Australian logistics company Interparcel recently highlighted the considerable increase in supply chain costs, a trend that poses challenges for small and medium-sized enterprises (SMEs) as they prepare for the busy business season ahead. According to their study, postal service charges have risen by 10.8% and shipping costs have surged by 12% year-on-year. These figures signal pressing problems for SMEs, which often operate on narrow margins and rely heavily on cost-effective logistics to stay competitive.
The increase in costs can be attributed to several factors, including soaring fuel prices, fluctuating labor market conditions, and increased warehousing expenses. Steve Zammit, CEO of Interparcel, pointed out that major courier companies have made substantial investments in larger warehouses and advanced technology to manage the increasing demands of the eCommerce industry. While these investments are necessary to handle the rising volume of parcels, they also contribute to higher shipping costs that ultimately affect SMEs and consumers alike.
The Australian Bureau of Statistics corroborates these trends, reporting a significant rise in postal and courier costs over the past year. Such escalating costs are expected to influence customer behavior, pushing businesses to adapt swiftly in order to retain their clientele.
Given these challenges, Zammit encourages SMEs to improve their operational efficiency. He advises businesses to conduct regular check-ups on their operations, ideally every six months, with a focus on shipping procedures. “Getting savvy with operations is crucial,” he emphasized. For SMEs, this means evaluating their processes to identify weaknesses and make necessary adjustments.
To tackle rising transportation expenses, Zammit proposed five key strategies.
1. Offer more checkout options to reduce cart abandonment. Providing customers with varied shipping choices at checkout can significantly decrease cart abandonment rates. Zammit states, “If a customer needs the product soon, they are more likely to abandon the cart if only standard shipping is available.” By offering options like express or same-day delivery, businesses can cater to diverse customer needs, ultimately leading to higher conversion rates.
2. Utilize shipping technology for routine tasks. Investing in shipping automation can save businesses considerable time and minimize errors. As Zammit observed, many retailers still handle tasks like creating shipping labels manually. By adopting technology that automates these processes, SMEs can shift their focus to more critical areas of growth. Interparcel’s platform, for example, allows users to import orders, select courier services, and manage customer notifications seamlessly.
3. Conduct regular health checks on business processes. SMEs are encouraged to assess their operational efficiency every six months. Simple adjustments, such as reorganizing warehouse layouts to place high-demand items near dispatch areas, can lead to remarkable time savings and improved service quality. Zammit notes, “Small changes combined with efficient shipping management can greatly enhance the post-purchase experience for customers.”
4. Be mindful of customer delivery preferences. It is essential for businesses to understand and accommodate customer preferences regarding delivery. Zammit explains that offering calculated rates at checkout through platforms like Shopify and WooCommerce helps businesses meet diverse delivery expectations. For instance, some customers may prefer specific carriers like CouriersPlease, while others might opt for Australia Post due to convenience. Understanding these preferences and providing options can minimize the risk of lost sales.
5. Explore international shipping opportunities. As local shipping becomes more expensive, venturing into international markets may offer SMEs competitive advantages. Zammit highlights a rising demand for Australian eCommerce products in countries like New Zealand and the USA. He suggests that shipping to New Zealand can often take the same amount of time as domestic deliveries, allowing businesses to tap into new revenue streams without significant logistical strain.
In summary, the warning issued by Interparcel about rising supply chain costs should serve as a wake-up call for SMEs preparing for peak business seasons. Implementing the strategies outlined by Zammit can help small and medium-sized businesses not only survive but thrive in an increasingly competitive eCommerce landscape. By focusing on operational efficiency, offering diverse delivery options, and utilizing technology, SMEs can navigate these challenging times more effectively and maintain their profitability.
