This year’s holiday season has borne out the reality of shopping’s mass migration to digital channels. As e-commerce outpaces offline retail growth, merchants require new partners to manage an influx of parcels making their way to mailboxes and doorsteps across the U.S.
On Thanksgiving week, Sendle brought its flat-rate shipping service stateside after helping small businesses in its native Australia compete with deep-pocketed, large-scale rivals. Amazon has set the pace in e-commerce fulfillment, moving the benchmark for excellence from the much-admired fast and free Prime two-day shipping to just one — a standard difficult to replicate with the limited resources of a mom-and-pop brand.
Despite the constant pushback that shipping rarely is actually free and that shoppers absorb these costs baked into product prices, Amazon continues to win in e-commerce by taking the delivery expense out of customers’ cost calculations.
And that’s a competitive advantage out of reach for many modestly sized e-commerce brands, according to Sendle CEO James Chin Moody, who co-founded the startup in 2014. Digital supernovas like Amazon “are able to absorb high shipping costs and access volume-based discounts — something small businesses can’t afford to do,” he said.
“They’ve completely reshaped consumer expectations around the cost of shipping to the point where consumers are abandoning purchases if shipping fees aren’t waived,” Chin Moody said of shipping’s status as “the new battleground for consumer spending.”
Small businesses, he added, simply cannot afford to “miss out on that piece of the puzzle” if they intend to remain relevant to young, savvy consumers whose shopping options expand by the day.
Sendle research shows that many mid-size merchants resort to cobbling together a rash of different shipping options to come up with something palatable for consumers, who, more often than not, will abandon their shopping carts if they encounter shipping sticker shock on the checkout page, the end zone for digital retail.
Like many fellow logistics innovators, Sendle has made a living out of finding and filling white space in the shipping market. The company stocks carrier delivery vehicles’ empty space with customer parcels, helping to make shippers’ national and regional routes even more efficient. Because Sendle takes this low-cost approach, a package might be moved by multiple carriers during its journey to the end consumer, “depending on what is the most efficient option for that specific day and destination,” the company said.
Sendle integrates with e-commerce companies’ software platforms, like Shopify, which helps clients seamlessly purchase a shipping label and schedule package pickups or drop-offs without the hassle of tallying costs or calculating other details.
E-commerce customers appreciate having access to a solution that delivers the quality experience consumers are looking for. Jill & Joey founder and CEO Thaison Ta says Sendle enables the maker of pregnancy and baby products to “deliver a sustainable, end-to-end customer experience without completely breaking the bank.”
Not only is Sendle simple and straightforward to use while outperforming bigger rivals on price, Ta added, “but they also share our mission that you can do business that does good for the planet.”
Customer awareness of online shopping’s planetary fallout seems to grow by the day, a point not lost on Ta and fellow direct-to-consumer founders. To address these concerns and resonate with eco-conscious consumers, sustainable DTC shoe brand Thousand Fell cozied up to a similarly minded courier partner when it debuted its designed-to-be-recycled white sneakers last month.
“It’s tough when you’re trying to be sustainable but then you’re shipping product one for one,” co-founder Stuart Ahlum said of e-commerce shipping’s high environmental cost. New York City-based startup Ohi provided a desirable low-impact fulfillment service, complete with micro-warehousing and same-day delivery by bike for orders to Manhattan, with Brooklyn soon to follow.
“It’s like the Amazon Prime of sustainable delivery,” co-founder Chloe Songer added.
Ohi founder Benjamin Jones left a career in finance to solve what he says is logistics’ biggest pain point — sprawling warehouses and distribution centers located far from where customers are clustered. The “old” model of warehousing — a specialized center that holds all inventory and ships countrywide in three to five days — fails to meet customer demands for low-cost, high-speed delivery, a byproduct of the modern obsession with instant gratification.
Ohi, he said, is building the infrastructure to store products closer to customer bases so that emerging, digitally native brands can match the standard for speed set by Amazon. The company takes advantage of unused space in urban retail stores, office buildings and other commercial space, adding shelving and other necessary accoutrements to set up a mini warehouse.
Jones believes Ohi’s tech platform and micro-warehousing network will replace the old-fashioned centralized model of fulfillment as a new breed of smaller, quality-minded brands chip away at staid incumbents and millennials and Generation Z shoppers shift their loyalties accordingly. A “same-day, next-day world,” Jones said, “is the direction we’re going in.”
But small startups aren’t the only ones looking to green the logistics game.
On Tuesday, Parcelly said it’s expanding its relationship with German logistics giant DHL Express. The U.K.-based carrier-agnostic logistics tech platform is growing its network of 2,000-plus domestic stores to include new package pick-up and drop-off locations in the Middle East and North Africa “to enable convenient consumer collections and returns of e-commerce parcels across the region.”
With the newly expanded relationship, DHL not only receives the benefit of more efficient operations and competitive costs but also can reduce the environmental concerns related to its delivery fleet’s carbon-emitting mileage.
“This partnership is yet another example of how DHL continues to drive premium service options in the highly competitive retail space by challenging the status quo,” Parcelly founder and CEO Sebastian Steinhauser said in a statement. “By establishing an ever-growing network of local [pickup and drop-off] locations, for both collections and returns, this solution will provide choice, convenience and control to consumers in the region, while also reducing the environmental and operational impact of failed deliveries.”
As e-commerce expands its tentacles to reach new consumers across borders, online retailers are looking to extend their brand promise and service as well. Reverse logistics startup Returnly debuted an international returns options in October so that customers anywhere in the world can easily send products back to the retailer without the typical hassle, time and expense. Returnly, which bills itself as a post-purchase payments company, aims to remove the friction from the process of getting shoppers a quick refund for unwanted online purchases. It takes care of everything from localized tax and duty information to parcel tracking, instant refunds and exchanges.
Because e-commerce has broken down international barriers, allowing retailers to reach new audiences, Returnly’s global solution facilitates smooth shopping for consumers across the world, founder and CEO Eduardo Vilar said. “With a simple, fast and reliable returns process, we’re giving consumers the confidence to buy while removing one of the biggest obstacles of global e-commerce growth for U.S. and Canadian online retailers ahead of the holiday season,” he added.
Premium ski apparel brand Spyder, owned by Global Brands Group, deployed Returnly’s international solution to serve the sport label’s highly global customer base. “We know that a smooth, user-friendly returns and exchange process is one of the main factors that our consumers consider when making a purchase and a key element to increasing our conversion rates,” Sam Minassian, global director of e-commerce, sports and lifestyle, for Global Brands Group/Spyder, said in an email to Sourcing Journal.
“Returnly gives us the best of both worlds by affording our customers that convenience and speed of transaction, while also helping us retain more revenue than we would with other solutions,” Minassian added. “We want that same experience for our customers wherever they are, and Returnly has proven that they have a solution that can expand globally, a vital consideration for our brands.”
Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.