The apparel industry, characterized by fast-moving trends and high customer expectations, relies heavily on efficient logistics and cost management. As ecommerce becomes increasingly dominant, apparel brands face mounting pressure to offer fast, affordable shipping while managing fluctuating parcel spend.
This means that the apparel industry faces a very unique set of challenges when it comes to shipping. With the eCommerce boom, fast fashion, and consumer demand for quick deliveries, apparel companies must balance speed with cost-effectiveness.
This balance often becomes difficult to manage as shipping costs can spiral out of control. Then, when you factor in dealing with returns, international shipping, and complex carrier agreements, parcel management can seem impossible. And with traditional parcel spend management technology, it may be, but there’s a new advancement in the world of logistics and parcel delivery for apparel companies.
Enter Parcel Spend Management (PSM) 2.0, an advanced solution designed to help apparel companies regain control over their shipping costs while maintaining operational efficiency.
This blog will explore the industry landscape, the challenges apparel companies encounter with parcel spend management, and how advanced PSM 2.0 technology can help optimize shipping costs and improve profitability.
Industry Landscape: Ecommerce Drives Shipping Demands for Apparel Companies
The apparel industry has seen a rapid shift toward ecommerce, with online shopping now a primary channel for consumers. In 2023, the fashion industry was valued at $820 billion, and with a predicted rise of more than $1.2 trillion by 2027, it’s the world’s top eCommerce industry.
Being number one in ecommerce comes with many advantages, but there are also numerous challenges that apparel companies have to overcome to increase their revenue and scalability. Fashion retailers must meet customer demands for fast shipping, easy returns, and seamless delivery experiences. As a result, parcel shipping has become one of the most significant expenses for apparel companies.
In addition to domestic shipping, apparel brands often operate on a global scale, adding to the complexity of managing international shipments, customs fees, and variable shipping costs across different regions. Whether fulfilling direct-to-consumer (DTC) orders or replenishing stock at retail locations, managing shipping logistics effectively is critical to maintaining a competitive edge.
Why Apparel Companies Need Parcel Spend Management 2.0: 6 Shipping Challenges In Fashion
Apparel companies, particularly those in eCommerce, ship large volumes of parcels on a daily basis. As a result, shipping expenses are one of the biggest operational costs they face. To compete with fast fashion brands and large online retailers, apparel companies need to offer flexible shipping options, fast delivery times, and affordable (or even free) shipping to attract and retain customers. However, offering these services can cut deeply into profit margins, especially if shipping costs aren’t properly managed.
Here are the top 5 challenges apparel companies face with shipping and logistics.
1. High Volume, Low Margin Shipments
Apparel companies often deal with high volumes of low-margin shipments, particularly in the fast-fashion sector. The cost of shipping can quickly erode profitability, especially when offering free or discounted shipping to attract customers. Brands need to balance the need for affordable shipping options with maintaining profit margins, making efficient parcel spend management essential.
2. Seasonal Demand Fluctuations
The apparel industry is highly seasonal, with peak shopping periods around holidays, back-to-school, and major sales events like Black Friday and Cyber Monday. According to The ProShip Report 2024, 22% of retail companies say that effectively managing increased order processing is their top challenge during peak seasons, but optimizing shipping costs is a close second at 21%.
Fluctuations in demand can lead to increased shipping costs during peak periods due to surcharges, capacity constraints, and the need for expedited shipping. Managing parcel spend effectively during these high-demand periods is crucial to ensuring profitability without compromising delivery speed.
3. Managing Returns and Reverse Logistics
Returns are a significant challenge in the apparel industry, with customers often ordering multiple sizes or styles and returning items that don’t fit. The cost of processing returns, also known as reverse logistics, can add substantial strain to an apparel company’s parcel spend. Managing the cost of returns, including shipping fees and restocking expenses, is essential for maintaining profitability while offering a customer-friendly return policy.Along with managing costs and shipping fees, apparel companies need to focus not just on what makes sense for their bottom line, but what is most convenient for their customers. Customer satisfaction is the #1 concern among retail companies when it comes to managing high-volume returns.
4. International Shipping Complexities
Many apparel brands ship products globally, facing challenges such as navigating different customs regulations, managing duties and taxes, and dealing with longer shipping times. International shipments can also be subject to higher shipping fees and fuel surcharges, making it difficult to manage parcel spend across multiple regions. Apparel companies must account for these complexities while ensuring timely and cost-effective delivery.
