The Demise of Home-Grown Parcel Shipping Technology

Historically, merchants decreased transportation costs and met customers’ order fulfillment expectations with a single exclusive carrier contract and just one API user interface.

Today, however, this is no longer the case. The explosive growth of e-commerce and rapidly changing consumer behavior have raised the bar dramatically for what it takes to profitably meet customers’ delivery expectations, and the associated complexity of parcel fulfillment technology has quickly made the home-grown variety an endangered breed for good reason.

Aside from just a few Amazon-sized behemoths, even the most accomplished e-commerce merchants choose the simplicity of outsourcing their multi-carrier shipping technology initiatives.

They acknowledge the complexity of such mission-critical tasks as streamlining carrier compliance, synthesizing data into cost-saving insights, and verifying addresses, all of which make building home-grown solutions impractical for most merchants.

Businesses’ current technology resources, available personnel, and scalability are just a few factors that have almost every merchant scrapping plans to build their own multi-carrier shipping technology, instead opting to shop for the right parcel management solution.

While the rapid ROI of Logistyx’s parcel shipping technology makes the decision an easy one for many, reflecting on how far parcel shipping has come in recent years can convince even the most ambitious advocate of home-grown technology that it’s time to call off ground-up development and focus instead on a profitable, short-term implementation.

In this series of posts, Why Buy? The Demise of Home-Grown Parcel Shipping Technology, we’ll examine some of the complexities of today’s parcel shipping initiatives, the intricate technologies enabling them, and the competitive advantage many of today’s top merchants realize once they decide not to build their own.

For this inaugural post, consider just two requirements of modern parcel shipping technology:

• Multi-carrier functionality
• Infrastructure support

Multi-carrier functionality is critical for almost every merchant in this e-commerce era. To ensure parcels reach customers in a timely and profitable manner, fulfillment must include the ability to rate shop a variety of carrier services and select the best service for each delivery.

For some global merchants, this requires tens or even hundreds of carrier-API connections, but even for those that only contract with the biggest carriers, building and maintaining a system that offers rate shopping and ensures carrier compliance typically requires more resources than what they have at their disposal.

These automated carrier connections enable merchants to navigate shipping delays, outages, and other hurdles, and the technologies that support them require ongoing monitoring, modifications, and enhancements.

Considering the infrastructure required to support an initiative like this can produce cold sweats in a hurry. Organizations that build their own parcel shipping technology must account for hosting, security service-level agreements, load balancing, and scalability, but many fail to see past this tip of the iceberg.

Carrier integrations alone can quickly overwhelm developers, and the scope of these integrations ties directly to the advanced features merchants increasingly seek to offer customers. One seller of health and wellness products, for example, required nearly 50 carrier integrations and opted to instantly integrate by licensing Logistyx’s TMS for parcel.

Despite the obvious challenges presented by these carrier integrations, they still represent just a fraction of the necessary infrastructure, because parcel shipping technology needs to work with more than just carrier technologies.

Integrations also have to be built and maintained to ensure cooperation with order management, ERP, warehouse management, and transportation management systems, as well as hundreds of other third-party software applications.

Organizations must also consider the time and people they’d need for a truly effective home-grown solution. Business analysts, project leaders, implementation engineers, testers, trainers, and support personnel all must work together over time to build something of this magnitude.

No wonder so many organizations opt to outsource this function and rely on Logistyx’s TMS for parcel, the first single engine designed for global parcel shipping.

Related: Implementing a TMS for Parcel Shipping Can Save Even More than You Think

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