Your business relies on receiving and shipping goods, and when delays arise, it can lead to severe issues. Luckily, there are providers who offer shipping management solution. Because they specialize in shipping management, they have the skills and tools needed to keep you on schedule. If you would like to know more about the consequences of shipping delays, keep reading.
1. Reduce Customer Retention Rate
Customer retention determines the number of customers you can keep during a given period. The average customer retention rate is around 80 percent for most industries, which is lower than it could be. However, your retention rate can drop even lower if you have shipping delays.
If you’re an online retailer, customers may stop coming to you because their items are constantly delivered late. In fact, according to one survey, 17 percent of customers will stop shopping with a retailer after one late delivery. The number jumps to 55 percent after two or three late deliveries in a row.
Online and in-store retail companies may also lose customers because they simply don’t have the items, equipment, or materials needed. Even loyal customers may turn to your competitors if you continually don’t have what they need in stock.
2. Inadequate Products for Manufacturing
If you manufacture products and items for other manufacturing companies or retailers, you rely on constant shipping delivers to bring in the materials you need. For this reason, shipping delays can drastically impact your bottom line.
Just like customers will find new retailers with the items they need, retailers will find new manufacturer that has what they need. In just a short amount of time, you can lose products, money, and customers. Even once you receive the materials you need, you’ll still be behind schedule. Not only does this impact your bottom line, but it can impact everyone else down the retail chain until it reaches unhappy customers.
3. Increased Overhead Costs
Shipping delays can also increase your overhead costs. One reason is because a lot of your money is tied up in inventory. However, since the inventory isn’t in your possession, you can’t even sell it to recoup some money. Depending on the situation, you may also not be able to cancel the order for a refund.
You may have to pay extra fees, or you may lose/break contracts with vendors and customers. Meanwhile, however, even if you have no goods to sell, you still must pay for regular overhead costs, such as:
- Equipment rental/maintenance
- Office supplies
This drastically drains your resources as you are spending money without making any or much in return.
4. Increased Risk of Lost or Stolen Goods
There are many reasons for shipping delays, but some are more problematic than others because they allow your goods to sit on the truck for long periods of time. For example, if there are supply chain issues, even if it takes a long time for the product to reach you, the items aren’t sitting on a stationary boat or truck for long periods of time.
However, extreme weather, labor shortages, and other factors may increase the length of time your products are sitting on the transport truck or boat. This increases the risk of theft or vandalism to the products. You may be able to be reimbursed if you have insurance, but you’ll still be out of product and out of money for a time, which could drastically impact your business.
Shipping delays are common, but they don’t have to be. You can maximize shipping with great management solutions. This will help keep you stocked, ensure your customers get their order on time, and it can prevent loss. If you would like to know more, contact us at JB Shipments today.