idrive updates
December 31, 2024
Webinar Recap: Breaking Down Carrier Contracts for Maximum Savings
Watch a reply on carrier contracts and how to read them, by iDrive Logistics President Glenn Gooding.
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“You get what you pay for.”
Many of us have heard this phrase, often after experiencing the downside of choosing the cheapest option. Unfortunately, the same holds true for shipping.
We get it—cutting costs in business is both normal and necessary. But when it comes to shipping, going for the lowest price isn’t always the most brilliant move. In fact, it can come at the expense of crucial benefits like reliability, speed, and customer satisfaction. Consider this: 85% of online shoppers won’t order from a retailer again after a bad delivery experience.
In this article, we’ll explain why focusing solely on cost can lead to pitfalls and how to strike the perfect balance between affordability and quality in your shipping solutions.
Rate shopping is when you compare shipping options from different carriers to find the best fit for your needs. Consider it as weighing all the pros and cons to make an informed decision that benefits your business and customers. The goal? To provide the best possible service while balancing cost, speed, and reliability.
To do that, there are several factors you have to keep in mind, such as:
Cost is often one of the top considerations when making shipping decisions—and for good reason. Beyond simply saving money, the ultimate goal is to secure the right services that align with your business needs without eating into your profits. After all, isn’t that why you’re in business in the first place?
While profit margins vary across industries, aiming for at least a 10% margin is generally a good benchmark to strive for.
Pro Tip: The cheapest option often has hidden trade-offs. Instead of focusing solely on the lowest price, look for the best value.
Did you know that 88% of consumers are willing to pay extra to receive their items on the same day they order?
We live in a world where faster service is often seen as better. Gone are the days when waiting several days for a parcel was the norm—now, same-day deliveries are becoming a standard option. While this evolution in shipping is exciting, it does come with added costs.
That’s where rate shopping comes in. It lets you compare transit times across carriers, helping you balance speed and affordability. You’ll be able to deliver the fast service customers expect without breaking the bank.
Having a trusted carrier is crucial because they keep your shipments safe and secure. But remember: your transaction doesn’t end once you ship your item.
While carriers can sometimes be liable for packages, your customers likely won’t think of it that way. Among those who experienced delivery failures, only 24% of customers blamed the delivery company. About 23% said they were less likely to order from the retailer again, and 21% lost faith. To make matters worse, 17% even told their friends and family to avoid that retailer!
What type of shipment does your product require? Does it need to arrive immediately? Is it perishable or prone to breakage? What are its specific requirements? These are all critical factors to consider to ensure the quality of your products.
When rate shopping, you must also evaluate the quality of service and the levels of delivery offered by each carrier. This will help you choose the best one that suits your product’s needs and ensures it arrives in excellent condition.
Check out the extra features carriers offer, such as:
These perks can add value to your business and enhance the customer journey. Think of them like the cherry on top—they’re not essential, but they improve the experience.
It’s completely normal to look for ways to save, especially when it’s something you'll need regularly for your business. That’s okay! However, issues arise when you compromise service quality just to save a few dollars. Because in the long run, it doesn’t actually save you money—it often ends up adding unexpected costs. Here’s why:
Low-cost carriers often struggle with on-time performance, and one of the main reasons is their tight operating margins.
While their prices may be appealing, it’s worth asking yourself—how are they making it work? With rising expenses like fuel, labor, and maintenance, offering rock-bottom prices often leads to significant operational challenges and strained profitability.
Budget cuts often lead to cutting corners, compromising quality checks and handling practices. This might stem from insufficient training or an inability to hire skilled experts, ultimately resulting in unhappy customers.
For businesses, this can mean additional costs for returns, replacements, or exchanges—expenses that could have been avoided with a more reliable service.
As the saying goes, if it seems too good to be true, it probably is. Some carriers may advertise low rates but hide additional charges in the fine print.
Fees for fuel, residential deliveries, or oversized packages can inflate the final cost of your shipping. This can leave you with unexpected expenses that undermine the initial savings you were aiming for.
Cheaper carriers often avoid the most efficient routes, leading to longer transit times and unnecessary complications. The most convenient shipping routes usually come at a higher cost, and budget carriers tend to avoid those expenses.
In the end, you might save on the upfront price but lose out on time and reliability.
Customers love convenience, and features like real-time tracking and reliable delivery timelines have become essential. Unfortunately, budget carriers often lack the resources to provide these.
Without this level of convenience, you risk frustrating your customers—and potentially losing their trust and business.
Budget carriers often have limitations on their services, making it difficult for them to scale alongside your growing business. They may struggle to handle increased shipment volumes or offer reliable international delivery options, ultimately restricting your ability to serve a larger customer base effectively.
As we’ve said, cost isn’t everything. It's essential to look at the bigger picture rather than focusing solely on cost savings. Reliability, delivery speed, and operational efficiency are just as crucial—if not more so. After all, what good are cost savings if they come at the expense of your customers’ trust and create operational headaches?
Customers want a seamless journey from checkout to delivery. That’s why 80% of companies are prioritizing investments in customer experience! Not only does it attract more business, but it also fosters long-term brand loyalty.
So, as you think about your shipping solutions, here are a few things to keep in mind:
As a business, it’s easy to focus on cost, but studies have shown that customers care about more than just the price. 61% of consumers are willing to pay more for a great experience!
Saving money on shipping can feel good at the moment, but if your carrier misses the mark on delivery, those savings can quickly turn into losses. It's worth investing in reliable carriers who can deliver the service your customers expect—after all, it’s also a reflection of your brand.
Who wants damaged goods? Definitely not your customers, who already paid for their items and expect them to be in perfect condition. At this point, it’s crucial to be careful when choosing your shipping solutions provider. In fact, 86% of consumers would abandon a brand after just two poor service experiences.
Budget carriers often cut corners, increasing the risk of damaged or mishandled parcels. So, find a carrier who takes responsibility for getting your packages delivered properly and on time. And, if returns are necessary, find one that offers an easy and cost-effective process for your customers.
One of the top reasons customers abandon their carts is unexpected costs at checkout. All potential fees should be visible from the start, not just at the final stage. Surprising your customers with hidden costs can break their expectations, which leads to cart abandonment.
Ensure your checkout experience is clear and transparent so your customers know exactly what they’re getting. Optimize it by offering three distinct shipping options that clearly show the type of service they can expect:
This way, they can easily choose the option that fits their budget and needs.
In shipping, time is money. The longer your packages take to reach their destination, the more you’ll spend. That’s why the more efficient the route, the more time and money you save—and the happier your customers will be.
At the end of the day, shipping isn’t just about getting a package from point A to point B—it’s about improving your customers’ experience. The smoother and more reliable you make it, the more likely they are to come back.
Happy customers stick around, and loyal ones are the backbone of long-term business growth. And guess what? A great experience can lead to them returning for more!
Cheaper shipping costs might seem like a win, but they don’t always yield the best results. As we’ve discussed, shipping costs are just one piece of the puzzle.
Don’t get us wrong—rate shopping can be a helpful tool! But it’s just as important to consider other factors, like reliability, delivery speed, service level, and extra features that make a real difference beyond the price tag.
At iDrive Logistics, we’re here to help you find the right balance with smart, cost-effective solutions. We’ll work with you to create a shipping strategy that fits your needs and supports your business as it grows. Connect with our team today to get started!
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