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BOPIS Little Help with Supply Chain Challenges Online Retailers Face Due to Cost Increases

November 12, 2021

Retailers still face significant supply chain and operational challenges as e-commerce shows no signs of slowing down, according to the results of a new study. National carriers are exacerbating the problems by piling on surcharges and capacity limitations, putting retailers at risk of delays and disruptions and limiting their ability to ensure faster, reliable delivery. In response, retailers have adopted various strategies to offset these challenges, including buy online, pick up in-store (BOPIS). However, the study reveals that retailers using BOPIS are still struggling to combat rising rates and capacity constraints, along with a new set of operational and logistics challenges created by BOPIS.

LaserShip commissioned the study with Hanover Research to survey over 100 C-Suite, VP, and director level supply chain professionals at large retailers who spend at least $50 million on parcel annually about the challenges they are currently facing, how they plan to respond to those challenges, and areas where they plan to invest. The research, including takeaways and recommendations for e-commerce retailers, is outlined in LaserShip’s whitepaper.

Key insights from the study include:

National carriers are implementing rate increases and capping shipping volumes, with no end in sight: Shipping rates are rising faster than they have in a decade. Sixty-five percent of top online retailers have experienced an off-schedule price increase in the last 24 months. The shift to e-commerce has also led to an overwhelming capacity crunch, resulting in hundreds of millions of packages being capped annually. Thirty-four percent of retailers surveyed currently have their shipping capacity capped, with two-thirds of those facing caps between 10% and 49% of their total volume.

Eighty-seven percent of retailers have already implemented BOPIS and click and collect: BOPIS adoption accelerated dramatically with the rapid onset of COVID-19 in the U.S., but retailers have found that it is not enough to offset capacity issues and rising rates. Retailers are also experiencing a new set of challenges created by BOPIS and those surveyed expressed numerous concerns, including lack of store availability (57%), strained capacity (56%), staff challenges (54%), and other issues largely stemming from the physical stores themselves.

Forty-nine percent of retailers have concerns about meeting consumers’ expectations of faster delivery: Retailers have taken note of consumers’ growing demands for faster delivery and are adapting their supply chains accordingly. Sixty-one percent of retailers surveyed indicated that offering faster shipping options is their primary differentiating strategy to stay ahead of the competition.

Fifty-nine percent of retailers plan to maintain or allocate more volume to regional carriers: With national carriers capping shipping volume and implementing off-schedule rate increases, retailers plan to use regional carriers as alternatives to build capacity and flexibility, reduce costs, and deliver to their consumers faster.

“As the shift to e-commerce continues to accelerate, retailers need to leverage different solutions to overcome the new challenges they are facing to meet consumers’ expectations and drive growth,” said Josh Dineen, Chief Commercial Officer of LaserShip. “This study provides retailers with actionable recommendations on how to build supply chains that create a sustainable competitive advantage. Retailers that can provide faster, reliable home delivery and diversify their carrier mix to ensure capacity and flexibility will gain an unfair share of the growing e-commerce market and build brand loyalty and customer lifetime value.”

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