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Concern
Over Shipping Charges Sounds Wakeup Alarm for E-Business
Merchants With Seat-Of-The-Pants Billing
LAGUNA
NIGUEL, Calif.--(BUSINESS WIRE)--
If
electronic business is the dream, the issues associated with
parcel delivery are the wakeup alarm for merchants and consumers
alike.
Carriers
such as the U.S. Postal Service, UPS, FedEx, Airborne and DHL
can dream on. Their business is booming as the result of online
purchases to the tune of $19 billion for combined
business-to-business and business-to-consumer transactions in
1999.
The
new reality is who pays how much for shipping, a question that
can strain relationships between buyers and sellers at a time
when e-business is just starting to take hold in a big way.
E-merchants
under pressure from investors for improved business performance
need to cover merchandise shipping costs. Buyers looking for
bargains are just as likely as not to click-off when they see
their savings evaporate at the bottom line. Compounding the
issues, neither party knows the exact cost of all possible
options at the moment of truth.
According
to a 1999 survey by Ernst & Young, shipping costs have
become the primary concern of online shoppers. Consumer Reports,
which has commenced rating e-commerce sites, finds shipping
charges at most sites to be within reasonable limits, but faults
difficulties in finding out what they are.
Considering
the tumultuous and youthful history of e-business, it is no
surprise that there is no industry standard formula for
calculating shipping costs. A survey of practices by GoShip,
Laguna Niguel, Calif., reveals five basic models:
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Merchant
web site is linked to a carrier's web site for downloading
one rate at a time, based on the consumer's choice of
a shipping method. If the consumer wants to see other
rates, the back button may be pushed to start the process
over.
The
most logical question of the day asks why is it so difficult to
provide comparative rates online at the time of purchase in one
display and let buyers make the choice. The answer lies in the
complexity of rate charts of each carrier, which may contain
hundreds of entries, and they are changed on a regular basis.
When you weigh the leading carrier rates together, the cost of
computer programming and maintenance dilutes the value of timely
precision.
There
are partial solutions being implemented that automate rate
tables for a single carrier or allow limited comparison shopping
for a few basic services. There are also enterprise solutions
that bundle rate comparisons with complete warehouse and
shipping systems.
The
first complete rate shipping solution designed from the ground
up for e-business is forthcoming from GoShip, which boasts more
experience in designing and marketing shipping systems than any
other independent software provider. GoShip founders were active
participants in developing the first computer system for small
parcel shipping, the shipping industry's first remote
communications system, custom shipping solutions for General
Motors and other Fortune 500 companies, and systems for major
carriers to distribute free to their customers. In 1987, they
developed the industry's first comparative shipping software for
Mailboxes Etc., when that company was in its infancy and
subsequently placed more than 2,500 systems at Mailbox
Etc. franchises.
"A
universal e-commerce solution goes far beyond anything that has
been done before," says Neal Anstadt, GoShip president and
CEO. "Ideally, it will serve the needs of individual
merchants, integrators and OEM customers with equal
effectiveness."
Major
challenges to vendors in delivering an easily implemented
solution without customer programming include:
-
Integration with any merchant's order form or shopping cart
program.
-
Customization of carriers and services for each merchant.
-
Calculation of shipping costs from various distribution
points, including virtual locations.
-
Comparative pricing displays to consumers, including
carriers, service levels, delivery times and shipping costs.
-
Accurate point-to-point charges displayed automatically at
the conclusion of a sale and added to the transaction total.
-
The ability for merchants to mark shipping costs up or down
by service type, weight or destination.
-
A line-item option for customers who order more than one
product to select different shipping options for each item.
-
Real-time updates of rate, service and zip code changes with
automatic adjustment to each merchant's pricing structure.
-
A variety of reports to merchants on costs and consumer
buying and shipping habits
-
Empower the consumer with all information needed to make
informed decisions just by entering the de
stination zip code.
-
24x7 customer service and support.
"Consumers
typically want the fastest delivery or the lowest cost, but with
a complete matrix of information, they can take a more
thoughtful approach to speed and cost together," Anstadt
said. "Business-to-business transactions usually involve
buyers who are more knowledgeable about shipping options, and
they may add a half dozen or so more criteria to the
decision."
He
believes business-to-business e-commerce offers the greatest
opportunity for shipping solution providers since that market is
forecast to grow much faster -- $300 billion vs. $17 billion for
the consumer retail market by 2002. That's why GoShip, for one
vendor, is focusing on value-added resellers and enterprise
resource planning vendors as its first order of business.
"These
are the people who are going to set the standard for what is a
good and complete solution and prove it on behalf of themselves
and business-to-business retailers," Anstadt said.
Customer
satisfaction is the common ground of both markets, and customers
do not like surprises or the appearance of
"seat-of-the-pants" decisions, he added. "The
ultimate solution is full disclosure of shipping charges and
making buyers a participant in deciding what they will
pay."
Anstadt
further believes that shipping costs will be a major factor in
competition for online customers once merchants gain control of
information and truly understand their costs. They will be able
to make intelligent decisions about when to mark down charges on
commodity items where competition is most intense and mark up
charges on big ticket items where handling costs are higher and
shipping is a small percentage of the total.
"One
thing is certain," he said, "competitive forces are
coming to bear on shipping costs - free and otherwise - and
solutions such as GoShip are essential to winning customers and
earning their loyalty."
Based
in Laguna Niguel, GoShip was founded in 1999 to meet a need
identified by its core team of e-commerce and shipping industry
experts: the need to offer choice in determining how goods
travel the "last mile" from seller to buyer. With more
than 20 years of front-line shipping savvy and a team of
e-commerce specialists, GoShip has created the next generation
infrastructure for online shipping. The company's goal is to be
the worldwide leader in e-commerce shipment rating software and
services for eMerchants of all tangible goods sold via the
Internet including value-added resellers and enterprise system
designers.
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