990,” he says.

4. SUPERSTAR RECEIVER: INBOUND PACKAGE MANAGEMENT Inbound shippers face their own set of unique challenges—as those in the business know all too well. Thanks to the sheer volume of parcels, residential managers have found themselves in a

business with fast-changing demands. This is par-ticularly true where there is a large population in a defined space: within apartment buildings, on college campuses and in office complexes. The

Linda’s Stuff needed a shipping solution with scal-ability. The solution Lightman implemented automates outbound shipping, accelerates the turnaround time, and has helped boost employee productivity. Additionally, it rate-shops to select the best and most cost-effective shipping option for every package, while maintaining visibility along the entire journey—so customer inquiries can be answered accurately the first time.

“The system does everything for us,” says

Lightman. “We put the item in a box, put the box on the scale, SendSuite then decides how it’s going to be shipped and prints out the appropriate label. Boom, boom, boom, it’s done.”

As a result, Linda’s Stuff was able to increase the volume of its shipments by 50% without increasing shipping team staff, with room left to grow even further. The company has low-ered its shipping costs and reduced annual overtime from $50,000 to zero.


increased volume means storage space is at a pre-mium and thus, quick turnaround of the parcels is a priority. It also means more work for employ-ees on the back end—more work to field emails and calls about a package, more work sending delivery notifications and even more work if the package can’t be found.

All-inclusive shipping offerings like Amazon Prime have fueled parcel mail volume. And for university students—and their parents at home—that has meant many more opportunities to have delivered the things they need. The University of Liverpool in the U.K. is one school that needed to deal with the challenges the parcel increases rep-resented. With more than 4,500 students housed in seven halls of residence and an international student population of 22%, the university was the gateway for a large volume of mail and parcels from all around the globe. The existing system was described by Niki Horobin, a hall opera-tions manager, as “prehistoric.” A whiteboard and a paper record book were the tools used by staff to manage the influx of parcels for students and staff, so with no efficient method of distribution, it’s unsurprising that parcels would gather dust on the shelves.

But an inbound parcel tracking system com-pletely changed that. Where staff would

previously spend four to five hours to process incoming mail each day, now, Horobin says, parcels scanned in by 11 a.m. are largely in the hands of their intended recipients by 4 p.m. the same day.

The inbound tracking system Horobin intro-duced incorporated barcode scanners and electronic signature capture, and integrated reporting and tracking into email notifications to replace the old paper, pen and whiteboard method.

As a result, package visibility and employee productivity has improved throughout the sys-tem. When an item arrives, it is scanned and can very quickly be located; so when a student comes looking for a package, university staff can easily identify where the package is or if it has been received at all. Staff were, at first, hesitant to switch from the old system, but the efficiency of parcel tracking has turned that around. “The flow is so quick.…The [parcel] turnover is incredible and really efficient. No issues, no lost parcels,” says Horobin.

“Looking back, I can’t believe we used a paper book and a whiteboard to keep track. Now the first impression that the student gets is one of efficiency.”

THE CROSS-BORDER OPPORTUNITYShipping internationally may represent real untapped market potential for a brand, but it is not necessarily easy to execute successfully. It needs to be seamless, affordable and extend the same brand experience your domestic consumers receive to those across borders—and all without getting caught up in customs or having international consumers saddled with unanticipated extra duties.

The cross-border ecommerce market is predicted to grow to $1 trillion by 2020, and physical products make up a significant proportion of these purchases, with clothing and consumer electronics outweighing the pop-ularity of digital downloadable content.

While many businesses are well placed to take advantage of the growth that cross-border ecommerce offers, simply offering international shipping won’t be enough to properly capitalize on its potential. In research car-ried out by PayPal and IPSOS, free shipping and returns, safe payment methods and local currency offerings all feature high on the list of top drivers for cross-border purchases. And according to research undertaken by Pitney Bowes, high shipping costs and additional delivery fees are two of the biggest barriers to adoption of global online shipping.


5. WHITE-GLOVE SHIPPER: A SPECIAL APPROACH FOR LUXURY STORES In the retail establishment there are a few well-known names that stand for a specific kind of luxury, a white-glove service that equates to unparalleled in-store experiences. Translating that to an ecommerce platform takes a lot of careful consideration, in everything from site design and navigation to shipping and delivery.

One of Retailer A’s key brand concepts is its exclusivity, and as a consequence its sole brick-and-mortar location is considered a must-see tourist attraction in its own right. Its online pres-ence is small, but of its ecommerce sales volume, approximately one-quarter originates inter-nationally, with the average order size tallying around $730 USD. While this retailer originally handled its own international shipping, it was a labor-intensive process that failed to deliver the online consumer experience it wanted. International shipping was handled through a single carrier and was largely treated the same

as domestic shipping. The website was limited in its ability to offer local currency options and was likewise unable to transact sales on a DDP (duty delivered paid) basis, which factors in duties and taxes at time of purchase to avoid consumers being hit with unexpected extra fees at delivery. Additionally, the retailer wanted a better ability to match the prices of the brands it stocked in var-ious countries, and not inadvertently undersell its own suppliers.

“It was very important that they introduced them-selves to the international consumer correctly, that customers have a good experience and people will want to keep coming and buying again,” says Pitney Bowes’s Martin.

