Logistics costs risk cutting into Black-Friday profits as carrier rates soar by 25%

Retailers urged to start preparing now to protect next year’s peak-season revenue

Sharp increases in delivery costs, by as much as 25%[1], may have led to reduced Black-Friday profits for ecommerce businesses. nShift, the global leader in multi-carrier delivery management, is encouraging businesses to start preparing now for next year in order to protect 2025 peak-season profits.

Due to limited capacity across the supply chain, almost a third of businesses (32%) had to deal with a cost hike.[2] While it’s still too early to assess the specifics of cost rises on last week’s shopping bonanza, many retailers and warehouses saw carrier rates soar by 25% in 2023. Last year, the average per-item delivery expense in the UK rose from £3.50 to £4.37.[3] Other European markets experienced similar increases.

At the same time as businesses are struggling with costs, customers are demanding greater choice over delivery times and shipment options. Research shows that 72% of customers believe that a choice of delivery options is important when shopping with a brand, vendor or retailer for the first time.[4]

“Black Friday is all about providing the best deal possible. So when carrier costs ramp up over peak season, retailers and warehouses are reluctant to pass on the increase to customers,” says Mattias Gredenhag, CTO at nShift. “The business tends to absorb the cost, cutting into potential peak-season profit.

“Creating capacity is the key to retaining revenue and providing better customer choice. Access to a larger carrier network can reduce warehouses’ exposure to cost increases, enabling them to find cost-effective alternatives more easily. While it is too late to make major infrastructure changes for 2024, retailers and warehouses should start investing now, to ensure they can achieve peak profit in 2025.”

Mattias has released a list of four tips to get businesses planning for 2025:

1. Invest in multi-carrier capacity – when demand rises, warehouses have to ensure they have capacity to meet it. This involves having access to the largest network of carriers. Not only does this allow them to scale up, it also enables retailers to offer a greater range of delivery options
2. Automatically select the cheapest carrier for each delivery – the right delivery management software enables businesses to automate the carrier booking process, instantly selecting the most cost effective
3. Display options and information clearly at checkout – if shoppers want a specific delivery option, make sure they can find it quickly. If next-day delivery is no longer possible because of capacity, reflect this at checkout to avoid confusion. Many consumers seek sustainable shipping and will click away if they can’t find a lower-emissions option
4. Communicate, communicate, communicate – if delays have to happen, it’s crucial that retailers communicate this to their customers. In 2025 this can’t just be email – communications need to go to the mobile and social apps that shoppers live their digital lives through. Done well, such messages also create the opportunity for further product promotions

The nShift suite of solutions combines the best aspects of delivery management with customer-facing applications. Our carrier network consists of over 1000 carriers, enabling retailers, vendors and warehouses to operate an end-to-end delivery process from checkout to returns.

www.nshift.com

[1] https://supplychaindigital.com/logistics/black-friday-shipping-costs

[2] https://supplychaindigital.com/logistics/black-friday-shipping-costs

[3] https://supplychaindigital.com/logistics/black-friday-shipping-costs

[4] https://nshift.com/retail-week-shopper-unlocked