15 min read

Radial’s Laura Ritchey On How To Reduce Ecommerce Logistics Costs

QUICK SUMMARY

Laura Ritchey is EVP and COO of Radial. In this interview, she explains how ecommerce managers can reduce logistics costs.

In this interview series, we are talking to ecommerce managers, supply chain professionals, logistics experts, and anyone with hands-on experience in ecommerce logistics. As a part of this series, I had the pleasure of interviewing Laura Ritchey.

Laura Ritchey

Laura Ritchey is EVP and COO of Radial, where she brings decades of experience, having held leadership positions at L Brands, Victoria’s Secret, and Fullbeauty Brands. At Radial, she works with over 170 clients delivering fulfillment, transportation, and customer care services to meet their ecommerce needs. She leverages automation and technology to enhance service delivery while maintaining high-touch client engagement and identifying industry and vertical trends most relevant to her customers. Laura also holds a BA, JD, and MBA from Ohio State University.

Can you tell us about your backstory and how you grew up?

I attended kindergarten through high school in five different cities in Ohio. My father was a police officer, and my mother was a nurse, so we would all move when he was promoted and transferred.

I really believe that shaped me into the person and leader that I am today. I learned to adapt to new environments, meet new people and establish my network and stay focused on my grades and activities so college scholarships were possible.

One particular challenge was moving between my junior and senior years of high school. At the time, I was devastated, but in retrospect, I saw it was another challenge, and I was able to make it successful.

What led you to this specific career path?

I started my career assuming I would be an attorney after graduating from law school. Instead, I found myself on an amazing journey with experiences working and leading in treasury, business strategy and transformation, sourcing and logistics, and retail inventory planning.

As Chief Operating Officer and Executive Vice President at Radial, I am able to leverage my career experience to collaborate with our clients across various industries. I am lucky to always continue learning as our business evolves.

Can you share the most exciting story that has happened to you since you began at your company?

My most exciting story is that we did a team-building event with former Duke basketball players and Coach K’s daughter Debbie Savarino in 2021, the year before Coach K (the former head coach since 1980) retired in 2022.

For those that follow college basketball, Duke’s program has always been one of the top, so it was an honor to meet them. Not only that, but the leadership program used the game of basketball to teach us how to improve in business. Someone passes, and someone catches. Communication on the court is the way to win, and everyone can take and make the shot. What a great way to be reminded of important lessons, and I will forever keep my official Duke jersey.

What are some of the most interesting or exciting projects you are working on now? How do you think that might help people?

My most exciting projects now are focused on the blending of technology with our associates to provide better work experience as well as improve our performance.

I was recently on the floor of one of our fulfillment centers and was pleased to hear an associate tell me how proud she is to share with her son that she works with robots each day. He thinks she is really cool!

What has been important about that experience is making sure that we communicate to our team how technology will enhance what they do each day and not replace it. Many of our brands and clients have a spike in sales during certain sale times, and we need our people and our technology to be able to support our efforts.

What are three traits about yourself that you feel helped fuel your success?

I like to think of myself as a dynamic team builder who can work both as a player and a coach for the team, elevating my colleagues' strengths and motivating the group to achieve our goals.

I am also an analytical thinker, always pushing for strategic growth and implementing innovative technology to enhance our clients’ results.

I aspire to lead with empathy and believe in every challenge. There is always a solution if we think creatively.

What was the original vision for your ecommerce business? What pain point(s) were you trying to solve for your customers?

For ecommerce retailers and brands, right now, customer convenience is paramount. It’s not just about how quickly you can get your products to your customer but also providing various online and in-store options to meet customers' needs across all channels.

When it comes to increasing delivery speed and operations, where your fulfillment center is located has a huge impact. We are beginning to see ecommerce retailers pivot their fulfillment strategies and expand their fulfillment center locations, but we’re also seeing shipping costs skyrocket. Optimizing your supply chain will help get your products to your customers faster and can also help alleviate overall logistics costs.