To tackle all these challenges, the retailer imple-mented a full API integration of the global shipping solution with its own systems. This inte-gration allowed it to offer DDP shipping and local


currency options, choose the best shipping method for each international shipping order, ultimately keeping costs down, and extend its reach into China and Russia—two markets that it particu-larly wanted to tap into.

Retailer B differs in a few significant ways. Like Retailer A, it is a white-glove high-end retailer with an in-store reputation to uphold and a sig-nificant appeal to international shoppers. Unlike

Retailer A, this retailer had little prior ecom-merce experience and needed a solution to facilitate a quick launch, using a combination of pre-packaged modules and API integration with the back end. It really is looking to extend the white-glove, top-shelf level of service it has in stores and in the U.K. to the international expe-rience. With the implementation of this retailer’s solution, it plans to deliver the in-store experi-ence to an international online audience.

6. GLOBAL SHIPPER: EMBRACING CROSS- BORDER SHIPPINGEven when a business has mastered domes-tic ecommerce, taking advantage of the cross-border opportunity introduces a new set of complexities. There are multiple currencies,

customs duties, taxes and clearance to deal with—all of which may add time and cost to a consumer’s purchase, or drive the consumer to abandon the purchase entirely. Not to mention


the challenges around fulfillment and logistics, various compliance requirements, or security and fraud management.

This is perhaps nowhere better illustrated than with the case of Billy Reid, a high-end fash-ion retailer headquartered in Alabama. In 2012, Graham Heard, now in global ecommerce busi-ness development at Pitney Bowes, was the senior business director for ecommerce and operations at Billy Reid. Despite a steady stream of international visitors to the site at the time, few converted to completed sales. Heard says Billy Reid offered international shipping, but with only a single carrier—and the expedited option available was “extremely expensive” for the consumer. Adding further to the cost of shipping, international consumers would be hit with unexpected customs duties. As a result, Heard estimates, one of every three interna-tional orders would generate a complaint along these lines.

But when a still photo from the James Bond film Skyfall, depicting star Daniel Craig sport-ing a Billy Reid peacoat, leaked to a fan forum online—international demand skyrocketed overnight.

The good news, as Heard told the CEO later in making the case for a new run of the coat, was that a couple of months prior they had updated shipping capabilities with a global shipping solu-tion—so they could now much more easily fulfill the international demand.

The first run of 150 coats sold out by the time the order was placed with the factory. Heard added another order of 240 and then another of

400, each run selling out before they came in. “It took over a year before we were caught up with the demand. We literally could not produce them fast enough to keep up with the sales, and the onslaught of that, from the very beginning, started with all the overseas demand.”

Instead of complaints about the taxes and duties, members of the fan forum posted about how reasonable and accurate the shipping costs were.

Without updating its global shipping, Heard says, he thinks the company would have tried to fulfil the orders in the same way—but would have failed in the execution. “The shipping amount would have been so restrictive for a lot of customers that they would not have pur-chased,” he says. “We’re talking $15 in shipping versus $120.

“We would have had issues with getting these orders physically out the door.”

With Billy Reid’s new global shipping solution in play, it was able to turn the orders around from the manufacturer and send them domesti-cally to a distribution center in Kentucky for the international journey. Without that facility, says Heard, Billy Reid staff would have had to make individual labels and fill out documentation for each order, risking customs hold-ups and extra duties resulting in refused shipments.

“We simply would not have been able to exe-cute the amount of international volume that we were getting without the solution in place. It would have been a customer service night-mare, and it would have been an operational nightmare.”


When a still photo from the James Bond film Skyfall, depicting star Daniel Craig sporting a Billy Reid peacoat, leaked to a fan forum online—international demand skyrocketed overnight.


Shipping is inescapably an integral part of business, and it is only growing in importance. For some businesses, particularly in offices, it is likely a bigger part of the business workflow than most realize. Harnessing the science of shipping—that is the costs, logistics and data, businesses can better capital-ize on the art of shipping—delivering a package in the right way, at the right time and for the right price. Regardless of your business, without a thoughtful approach, shipping costs and inefficiencies can quickly spiral. With that in mind, it is more important than ever to simplify the complexity of shipping and reconsider the business approach to this key area.

Forbes Insights and Pitney Bowes would like to thank the following individuals for their time and expertise:

Jeff Crouse, General Manager SMB Solutions, Pitney Bowes

Rachel Martin, Director Product Marketing, Global Ecommerce, Pitney Bowes

CONCLUSION

ACKNOWLEDGMENTS

ABOUT FORBES INSIGHTSForbes Insights is the strategic research and thought leadership practice of Forbes Media, publish-er of Forbes magazine and Forbes.com, whose combined media properties reach nearly 75 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.

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FORBES INSIGHTS

Bruce Rogers Chief Insights Officer

Erika Maguire Director of Programs

EDITORIAL

Kasia Wandycz Moreno, Director

Hugo S. Moreno, Director

Lynda Brendish, Report Author

Charles Brucaliere, Designer

RESEARCH

Ross Gagnon, Director

Kimberly Kurata, Research Analyst

SALES

North America Brian McLeod, Commercial Director [email protected]

Matthew Muszala, Manager

William Thompson, Manager

EMEA Tibor Fuchsel, Manager

APAC Serene Lee, Executive Director

the art and science of shipping · goods are delivered. in cross-border ecommerce, low-cost...

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