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Declining e-commerce volume triggering layoffs - ShipRx
Blog / Declining e-commerce volume triggers distribution layoffs
2 minutes read

Inflation and e-commerce: what to do when shipping volumes change

In November 2020, The New York Times published an article with a headline that read: “Pushed by Pandemic, Amazon Goes on a Hiring Spree Without Equal: The company has added 427,300 employees in 10 months, bringing its global work force to more than 1.2 million.” This week, the Associated Press reported that Amazon plans to lay off more than 9,000 employees in the coming weeks, bringing this year’s layoff total to 27,000— and it’s only March.

Amazon isn’t alone. Other big e-commerce brands like Walmart, Wayfair, and eBay are cutting operating costs and personnel expenses with layoffs, too. As inflation rates rise, retailers must increase costs. At the same time, customers are becoming more mindful of their spending, prioritizing essentials like food over luxury items and even general merchandise. With financial uncertainty comes a change in spending.

This change in habits is guaranteed to show, not only in sales figures but in shipments, too. When your shipping contract is predicated on minimum volumes, how can you succeed— even when business is lower than expected?

Is e-commerce really on a decline?

All signs point to yes.

FedEx (Express and Ground services) and UPS all experienced a decline in average daily package volume in the last quarter, despite an increase in revenue for both. As inflation drives up the prices, e-commerce trends may rise by dollar amount, despite the declining volume.

The experts are paying close attention to this trend. Wells Fargo analyst Allison Poliniak-Cusic told Reuters, “Although (freight) customers still say they expect a 2H (second half) pick-up, they are not reaching out to schedule additional capacity… An acceleration may still occur, (but) we expect confidence to weaken as the timelines get extended.”

Is your business affected by a lower volume of sales?

As costs rise and sales drop, you’re likely strategizing about different ways to increase your revenue. Options like buy now/pay later can boost sales through payment plans. And discounts make your brand stand out among competitors who are raising rates.

Of course, you could take a page from the major tech firms and announce layoffs. But we’d like to suggest a far less drastic cost-saving measure. No matter your current shipping volume, ShipRx can help you save money on your UPS or FedEx bill.

How should you proceed with your shipping carrier when you don’t fulfill your minimum volume commitment contract?

When circumstances change, change the terms. You can renegotiate your UPS and FedEx contracts at any time, and rising costs and dropping volumes are great catalysts for change.

Our team of shipping experts can often lower our customers’ shipping costs by 20%-30% or more, so you’ve got nothing to lose by starting the process. We’ll evaluate your current contract for free, tell you honestly whether you’re paying too much for your current shipping services, and help you secure the lowest possible rates for your new shipping volumes.

Before joining Amazon in its latest round of layoffs, offload extra costs with ShipRx parcel rate negotiation.

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