Today, retailers are equipped to deliver a multitude of shopping experiences based on what customers demand. That includes online, store-only, and hybrid experiences that leverage both physical and a complex mix of digital channels. This omnichannel world brings its own challenges. One area where trouble often hits retailers is in the packing and shipping stage.
Packing for stores is not as easy as it seems
Today’s stores need to cater not only to in-store customers but also to customers who may have ordered online and chosen the option of picking up their goods physically. This makes the storage, inventory management, pick-up, and order fulfillment challenge much more complex. That complexity adds to efforts and costs. In fact, it is estimated that 2 to 3% of sales from retailers are expected to go into delivery costs to stock stores. To save costs, most retailers prefer to keep packing simple and capable of being directly put up on store shelf displays for customers to pick up. That doesn’t work for the so-called BOPIS (Buy online pickup in-store) customers though.
eCommerce has always been heavy on packing costs
For online commerce, studies show that 62% of shoppers will not consider purchasing from a retailer that doesn’t guarantee free delivery. This creates a big problem because a typical retailer spends nearly 10 to 15% of their sales on home delivery. So, how is a retailer to balance the need to provide cost-effective delivery with ensuring quality across the entire product packaging, fulfillment, and delivery lifecycle? Packaging costs are one obvious place to look at to save costs and enhance the delivery experience. Optimizing the size, nature, and quality of the packaging can help eCommerce brands achieve both objectives.
The rising packing and shipment challenges
We have just covered how packing becomes a key focus area for retailers, be it online or offline channels. But today, there are very specific areas in the packing process that create major challenges for retailers. Business leaders need to have a deeper understanding of these. Let us explore the same:
Box size selection
A majority of retailers partner with 3rd party delivery companies to handle the nitty-gritty of logistics and meet stiff delivery commitments. What often happens in such a setup is that the delivery partner bills each package based on the dimensions of the package. The delivery partner often bundles packages from different businesses into a truck; hence, every inch of space inside the truck’s loading bay is an opportunity to generate revenue for them.
For retailers, this can be a tricky proposition.
Sometimes items that are small in size may get packed in bigger containers or boxes. This results in their delivery costs escalating. As a result, the product’s margin is reduced solely because of the bigger box used to ship it. The same issue will persist for their store shipments as well. The additional problem of misfits at store shelves will crop up for in-store shipments. Custom store shelves may be needed to hold items in a specific carton or package size. However, that’s neither practical nor economical.
Conflicts with delivery partner measurements
Delivery partners may at times overcharge for packages that spill over size restrictions. In such scenarios, retailers would need to re-check their package dimensions manually to confirm if the delivery partner charges are justifiable. In the case of any discrepancies, then the retailer would require a joint audit with the delivery partner to prove that their packing is in line with the agreed dimensions.
While this practice may help the retailer save on costs from overcharging on wrong packing dimensions, it will result in significant delays and manual efforts. This will ultimately impact delivery time, operational efficiency, and customer experience.
Difficulties in scaling delivery commitments
Challenges like those listed earlier can result in a very manual-intense and expensive packing workflow that retailers need to work out with their delivery partners. This will become a big hindrance to the speed, agility, and scalability of delivery operations.
Over time, this will become a huge liability for the retailer as their shipping volume increases severalfold. From a store restocking perspective, there will be instances where several goods would have to be unboxed and arranged in different cartons or placed directly on the store shelf. This will increase work for staff in the store. The manual effort will create bottlenecks as well.
The solution – visual analytics
The challenges retailers face with respect to packaging can primarily be traced back to a single reason. The key underlying issue here is that retailers cannot accurately capture, manage, and leverage data about package measurements. By bringing on-board a visual analytics platform like KamerAI, it becomes easy for retailers to significantly transform how the entire delivery process is handled.
By using KamerAI, coupled with an appropriately placed camera system, retailers can capture the exact measurement of every package being readied for shipment. This data can be used to build reports that can be cross-checked with delivery partner requirements, metrics, etc. That helps field staff to pick the right box for every item without causing any wastage of time or effort. Furthermore, the data reports of measurements can be used to help delivery partners address accuracy issues in their measuring approaches.
Check out our case study where a leading retailer managed to bring down their logistic expense by nearly 10% with a box measurement solution that was created with Kamer.AI. Get in touch with us to know more about staying nimble and prudent in your business operations with the power of visual analytics.
