Covid-19 has left its impression across many different industry types globally. E-tail business has been one of the few benefactors, with Amazon reportedly doubling their profits since 2019 to $5.2 billion as lockdowns limited shoppers to familiar online stores. While brick and mortar businesses struggle, Amazon is set to hire 33,000 U.S. workers to prepare for the upcoming holiday season. Amazon dominates the online shopping space, primarily due to their lowest price policy for vendors and free shipping to shoppers.
In the meantime, e-commerce businesses striving to make it outside the Amazon bubble have quite the battle to remain competitive while absorbing ever increasing shipping costs. In fact, shipping costs can eat significantly into profits and when money is lost on incorrect shipping calculations or unclaimed refunds, companies surrender a substantial portion of their profits.
Holiday Season Predictions
According to Retail Info Systems, fears of in-store shopping will continue to lingering, driving up online shopping and mobile shopping use. Experts indicate that decreased spending on restaurants and other event related activities leaves consumers with more money available for holiday shopping use. Q2 saw record mobile shopping use; e-commerce websites should adapt, streamlining their shopper experience for ease of use on all mobile devices. Research indicates online holiday shopping will see a 35% increase this year with activity fluctuating by region based on local Covid related regulations.
An increase in online shopping with a decrease in drivers willing to deal with the inconvenience of quarantines when crossing state lines can lead to slower delivery times and more on-time delivery charge refunds. Without a system in place or the staff to review invoices and manage incorrect shipping charges, businesses leave potential profits on the table. As production, fulfillment and shipping become overworked to keep up with the increase in demand, managing the smaller details like maximizing shipping savings is likely to be neglected. The window of opportunity for filing for guaranteed service refunds is limited and difficult to navigate, resulting in money wasted due to inaction.
Uncovering Lost Profits
One way businesses can reclaim profits without letting go of employees or trimming costs is to take advantage of the benefits a professional freight auditing company like LJM Group can offer. Offering the expertise of seasons UPS and FedEx employment, the firm is known as a leader in parcel shipping audits and carrier contract negotiations. By reviewing all carrier shipping invoices, they can identify mistakes made in shipping calculations and refunds due for late deliveries. On average, most businesses see 10% or more in shipping costs savings. Fees for these services are based on a percentage of the money they save your business, spelling no out of pocket costs to you.
Common Invoice Errors
FedEx and UPS change their pricing structures often and keeping up to date on the changes and how to eliminate waste is a growing challenge. When you work with a freight auditor, they will comb through your files to find the following:
- Refunds for Late Delivery – UPS and FedEx base their rates on delivery dates and times and guarantee packages will be delivered accordingly. When packages are delivered late, the business is due a refund. There are many steps and rules to file for a refund. Without staff dedicated to monitoring invoices and checking delivery times, the refund opportunity is often wasted.
- Designating an address as commercial rather than residential can result in inaccurate shipping fees as can using inaccurate zip codes.
- Overcharges – accessorial fees related to package sizes, weights, etc. are common areas for miscalculations. Software designed to identify these inaccuracies can uncover huge savings.
- Theft – although unrelated to invoices, when a professional examines your shipping costs and provides an analysis, that’s usually the time when the business can discover where unexpected losses occur and often it may be due to merchandise theft or shipping costs expended for the employee’s benefit.
- Rate Change Updates – Modifying shipping practices to reduce costs is a necessary response to shipping rate increases. When shipping eats large amounts of profits, trimming out the fat is a priority.
- Contract Negotiation – Unbeknownst to most retailers, you do not need to wait until your contract expires to negotiate better terms; however, knowing how to get better rates requires an understanding about where the carriers can easily make changes to save you money. As long as they have competition, you have the ability to negotiate better rates.
Whatever the level of chaos this upcoming holiday season brings your business, you can be better prepared to be more profitable by taking steps to streamline your fulfillment and shipping processes. Having an analysis performed is an easy and painless first step as it is often performed at no cost.