The recent news about UPS and FedEx increasing their rates (again!) approaching the holiday season is, in fact, old news. This should surprise no one. For far too long, shipping behemoths have been squeezing the same lemon: leveraging their scale and negotiating power to maximize profit at the expense of their customers. This is a win-lose proposition: Every time UPS and FedEx take a bigger piece of the pie; shippers are left with less, scrambling to find ways to reduce their budget elsewhere. And this ‘zero-sum game’ happens every year.
Even worse, UPS and FedEx are playing this ‘zero-sum’ game without introducing any meaningful innovation to the market. While the whole world has been moving forward in leaps and bounds by embracing disruptive technological advancements, the shipping industry — ”led” by UPS and FedEx — has been stuck in place for decades.
So it's no surprise shippers are turning to options more responsive to their needs.
I was recently at the US Open watching a tennis match alongside one of our business partners - a logistics executive from a global household brand. “The UPS and FedEx era are over,” he said. “That music has to stop.”
I agree. It's time to move beyond the zero-sum game in shipping, and enter a new era in which shipping companies work hand-in-hand with brands to create ‘win-win’ value, leverage technology to solve pain points and elevate the customer experience to new levels.
The New Era
In this new era, shipping providers must do much more than just move boxes from point A to point B. They must work closely with brands to design an end-to-end delivery experience that strengthens customer loyalty and trust. They must treat shipping as a tool to help brands achieve their strategic goals like boosting revenue, reducing operational costs, and driving retention. They must be curious about their brand partners’ needs and build products that solve real-world problems.
In the new era, shipping will be a powerful tool for growth and customer satisfaction. Shipping providers and brands will collaborate closely, leveraging superior technological innovations to drive efficiency, promote flexibility, and improve customer communication at every stage of the delivery process.
Delivery Experience as an ROI Driver
Consider the impact of a superior delivery experience.
Our research and experience shows that top brands who prioritize the delivery experience for the end customer are driving true business value — cutting operational costs, and boosting key metrics like revenue, customer satisfaction, and loyalty. They are getting a High Return on Shipping.
According to the latest research, a superior last-mile experience can drive a 10.6% increase in average order value (AOV), an 8.9% improvement in checkout page conversion rates, and can boost a brand’s net promoter score by +15.3%. Moreover, research shows that a better delivery experience can increase customer lifetime value by 51%!
And as they say, consumers vote with their feet. 60% percent of them would choose which brand to shop with based on delivery options available, and 45% would switch to a competitor brand if that brand’s delivery options are better.
This is what I mean by ‘Return on Shipping’. Just like any other investment or budget allocation, shipping and delivery should be evaluated on the returns they generate. And the numbers don’t lie — a better delivery experience drives a much higher ROI.
Goodbye Mediocrity. It’s Time to Re-Evaluate your Shipping Strategy.
So, shippers, here’s my question to you: Are you willing to continue paying higher fees to legacy carriers who deliver an inferior service? With yet another rate increase from UPS and FedEx carriers, isn’t it time to reevaluate your shipping strategy?
The days of accepting mediocrity are over. It's time to embrace a new era where shipping isn’t seen as a cost center, but rather — an investment in growth, profitability and customer lifetime value.
At Veho, we’re leading the charge in this transformation.
Let’s move beyond the zero-sum game in shipping and enter the new era of shipping in which both brands and shipping providers win.
