E-commerce ease, delivered

View This Article in BOSS Magazine

101 years. Two pandemics. For Pitney Bowes, that’s business as usual.

Pitney Bowes has been powering the flow of commerce across borders, brands, and barriers for over a century. Their path of invention and visionary steps have garnered the Stamford, Conn., company a unique place in American history and in the annals of global commerce.

In 1920, on the heels of the Spanish Flu pandemic, Arthur Pitney and Walter Bowes combined invention and entrepreneurial savvy to make the Model M postage meter a fixture in businesses around the country, making it faster and easier to process mail, that era’s backbone of commerce. In those days, stamps were affixed by licking the glue on their backs, and postage meters helped to ease the fears of public health officials and consumers desperate to keep the virus in check.

Here we are again. This time, Pitney Bowes is on the cutting edge of transformation as the COVID-19 pandemic reshapes the way consumers purchase goods and delivery companies grapple with unprecedented demand for e-commerce shipping. With 750,000 global clients, including 90% of Fortune 500 companies, they are once again in the right place at the right time, offering services in e-commerce delivery, returns, fulfillment, and cross-border shipping

A fierce competitor in a field dominated by a handful of players, their data-driven, consultative client support model and a cultural focus on transparency and operational flexibility for clients are among the many strengths that set them apart from that competitive pack, offering timely support for e-commerce companies as they face the fastest increase ever in adoption of online shopping. E-commerce logistics now represents more than 50% of Pitney Bowes’ business. The balance is composed of mailing equipment and software, office shipping and mailing services, and financial services.

As economies recover and restrictions on personal interactions and travel decrease, one lesson learned from 2020 is that the future is bearing down on retail brands and it’s going to take some serious work to meet its challenges. We recently spoke with Vijay Ramachandran, Pitney Bowes VP of Market Insights and Strategy, to get a deeper look at the balance of consumer expectations and retail realities, and how they are driving rapid change.

“The pandemic is proving to be more than a shared trauma; it is fundamentally rewiring what consumers expect from their communities, employers, personal relationships, and—most measurably—commerce,” Ramachandran said. “The e-commerce logistics industry now sits at the intersection of opportunity and tumult, but our company has been in this situation before with solutions incredibly well-timed for the needs of the market. Digital brands today are looking for help to navigate the post-pandemic landscape, and our consultative insights and logistics services are well positioned to support them.”

Pursuing the traveling population

In 2021, people are on the move, or about to be, abandoning densely populated cities for roomier and cheaper places to call home in the suburbs, exurbs, or rural areas. That yearning for space has been a meandering trend for quite a while, but the combination of corporations’ acceptance of remote work, the cost of maintaining big city office space, and the desire for more breathing room after over a year of lockdowns has sped up the pace of urban flight by about five years.

Relocation is now a real possibility for one in three Americans, according to a recent Pitney Bowes BOXpoll.  The urge for going reaches across generations, from 20% of boomers eyeing new horizons as they age into retirement, to a whopping 54% of GenZers ready to roam in the next 12 to 18 months.

“As consumers move out of urban areas that’s going to affect culture, politics, and the economics of e-commerce logistics,” Ramachandran said.

Delivering packages to urban addresses and their alternatives also brings a tangle of issues for consumers and carriers. Consumers may live in settings where there are few good or safe options for doorstep drop offs and pickups. Shuttling hundreds of packages to a city apartment building often means carriers can make a one-and-done stop at a doorway or freight dock; delivering the same number of parcels in suburbia means a stop at every door, and rural deliveries take longer transit times.

“Urban dwellers have unconsciously struck a bargain with e-commerce: fast shipping and broad inventory availability, at the price of friction such as limited delivery to your doorstep or no home pickup of returns. As many of these consumers relocate elsewhere — driven by the promise of remote work policies — they will be making tradeoffs in shipping speed for the convenience of residential delivery and returns services. It’s going to upend the unit economics for every logistics provider and shipper in America.”

