Q: What are the trends that you are seeing in retail with high-value goods shipping?
A: We are seeing more and more goods sold online. Luxury e-commerce is exploding. According to Technavio’s Global Luxury E-tailing Market Report 2015-2019, global sales in the luxury e-commerce market are expected to reach $42 billion in just the next three years, a 100 percent increase over the $21 billion high of 2014. It’s a market opportunity that can’t – and shouldn’t – be ignored.
Q: What are the things that keep executives up at night when thinking about their supply chains and shipping high-value goods?
A: Regardless of the goods being shipped, theft, fraud and loss are always top concerns. However, when you’re shipping high-value items such as jewelry or watches, those concerns can really interrupt executives’ sleep patterns. To that end, it is vital that executives educate themselves on how damaging a loss can be to their companies and how having a layered approach – multiple levels of security – to risk mitigation can protect your product, your reputation and, ultimately, your company.
Q: How can retailers mitigate shipping and supply-chain risk?
A: Planning is the single best tool that you can use to mitigate the risks associated with selling online, and all it takes is a simple, three-step process:
• Step One: Identify Risks – Since you can’t mitigate what you don’t know, your company’s first priority should be to identify the risks facing your supply chain. This should be done initially and then regularly by a team of stakeholders who recognize the risks facing your company’s global supply chain.
Some areas for the team to explore include:
- routine supply chain risks – transit delays, changes in customer orders, supplier problems, theft, warehouse or production malfunctions
- laws and regulations
- customs and compliance
- natural disasters
- price or currency change
- quality issues
• Step Two: Prioritize Risks – Once your team has identified all of the risks facing your company’s supply chain, the next step is to prioritize those risks.
There are several documented methodologies and tools that can be utilized to tackle this process. Regardless, companies should consider the potential frequency and the severity of occurrence. It’s important to remember throughout this step that most companies only have the capacity to deal with a few high-priority risks at any given time, so your company shouldn’t overwhelm itself by trying to tackle every issue at once.
• Step Three: Mitigate Risks – The final step is developing a plan to address the highest priority risks facing your company. Your risk-mitigation plan should include the top 3-5 risks as well as the methods that can reduce the probability of occurrence and/or degree of impact.
Also consider relying on your outside experts – including insurance companies, academics, logistics providers, and vendors – to both assess risk and help with risk-mitigation solutions.
Some risk mitigation solutions that companies routinely use are:
- Supply Chain Event Management – These systems put in place criteria that trigger alerts in time for problems to be identified and addressed early in a supply chain, e.g. if a shipment faces a delay at a port.
- Contingency Planning – This details a course of action if your company were to lose a major supplier, factory, distribution center, etc.
- Cargo Insurance – Carrier liability is not cargo insurance, but many supply chain professionals mistakenly think that it is and that it covers the full value of lost or damaged items. Cargo insurance covers mail, parcels and containers; is mode- and carrier-agnostic; and goes beyond standard carrier liability limits.
Q: How can retailers protect themselves from loss in shipping?
A: Because fraud, theft and loss can occur at any time during the sales and shipping process, it’s important for retailers to use a layered approached when formulating a risk-mitigation plan for high-value goods. This type of strategy can include such techniques as having a written security plan and employee training; securing appropriate insurance; hiring specialty service providers; using proper labeling and packaging, including deletion of identifying words; double-boxing shipments; proactive monitoring of in-transit goods; and coordinating deliveries of goods.
Q: With the holiday season fast-approaching, what should retailers be thinking about in terms of shipping with their high-value goods this season?
A: Holiday shipping can be joyful for retailers if they follow a few quick tips that will help them minimize risks while maximizing sales:
- Validate customer and customer address
- Validate customer payment method and payment information
- Synchronize delivery date with recipient
Shipment Prep & Shipment
- Prepare shipments under a camera and ensure tracking number is captured
- Use fiber tape to seal shipments
- Minimize handoffs and require documentation/signatures whenever they occur.
- Confirm the package was delivered and a signature obtained
- Film the opening of the high-value packages/returns
- Always keep packaging if a loss does occur
Dave Zamsky is the Vice President, Marketing, UPS Capital/Parcel Pro.