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How retailers can avoid holiday shipping surcharges with curbside pick up

Conquer Curbside Pickup for the Post-Covid Era

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When non-essential stores closed and consumers hunkered down to avoid contracting COVID-19, nimble retailers found a work-around with curbside pickup. 

Now the work-around is looking more like a lifeline. Retailers are facing a holiday shopping season that promises an ecommerce order spike on top of a pandemic order spike and shipping surcharges that are headed skyward.

Ecommerce’s main distribution partners — UPS, FedEx and the U.S. Postal Service — have all announced holiday surcharges for out-of-the-ordinary shipping volumes. The higher fees come on top of pandemic-induced shipping price hikes and in the face of what will be a record-breaking holiday for online sales. The surcharges are meant to bolster shippers’ profits and keep their networks from being overwhelmed. 

“With the surge of demand for parcel shipments, it’s shifted to a carrier market,” Hannah Testani, chief operating officer of freight analytics company Intelligent Audit told the Wall Street Journal. “With such few carriers that can truly move national shipments, the carriers have almost unlimited pricing power.

Three ways to avoid holiday shipping surcharge
  1. Turn to regional shippers
  2. Encourage customers to combine orders
  3. Promote curbside pickup of online orders

The shipping surcharge rules are somewhat complicated. Generally they mean higher fees kick in for the entire holiday period once a retailer exceeds a daily package threshold. So, it is difficult to calculate the added cost for an individual retailer without figures for how many packages they will ship.

Holiday shipping surcharges will be higher than ever

But conversations with Signifyd customers indicate some are planning to ship more than double the packages they shipped last year. And yes they are worried. A review of Signifyd data indicates they should be, based on last  year’s holiday volumes. 

Like almost everything in 2020, the shipping fee hikes are unlike those that have come before. UPS will add as much as $4 to the cost to ship a package, an amount that would squeeze or wipe out the margin on a significant number of ship-to-home orders. 

FedEx is adding $1 per package — $2 during Cyber Week — and up to $5 shipped through its Express service. The U.S. Postal Service is adding from 24 cents to $1.50 to fees and adding uncertainty to shipping times due to political squabbling and a slow-down in service. 

No question it makes sense to turn to curbside pickup to hold down shipping costs, says Carl Boutet, a retail strategist with Montreal-based Studio Rx. But there are a flurry of other reasons curbside makes sense for a successful holiday.

“Here in Canada, our parcel volume hit levels they weren’t expecting to see till 2029, Boutet says. “Add short staffing and more complex logistics handling because of public health impacts and we have one more solid reason for click-and-collect.”

What it takes to launch curbside pickup successfully

Carl Boutet is a retail strategist with Studio Rx and a managing director of CQIC – Centre Québécois Innovation en Commerce. He has worked in and studied the retail and ecommerce fields for years. He recently spoke with Signifyd’s Mike Cassidy about the key considerations for retailers looking to launch curbside pickup in the time of coronavirus.

The  shipping surcharges  are a result of the explosive growth of ecommerce that started with the onset of the coronavirus pandemic. Online spending increased by more than 300% in May, according to Signifyd’s Ecommerce Pulse data.

How to avoid higher holiday shipping fees

 And while sales have calmed from that peak, they were still running 34% higher in August than in the same month a year ago. Curbside pickup saw even more massive growth, evolving from a service relatively few retailers offered to a must-have channel for stores that couldn’t open and for consumers afraid to enter stores that were open. 

Buy online, pick up at the store orders ballooned by nearly 500% in April and remain nearly 200% above pre-pandemic levels, Pulse data shows. Consumers’ willingness to serve as their own delivery service couldn’t come at a better time for retailers, given the coming shipping cost increases. 

Think about it: On the face of it, retailers contending with considerably higher holiday shipping costs can either eat the cost or pass it along to consumers. But, of course, they can also look for ways to avoid those higher costs.

Some are turning to regional shippers and shifting business away from the big three shippers. But experts have pointed out that it will take regional shippers months to build the kind of capacity retailers require for the holiday season. Retailers can also save by reconfiguring their shipments and modifying their packaging, Satish Jindel, the president of ShipMatrix, told Supply Chain Drive.

Target and others, for instance, have encouraged customers to consolidate their orders into one, sometimes slower, shipment by offering a small discount, often $1.

Consumers have already embraced curbside pickup

But curbside pickup is a solution that is literally right outside retailers’ front doors. All indicators point to the notion that consumers already love curbside pickup. There is the big uptick in orders. There are consumer surveys, such as a May Shopkick poll in which nearly 70% of respondents said they’d use buy online pick up at store options when they were available.

As telling, 42% of those who started using curbside pickup during the pandemic told Accenture they would continue to be curbside shoppers even once the pandemic had passed. 

Encouraging shoppers who already embrace curbside to pick up their orders saves shipping on every transaction and also potentially keeps shipping volume under the thresholds that bring on the surcharges from the big shippers. 

Target recently reported that buy online, pick up in store or at the curb, saves the retailer 90% of the cost of shipping an online order to a shopper’s home, according to Digital 360.

Target found curbside boosts basket size

In fact, Target has had incredible success with its curbside program. In a March call with  analysts, CEO Brian Cornell said that 75% of Target shoppers who try curbside pickup for the first time, try it again within three months. Not only that, but they also increase how much they spend, with online order values increasing by 50% and in-store purchases rising by 9%, according to Digital Commerce 360’s account of the call. 

While it seems shoppers need little incentive to turn to curbside, retailers who want to expand their pool of curbside shoppers should consider incentives to attract first-time, car-bound buyers. 

Possible programs include, adding extra loyalty points for curbside orders, providing discounts on future purchases, offering a gift delivered to a customer’s car along with their order.

Whatever the enticement, it seems pretty clear you won’t need to offer an incentive for your customer’s second trip to your curbside pickup area. Once a consumer tries curbside, it appears the deal is sealed. And that’s a good thing. 

The National Retail Federation recently surveyed Baby Boomers, asking about their shopping habits during the pandemic. Half of them said they had used curbside pickup as a way to collect items they had ordered online. 

When you consider consumers’ unbridled enthusiasm for picking up orders at the curbside and the tremendous cost savings the service can mean for retailers during the holiday, there is little doubt that curbside pickup is the right fulfillment channel at the right time.

Photo by Mike Cassidy

Mike Cassidy

Mike is lead storyteller at Signifyd. A former journalist and a retail geek, he covers ecommerce and the way technology is transforming digital commerce. Contact him at mike.cassidy@signifyd.com; follow him on Twitter at @mikecassidy.