Shipping Platforms

Until a few years ago, if you wanted your parcels to flow seamlessly into the parcel carrier networks, you needed a point-to-point integration for each carrier you used. Nothing too difficult, although there can be are integrations to consider from multiple existing systems. eCommerce platforms have to be consistent with the back-end, otherwise you might accept an order on a website for next-day delivery and only discover at the packing stage that it’s not a mainland-UK destination, or the items are too heavy for a standard service. Manual interventions can sometimes sort things out, but that only works to a point – more than one or two workarounds and things quickly go pear-shaped.

Most order management systems support a handful of carriers directly, although most eCommerce platforms are less likely to do so. In either case new integrations can be quite fiddly. Each one is a different and the costs get passed on to clients at something like £5-10k per carrier. Amortise that over 3 years and you might need 250 parcels a day to justify the cost. One approach on new carrier services is to ask the parcel carrier to contribute to the development work, but even it that comes off, it still takes precious time and effort. What’s more, the requirements around shipping are getting more complex, not less. Customers expect to see a range of delivery options and charges right there in the product page, as much for re-assurance as anything, and increasingly we need 2-hour delivery windows or delivery to lockboxes and safeplaces.

Fortunately, a handful of UK-based multi-carrier shipping platforms is making life a bit easier. The idea is that you integrate once to a carrier-independent shipping platform, which can already talk to every carrier service you may need. This lets you adopt new carrier services at will, without the cost and delay of doing it yourself. Similar systems have been around in the States for years, but the UK market was slow to get going. Today, it seems to be flying, with several new entrants and most vendors reporting strong growth.

Functionality

The shipping platform can get involved in the order cycle from the product page onwards, suggesting different service levels & timescales. The consumer wants to know lead time and cost, but behind the scenes the shipping system is considering all possible carrier services against dimensions and weights of items, any hazardous materials, shipping address, and time of day versus carrier-collection cut-offs. If an organisation uses its own vehicles these can also be built into the rules.

The eCommerce platform remains responsible for the shopping cart process. The shipping API allows the website to ask “how can I ship these items to this address?” and receive a reply with the valid options. How the response is used depends on the eCommerce platform and the order flow. Some shipping vendors offer their own plug-ins for popular eCommerce platforms, but don’t expect these to handle every scenario you can think up in a more complicated basket.

Downstream, normally at packing, the system will definitively allocate the correct carrier service, produce labels and manifest the parcels onto the relevant carrier. It might generate branded emails to customers containing tracking links, or leave that to either eCommerce or order management. Shipping systems also handle tracking enquiries, providing a single interface point for any carrier service.

Most shipping platforms also offer a few wrap-around functions, for example reporting tools, carrier performance management, and returns. From the my-account pages of your eCommerce platform, consumers can seamlessly click through into a branded shipping-system page and generate returns labels, or even organise a pick up.

Shipping systems can be cloud based or on-premise. An implementation normally consists of hooking up your eCommerce and back-end systems, together with some training on how to set up your particular shipping rules. There’s often a standard route through the project for simple requirements, but if you’re more complex, expect to get your various vendors involved. Above all, be clear on how much help you will need from all parties before starting, as there can be nothing more open ended than integration work.

It’s interesting to note that a few order management vendors offer integrations with Metapack, the biggest of the available shipping solutions. But don’t let that drive a decision. Shipping platforms are in the business of integration, and it’s only a one-off exercise.

Vendor Landscape

Whilst there’s a fairly wide variety of vendors, the standard pricing model is a “cost per label” based on banded monthly subscriptions. Expect 10-12p per label as a starting point. There may be a fee per carrier and also a training/setup charge, although it should be minimal as these systems are all about integration. You might recover some cost through better carrier allocation, but more importantly you should be able to provide a better service to consumers.

Metapack is the largest and most established vendor. In fact they dwarf their competitors, employing over 300 people and handling 600 million parcels per year through 450 carriers integrations internationally. MD Patrick Wall says their international capabilities and investment in high-availability are key differentiators, with uptime approaching 99.999%. Processing speed and scalability are other key factors for larger users. Metapack’s solution manifests parcels and produces labels without needing an online response from carrier systems. That can make a big difference on packing station throughput, but it becomes essential in the most highly automated parcel despatch environments. They offer a rounded set of added-value products, including reporting & returns, plus a new solution being launched this year to help plan transport & shipping requirements on a macro scale.

All things considered, we see Metapack as the benchmark for this sector, but some several vendors are competing strongly, especially on cost, usability and rapid implementation. Metapack’s stated focus is organisations with 200 parcels per day and above.

Scurri is growing rapidly, with about 25 staff today. They have an entry level package of 3000 labels per month, priced at £375, with discounts for a year in advance. Like others, an average integration project is 6-8 weeks, but simplifying integration is top of their agenda – they want to get it down to 30 days. They support a wide range of vendors, but have more work to do on their returns portal, which is currently limited to UPS. Scurri customer, Active in Style, sell top-branded activewear for women. Co-founder Andrew Manteit chose Scurri because “it did all the simple things well and was better value than others we looked at”.

Intersoft is a mature Metapack challenger, recently acquired by Royal Mail. It’s a 50-person business, with ambitious plans to grow via the Royal Mail tie-up. They charge banded fees based on labels per month, but parcels sent via Royal Mail attract no Intersoft fees at all. That said, their base price is 15p per label, a touch higher than others. Nevertheless, it seems like a strong contender with 70 carrier integrations, a fully functional returns portal and reporting options all in the mix.

Temando is an Australian company with global ambitions. In Europe they have a strong tie up with French mailroom specialist Neopost, and are actively partnering with Magento. In Europe they have 100 customers of which 15 in the UK, and are geared up for more complex requirements and customised solutions – for example, at La Redoute, they integrate multiple warehouse locations and 25 different carriers. They say they are best suited to an organisation looking for a partnership, and are willing to co-invest in solutions for a long-term relationship.

Shipmate is a new British entrant, with contemporary cloud-based tech. They differentiate on price but are focusing on a high quality, personalised customer service. Their entry point is 50 parcels per day, although their largest customer processes 4,000. They offer a much shorter list of carriers than some others, but if you are operating in the UK primarily, it’s likely that there’s only 7 or 8 you’d even consider, and Shipmate has those covered.

Parcelhub are different to the other vendors. Instead of charging a fee per label, they are an intermediary between you and the carriers. They negotiate discount rates based on aggregate demand and pass savings on to customers. They say that 20% vs standard carrier rates is normal. Their sweet-spot customer has 200 parcels per day, with total volumes around 40,000 per day. This model is ideal for smaller merchants without the bargaining power to tackle the carriers directly.

In conclusion, this is an interesting market experiencing rapid change and new competition. Brexit will bring more challenges, especially if more customs procedures are required. A well resourced shipping platform might be good insurance. We’ll see what the future holds.

About the author:

Harry Manley worked in the software side of Direct Commerce for 20 years, first for Maginus then for Omnica.

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