Added pressure comes from buyers’ expectations of free shipping. Pitney Bowes discovered that more than 85% of e-commerce customers expect it and will abandon online sellers that don’t offer it.

The cost of residential delivery, as with everything the pandemic has touched, will now be accelerated by the “dispersion” of consumers out of urban areas. It will become even more expensive for online brands to deliver to consumers while also footing the cost of “free” shipping. Something has to give, and it may well be our ‘need for speed’ in terms of shipping. In fact, Pitney Bowes research has found that consumers’ expectations of what constitutes “fast” shipping has actually become slower during the pandemic, now more than two days (while in 2019 it was less than 2 days). “Acceptable” shipping is now at an average of almost four days for delivery.

While expectations are prone to go back up after the pandemic, it has opened a question in consumers’ minds as to whether fast delivery is the same as convenient delivery. As curbside pickup has become integral to our shopping experiences, consumers — especially those moving out of dense urban areas — look to chain stores to scratch the “immediacy” itch. This, says Ramachandran, allows online retailers to establish new norms.

“Curbside pickup is an inherent differentiator for store-based retail chains. But the tradeoff here is that stores have more limited product selection than retailers’ websites,” he said. “So, consumers looking for speed will more often sacrifice finding the ‘best’ product for their needs. But consumers looking for the ‘best’ product now are willing to sacrifice immediacy.”

The returns conundrum

Walter Bowes

Arthur Pitney

Vijay Ramachandran

With more new e-commerce customers emerging in the last 12 months than ever before, more packages will be heading back for refunds.

“In our research, consumers said that returns were the most important aspect of the e-commerce online ordering experience, tied with the experience of opening the box,” Ramachandran said.

One in three shoppers told Pitney Bowes they were holding back on buying something because they were worried that returns were going to be a hassle, and 78% said their most recent online returns experiences were inconvenient.

But returns cost sellers dearly.

“The friction, in many cases, is a feature and not a bug. Retailers would rather not pay for returns shipping, processing, and — if the product can’t be resold — liquidation or write-offs,” Ramachandran explained.  “That’s why returns processes aren’t shining examples of convenience —the friction is a tourniquet to stop bleeding margin.”

But, Ramachandran explains, there are unintended consequences of “intentional inconvenience.” If consumers are faced with friction in the returns process, they tend to hold on to returns for longer than a few days, a phenomenon Pitney Bowes measures as “trunk time,” or the length of time a return sits in your car trunk (or in your house) before you drop it off.

For fashion and other seasonal retailers, trunk time may cause them to miss the chance to resell those goods during critical selling seasons, resulting in steep and costly markdowns.  And, for retailers who de-prioritize processing their returns, expect a cavalcade of calls into your customer care team.

Shoppers tell Pitney Bowes they will contact customer service if they haven’t received a refund within an average of nine days. For retailers, says Ramachandran, these inbound calls unnecessarily add to the costs of returns.

Home pickup of return packages is the preferred method for 41% of consumers surveyed by Pitney Bowes, with every other option rated as less convenient. However, roughly one-third of online shoppers don’t have the option of leaving an unattended package out for pickup (largely apartment dwellers), and 30-plus percent don’t have a way to print return labels at home or find it too difficult to do. This creates the need to support a drop off option that is most convenient — i.e., locations close to consumers’ homes and offers the option to print the label for you.

So, what’s the No. 1 place consumers prefer to drop off an online return?

The United States Post Office, who Pitney Bowes has partnered with to offer an easy “printerless” solution for consumers who can’t (or won’t) print returns shipping labels at home.

Across a century bookended by pandemics, Pitney Bowes has been positioned with timely and innovative services that have helped propel the movement of global commerce.  Coming out of the latest pandemic, they have emerged as one of the most unique e-commerce logistics innovators in the industry, supporting business with leading edge technology, deep expertise, and a trove of market intelligence that helps build stronger businesses and keeps commerce moving at the pace of change.