COVID-19: What Food and Beverage Shippers Should Watch For
As COVID-19 reshapes the eCommerce landscape, food and beverage companies are seeing a unique set of opportunities and challenges when it comes to shipping.
The food and beverage sector was already expecting a 23.4% eCommerce boost for the year thanks to the rising interest in online ordering, but the COVID-19 crisis is driving grocery sales even higher with a 210% increase in the dollar value of consumers’ orders, according to PYMNTS.com.
Companies like meal kit subscription services and specialty food retailers are also experiencing a bump at the moment, as consumers look for new ways to prepare and enjoy food at home without having to visit a physical store.
If your company is part of this boom, there are several factors to be aware of when it comes to your customer experience and your shipping. It’s time to ask questions like:
1. What’s in my carrier contract?
First, understand what your shipping characteristics and volumes used to look like and how they interacted with your carrier contract. For instance, were you getting a big discount on commercial shipping rates because you primarily shipped to business addresses? That might be irrelevant now that so many businesses are shut down and employees are working from home. Many traditional B2B shippers are now experiencing huge increases in the cost of their shipping due to the increased frequency of residential and delivery area surcharges. Add in the push toward two-day fulfillment over the last couple of years, and many businesses simply don’t have competitive ground residential rates in their contracts with the major carriers. Some are seeing shipping cost increases of 20-30% because their contracts aren’t optimized for how they need to deliver to their customers now.
2. What needs to change?
A major aspect of loss prevention for eCommerce food and beverage companies is spoilage and breakage, so you were likely reliant on your carrier’s network running smoothly and efficiently. As we have heard from the carriers, COVID-19 has eliminated those standards and the carriers have suspended their service guarantees. Late packages for meal kit subscription services is as much about missing consumer expectations as it is about actual spoilage. You might see a tidbit back from the carrier refunding the cost of shipping and reimbursing the cost of the good, but what will it take to win that consumer back?Ensuring that customers receive safe, intact delivery is a linchpin of your business, so it falls to you to reach out to your carrier and use any leverage you have to get them to get your deliveries through on time.One bit of sway you might have is increased volume. If your sales are rising, use this as a point of negotiation with your carrier. They want to keep you as a customer even when this crisis has passed, so start talking about a better pricing tier and expedited service.
Look at your orders for clues to how your customers’ tastes and expectations have changed. Are you shipping larger packages now? Are they going to primarily residential areas and incurring related surcharges? What shipping speeds do customers expect? If your goods aren’t perishable, are you able to encourage them to select slower, less costly shipping speeds?
The key to your conversation with the carrier rep is to focus on service levels and consumer experience pitfall concerns. Emphasize that, because that we indeed live in an age of uncertainty and consumer needs and habits will continue to evolve, you want to stay in close contact and keep a positive working relationship with your rep. A little goodwill goes a long way.
3. What fulfillment options do I have?
As Amazon tries to balance consumer demand for certain products with the scope of its fulfillment network, some online retailers are competing for consumers’ attention by optimizing their own product lines to make direct to consumer shipping more affordable. Others are relying on their physical stores as distribution points if they are not halted by stay-at-home orders. Food and beverage companies of all kinds are pivoting their business models quickly in response, so examine your own options. Can you work with your carrier to create contract terms that allow you to profitably ship directly to consumers?
4. How can I maintain customer experience?
The key here is communication, of course. When you let your customers know what will happen with their order before, during and after the transaction, you create transparency that builds a strong relationship. Yes, they want what they ordered quickly, but most are aware of the incredible impact this crisis has had on American commerce and logistics. If you are clear with customers about what to expect, they’ll be more understanding if they have to wait.
Your shipping action item checklist
As always, plan — don’t panic! Take these steps to keep your shipping on track.
1. Examine your shipping data to understand where you were, where you are now and what’s changed. You should be starting to see trends in your carrier invoices that reflect the changes to your volume, shipment characteristics and surcharges.
2. Get in contact with your carrier and negotiate contract changes that reflect these trends. Many shippers we work with are having success in securing faster shipping and discounts when they approach their carrier rep with data in hand and a cooperative attitude.
3. Examine your fulfillment network and optimize for your new normal. Some shippers have even shifted to LTL services to move shipments quickly rather than rely on their traditional shipping methods.
If you’re a shipper, we understand how overwhelming this all is. Trust us — we feel it too. That’s why we’ve set up a COVID-19 resource page for shippers that features carrier news and updates, shipper best practices and FAQs. We’ve also just released a new eBook that helps you understand and combat some of the new surcharges you might be experiencing — take a look!