5. Carrier Contract Negotiation and Rate Fluctuations
Apparel companies often rely on multiple carriers for domestic and international shipments, each with its own pricing structures, surcharges, fees, and service levels. Negotiating favorable carrier contracts is essential to minimizing parcel spend, but rate fluctuations and added fees can make it difficult to predict costs accurately. Apparel brands must navigate complex carrier agreements to secure the best possible rates while maintaining flexibility for seasonal or high-volume shipping periods.
6. Managing Customer Expectations
The apparel industry is plagued by the “Amazon Prime effect,” where customers demand ultra-fast shipping for their packages. The data doesn’t lie. 90% of consumers expect 2- to 3-day delivery to be standard, while 30% expect same-day delivery. Apparel companies don’t have the luxury of a 5-7 business day shipping window anymore.
Parcel Spend Management 2.0 offers a comprehensive, data-driven solution that helps apparel companies optimize their shipping spend, streamline carrier management, and identify cost-saving opportunities—without adding complexity or budget strain.
The 5 Benefits Parcel Spend Management 2.0 for Apparel Companies
To address these challenges, apparel companies can leverage advanced parcel spend management technology, which offers real-time insights and optimization tools designed to reduce shipping costs and improve efficiency. By implementing PSM 2.0, apparel companies can immediately see 5 key benefits.
1. Real-Time Visibility and Control Over Shipping Costs
One of the biggest challenges for apparel companies is managing shipping costs in real-time. Many rely on outdated systems or manual processes that make it difficult to track shipping expenses, monitor carrier performance, or identify inefficiencies.
PSM 2.0 provides real-time visibility into shipping spend, giving apparel companies full control over their shipping operations. With access to real-time data, logistics managers can track shipping costs, compare carrier performance, and quickly adjust strategies to mitigate unexpected fees or delays. This allows companies to make informed, data-driven decisions that align with their business goals and maintain competitive shipping options for customers, without sacrificing profitability.
2. Seamless Returns Management
The apparel industry is notorious for high return rates, with customers often buying multiple sizes or styles and returning what doesn’t fit or suit them. Managing returns efficiently while keeping shipping costs in check is essential.
PSM 2.0 helps apparel companies streamline returns management by optimizing shipping costs related to reverse logistics. The platform identifies cost-saving opportunities, such as consolidating return shipments or negotiating better rates with carriers specifically for return orders. By analyzing return patterns and shipping costs, companies can identify ways to optimize return shipping methods, improve packaging efficiency, and streamline the overall return process. This allows companies to offer hassle-free returns to customers without breaking the bank.
3. Cost Optimization Without Financial Risk
PSM 2.0 operates on a performance-based model, meaning that apparel companies don’t need to allocate additional budget upfront. Instead, the platform generates savings by analyzing shipping data, identifying inefficiencies, and recommending cost-saving measures. Companies only pay based on the savings achieved, ensuring that there is no cash flow impact and no financial risk.
For apparel companies dealing with high-volume shipping, this risk-free model provides immediate relief by optimizing shipping routes, consolidating orders, and negotiating better rates with carriers, leading to significant savings without any financial burden.
4. Simplified Carrier Contract Negotiation
Managing multiple carriers can be a complex and time-consuming process, especially when dealing with fluctuating rates, service inconsistencies, and hidden fees. Apparel companies often find it difficult to negotiate the best rates or identify the most reliable carriers.
With PSM 2.0, apparel companies can streamline carrier management by using data-driven insights to negotiate better contracts. The platform analyzes carrier performance, benchmarks industry standards, and identifies areas for improvement, empowering companies to negotiate better terms and avoid unnecessary costs.
5. Scalability for Growing Operations
As apparel companies grow and expand into new markets, their shipping needs become increasingly more complex. PSM 2.0 is designed to scale with the business, adapting to increased shipping volumes, new distribution channels, and additional carrier partners. This flexibility makes it an ideal solution for apparel companies looking to expand their operations without sacrificing control over shipping expenses.
Stop Wasting Time (And Money!) With Traditional PSM Technologies
In an industry where fast and affordable shipping is a key differentiator, managing parcel spend effectively is crucial to profitability. Parcel Spend Management 2.0 offers apparel companies a powerful solution to optimize shipping costs, streamline returns, and improve carrier management—all without upfront costs or financial risk. With real-time visibility, AI-driven insights, and data-backed contract management, PSM 2.0 empowers apparel companies to stay competitive, keep customers happy, and protect their bottom line. Get started today! Request a demo with our team to learn about how Reveel’s Parcel Spend Management 2.0 technology can enhance your parcel spend management strategy.