E-commerce is a booming industry, but it also comes with many challenges. One of the biggest is reducing logistics costs while delivering a great customer experience. Logistics costs can consume a large chunk of your profit margin, especially if you have to deal with high shipping rates, returns, customer acquisition, inventory management, and customer service issues.

In this post, we share some tips on reducing e-commerce business costs and boosting customer satisfaction by optimizing your processes and using smart technology solutions.

Tip 1: Use high-value touchpoints to increase customer retention and reduce marketing costs

One of the best ways to reduce e-commerce logistics costs is to increase customer retention. When your existing customers keep coming back to buy from you, it reduces your need to spend money on customer acquisition. According to a study by Bain & Company, increasing customer retention by 5% can increase profits by up to 95%.

E-commerce businesses can increase customer retention by using high-value touchpoints like delivery updates. These interactions create a positive impression and build trust with your customers. For example, you can include relevant offers, new product recommendations, or customer reminders through these notifications that compel repurchase. 

By using high-value touchpoints, you can create a loyal customer base that will buy more from you and refer you to others. This will save you money on marketing costs and increase your revenue.

Tip 2: Streamline your last-mile ops and save on manpower

Another way to reduce e-commerce costs is to streamline your last-mile operations and save on manpower. Your last-mile operations comprise carriers and providers that deliver your products to your customers from your warehouse. A streamlined last-mile operation means efficient processes, reliable partners, and minimal delays or errors.

One of the ways to streamline your supply chain is with full parcel tracking visibility. With 100% transparency in your last-mile operations, you can anticipate and prevent potential problems before they affect your customers. For example, you can use real-time data and analytics to monitor shipment issues. That allows you to take a proactive stance when resolving potential delivery delays. 

With proactive issue handling, you can reduce the risk of involuntary returns and refunds. It also lets you save on manpower, storage fees, or penalties. 

Tip 3: Optimize reverse logistics and inventory management

E-commerce businesses offer returns to keep customers happy and spending. However, Returns can be a big cost for merchants. The best way to reduce the cost of returns is to gain visibility in reverse logistics to improve the returns process. To get returns visibility, you can use a digital returns solution to connect data feeds from all your logistics partners for real-time information on orders traveling back to your warehouse. 

By gaining visibility of inbound shipments, you can optimize inventory management and ensure you have the right amount of products in the right place at the right time. With a balanced inventory, you can reduce costs by avoiding excess inventory or stockouts. 

A digital returns solution also lets you automate labor-intensive steps in the returns process. It digitizes your returns policy to reject invalid or fraudulent returns automatically. This saves your customer service team time initiating the returns process and prevents out-of-policy returns, which can lead to wastage and unnecessary shipping costs. 

Tip 4: Negotiate contracts with carriers and lower shipping costs

When you track your shipments, you also unlock the ability to measure your carriers’ performance. This capability is key when negotiating advantageous contracts with carriers that lower your shipping costs. Shipping costs are a major expense for e-commerce businesses, especially if you offer free or discounted shipping to your customers.

Having carrier performance data lets you understand how each carrier is performing. From there, you can decide on the most suitable carriers. You can start contract negotiations to lower shipping costs by leveraging your volume and frequency. With a parcel tracking system, you can easily determine which carriers you use most. 

The more orders you ship with these carriers, the more bargaining power you have. By negotiating contracts with carriers and lowering shipping costs, you can reduce logistics costs by saving money on shipment fees. You can also pass on some savings to your customers by offering competitive shipping rates or free shipping thresholds.

Tip 5: Reduce WISMO (Where Is My Order) and WISMR (Where Is My Return) inquiries

E-commerce businesses face WISMO (Where Is My Order) and WISMR (Where Is My Return) inquiries daily. However, These questions take up a lot of time and resources for your customer service team, especially if you have to deal with multiple channels, languages, or time zones. And if your teams cannot answer these queries, you end up with very unhappy customers–who may not buy again from your store. 

The key to reducing WISMO/WISMR-related costs is, once again, the ability to track inbound and outbound parcels. Once you have this information, you can update customers on their orders or returns status. There are several channels for you to do this. You can create a tracking page where customers can log in to check for status updates or proactively send them emails and SMS notifications during the delivery journey. 

Regardless of your channel, keeping customers updated can substantially reduce WISMO and WISMR inquiries. Furthermore, layering tracking data and ratings to collect customer insights can help you improve your service quality–and keep your customers happy. By reducing WISMO and WISMR inquiries and streamlining customer service costs, you can save money on manpower, training, or software. 

Conclusion

Rising logistics costs are an ongoing challenge for e-commerce businesses. But full visibility over your logistics setup can help you optimize processes so you spend less on human and financial resources. Book a demo with one of our logistics experts to find out how your business can leverage Parcel Perform’s industry-leading logistics Data and Delivery Experience Platform. Discover how we can provide end-to-end visibility in your post-checkout process.