Another pain point for ecommerce retailers and brands is returns, and the solutions to provide both ease of the physical return as well as crediting the customer while avoiding fraud continue to develop. This is made even more challenging when retailers and brands enable returns to stores in addition to shipping the package back to the fulfillment center. With peak season on the horizon, it’s vital for ecommerce retailers and brands to stay ahead of their customers’ expectations), because trying to play catch-up can come at the cost of customer loyalty.

What are some of the biggest challenges you currently face regarding ecommerce logistics costs?

Many ecommerce brands and retailers find it challenging to work with legacy systems that lack automation to scale fulfillment and provide real-time data throughout the entire supply chain operation.

The last thing a retailer or brand wants is to successfully get customers all the way to the checkout page and then have them leave due to a surcharge tacked on to their shopping cart total.

Unfortunately, this is common. In fact, Baymard Institute found that 49% of customers abandon their shopping carts because the shipping cost is too high. This leads to revenue loss and customers who may never return due to a poor experience with a brand.

Passing the increasing cost of logistics and shipping onto customers may seem like a smart financial decision. However, adding even a few extra dollars to your customers’ orders likely comes with a higher ultimate cost.

Fortunately, by partnering with a third-party logistics provider (3PL), ecommerce brands and retailers can effectively pinpoint cost-effective shipping prices and help mitigate rising logistics costs while still meeting the rising customer demand.

Additionally, having a trusted omnichannel order fulfillment partner can also help shift the burden of complex fulfillment, freeing up time for the employees to focus on providing an exceptional customer experience.

What role do technology and automation play in reducing ecommerce logistics costs, and what specific tools or solutions have you found most effective in achieving this?

Customer experience is always the top priority for ecommerce brands and retailers. Meeting customers where they are and ensuring they have an optimal customer experience, whether online or in-store.

Ecommerce retailers must streamline their omnichannel operations and make sure they have the latest view of their available inventory to avoid lost sales. They must also know when the shipment is expected to arrive so that their product quantity and details are accurate for the customers long before they click the “buy now” button.

The return on investment of fulfillment center automation makes sense mitigating higher labor costs and labor availability, so many are deploying robotics. Companies are leveraging this technology to fill the gap and lessen the workload for the staff that they do have while improving overall operations.

How do you ensure that your logistics providers deliver the highest quality of service at the lowest possible cost, and what metrics do you use to measure their performance?

Customer demand and rising expectations have put a heavy burden on ecommerce retailers and brands.

As ecommerce shopping increases, brands struggle to upgrade their operational processes and increase efficiency enough to meet the growing demand without it taking more away from their revenue and profit.

The benefit of outsourcing your supply chain management to a third-party logistics provider (3PL) is leveraging their expertise and infrastructure. Doing so will lessen the burden on the business resources while the 3PL can focus on scaling fulfillment operations, streamlining operations to increase efficiency, and locking in lower shipping rates.

Every year, Radial conducts a consumer survey to help brands navigate customer behaviors and expectations ahead of the holiday peak season. Last year’s survey results revealed that shoppers expect delivery times to be accurate and worth the cost.

In 2020, only 14% of surveyed shoppers expected holiday ecommerce orders to reach them in two days. By 2022, that number nearly doubled, jumping to 33% of shoppers expecting delivery within two days.

Brands, in turn, must prioritize streamlining their order fulfillment and shipping operations to meet order demand and customer expectations and ultimately provide a customer experience that will keep shoppers returning for future purchases.

What are some of the key factors that influence your decisions when selecting logistics providers, and what advice would you give to other ecommerce professionals looking to make similar choices?

Customer behavior reveals that ecommerce shopping is not slowing down, despite uncertain economic factors and inflation costs.

This means that ecommerce retailers and brands must scale their operations to meet the growing demand. Buying or building new fulfillment centers is costly and time-consuming, leaving many retailers feeling like their business is bursting at the seams. It may initially be a tough decision for ecommerce retailers and brands to make, but outsourcing supply chain management to a 3PL will shift that burden off of retailers and improve overall operations.

