Major Retailers Reduce Delivery Costs Through Carrier Diversification

A headline in Supply Chain Drive last May announced, “Shipping carrier diversification benefits Lulu’s in Q1”. “Lulu’s Fashion Lounge Holdings saw savings in Q1 ‘24 by diversifying its base of shipping carriers, CFO Tiffany Smith said on an earnings call” in May 2024. In a previous earnings call, CEO Tiffany Landsem said, “By partnering with multiple carriers, we’ve been able to leverage a broader range of shipping options, rates, and delivery times, further optimizing our costs and continuously seeking ways to improve the customer experience.”

Lulus is not alone. Another recent Supply Chain Drive headline reads, “Stitch Fix among the rush of retailers adding delivery providers.” According to CFO, Stitch Fix “has worked to reduce shipping costs and boost its bottom line by diversifying its carrier base”. The article notes that Duluth Trading Co. has also added new carriers to its transportation mix, reducing its outbound shipping costs, as reported in its May earnings call.

One visible online brand diversifying its carrier base might be an exception, two might be a coincidence, but three is an accelerating trend.

According to the Pitney Bowes 2023 Shipping Index, while shippers like UPS and FedEx saw a decline in parcel volumes and revenues in 2023, smaller last mile delivery providers like Jitsu saw a 28.5% increase in volume and an over 30% increase in revenues; making them the fastest growing segment in last-mile delivery. That’s not a one-off, but a continuation of a trend that was also clearly visible in the previous year’s Shipping Index. Our own experience, and the evidence we see in the press, indicates that this trend is not only continuing but accelerating in 2024.

This carrier diversification thing may be catching on. We think that’s great for online sellers, providing opportunities to reduce costs while enhancing service levels. Deloitte says, “Emerging models like independent couriers, crowd-shipping services, and autonomous delivery can be layered into traditional methods to support growth and service performance.” Working with multiple carriers is ‘the new normal’ for many retailers. Now might be a good time to connect with one of our logistics professionals to see how your brand might benefit from a more diversified carrier mix.