Great Expectations: Delivering Customer Experience and Fulfillment Profitability




Through ·

Shippers continue to face significant supply chain and margin pressures as the pandemic-accelerated rise of e-commerce disrupts fulfillment models across a variety of product categories.

Direct-to-consumer (DTC) demand remains strong despite 8% inflation and recession concerns; According to Insider Intelligence, U.S. e-commerce sales are expected to surpass $1 trillion this year for the first time, though the overall growth rate is likely to slow to 9.4% year over year in 2022. The longer-term trend, meanwhile, is up, with online sales projected to reach $1.67 trillion by 2026, or 21.2% of total U.S. retail sales.

Customer expectations regarding delivery speed such as next and same day delivery, quality, cost and reliability have continued to rise. For example, same-day delivery is projected to grow 21% annually through 2024; Returns, mostly free, which accounted for 15% to 30% of online purchases – double that of brick-and-mortar retail – totaled $114 billion in the holiday peak of 2021 alone. Customers don’t make up: as many as 40% say in surveys they disregard shippers who don’t offer free shipping or returns options, and over 80% never return to a website after a single shipping error.

Meanwhile, costs are rising due to exploding investments in labor, fuel, yields and facilities to be closer to customers in both dense urban and underserved rural areas. For example, rapidly escalating impacts on market costs are reflected in steady biennial increases in parcel rates of 7% to 9%. For many shippers, today’s rapid changes in customer demands and operational costs have resulted in eroded margins, slowed growth and an uncertain future.

Through ·

Shippers continue to face significant supply chain and margin pressures as the pandemic-accelerated rise of e-commerce disrupts fulfillment models across a variety of product categories.

Direct-to-consumer (DTC) demand remains strong despite 8% inflation and recession concerns; According to Insider Intelligence, U.S. e-commerce sales are expected to surpass $1 trillion this year for the first time, though the overall growth rate is likely to slow to 9.4% year over year in 2022. The longer-term trend, meanwhile, is up, with online sales projected to reach $1.67 trillion by 2026, or 21.2% of total U.S. retail sales.

Customer expectations regarding delivery speed such as next and same day delivery, quality, cost and reliability have continued to rise. For example, same-day delivery is projected to grow 21% annually through 2024; Returns, mostly free, which accounted for 15% to 30% of online purchases – double that of brick-and-mortar retail – totaled $114 billion in the holiday peak of 2021 alone. Customers don’t make up: as many as 40% say in surveys they disregard shippers who don’t offer free shipping or returns options, and over 80% never return to a website after a single shipping error.

Meanwhile, costs are rising due to exploding investments in labor, fuel, yields and facilities to be closer to customers in both dense urban and underserved rural areas. For example, rapidly escalating impacts on market costs are reflected in steady biennial increases in parcel freight rates of 7% to 9%. For many shippers, today’s rapid changes in customer demands and operational costs have resulted in eroded margins, slowed growth and an uncertain future.







November 2, 2022


Subscribe to Supply Chain Management Review Magazine!

Subscribe today. Do not miss!
Get in-depth coverage from industry experts with proven techniques to reduce supply chain costs and case studies on supply chain best practices.
Start your subscription today!


Article Topics

Deliver &mean fulfillment &mean omnichannel &mean
All topics

Leave a Comment