A 3PL can negotiate lower shipping rates that can be “locked in” and decrease the chances of fluctuation from a customer’s perspective. 3PLs can also streamline the fulfillment process, including every step, from getting customer orders to the carrier trucks faster and providing real-time updates on what’s stocked in inventory to having the infrastructure and relationships needed to grow and expand with the brand.

Additionally, 3PLs can help ecommerce retailers and brands integrate the latest innovative automated technologies throughout their supply chain operations, which will help reduce order errors, increase efficiency and speed, and help ease challenges of labor availability.

Can you please share five innovative or unconventional strategies you’ve employed to reduce ecommerce logistics costs?

1. Reverse logistics can be a complex and costly process. It’s vital to make the return process as easy for the customer as possible while simultaneously creating an online shopping experience that will help reduce the chances of order error and decrease the odds that the customer would want to return a product. However, customers may still want to return a product for various reasons, and when that happens, you want to ensure that the process is as painless and cost-effective as possible. Radial is able to provide fulfillment center space, handle complex return workflows from multiple ecommerce channels, optimize transportation costs, and offer services for lightly salvaging, retagging, and restocking inventory. These offerings enable our retailers and brands to maximize revenue and profit.

2. Consumers are pressuring ecommerce retailers to raise the bar when it comes to fast delivery. Ecommerce retailers need to have streamlined fulfillment processes and heavily negotiated rates with carriers to mitigate ballooning shipping costs. Automating order fulfillment can reduce the likelihood of human errors and can track order delivery to ensure customers know where their purchases are at any time. Reducing last-mile delivery costs is important to help retailers keep shipping costs low and offer additional store fulfillment options such as online purchases, pickup in-store (BOPIS), and online curbside pickup. Radial is able to leverage our scale to offer competitive shipping and quality fulfillment, which brands and retailers may find challenging to access on their own.

3. Using physical stores as micro-fulfillment centers ensures that products are geographically closer to customers, which decreases shipping times and improves the customers’ experience. Coordinating two-day delivery requires more automated systems inside the distribution center. Robotic pick-and-pack systems in fulfillment centers and well-trained fulfillment staff process orders efficiently. Partnering with the right ecommerce fulfillment provider—with multiple nodes across the country or in key markets—can also help increase delivery speeds if distribution centers are closer to customers. Radial’s order management system ensures that orders are directed to the most optimal location for fulfillment, including the location of inventory and speed to customers.

4. Despite rising inflation costs and an economy that may be headed toward a recession, ecommerce sales continue to grow post-pandemic. While many ecommerce retailers are faced with challenges, including scaling fulfillment to keep up with growth, buying or building new fulfillment centers is costly and time-consuming. Merchants’ fulfillment strategies are shifting toward options such as physical stores and micro-fulfillment centers that are located closer to customers to be more flexible and convenient. Radial is able to offer store replenishment and ecommerce fulfillment so that the retailers and brands know that their products will be available to customers wherever they choose to purchase.

5. Retail businesses rely on data to inform their forecasting, budgets, inventory management, order fulfillment, and supply chain decisions. Legacy business intelligence systems and order management solutions make it difficult to integrate data from multiple sources and create the reporting needed—in real-time—to make timely, responsive business decisions. Moving from on-premises systems to cloud-based systems—and upgrading aging or inefficient software—is often the only way to achieve true and reliable real-time visibility. Partnering with Radial enables our retail partners to access and leverage their data utilizing our visibility and modeling tools.

Looking ahead, what are the biggest challenges and opportunities in reducing ecommerce logistics costs, and how do you plan to address them in the coming years?

Inflation has affected consumer behaviors, and there is no greater focus on satisfying expectations to drive continued sales. Two-day and next-day delivery have become the standard, but many ecommerce retailers still promise delivery within three to seven business days. Aligning fulfillment with consumer expectations can be a major deciding factor in maintaining customer loyalty amid today’s competitive landscape.

Some retailers are offering shipping promotions which is a costly response. Others are exploring options such as providing an estimated delivery date at checkout instead of assuming the customer expects a certain level of speed. Many retailers are again gathering customer insights to zero in on the right solution for both their business and the customer.

Ultimately, precise, real-time data is a linchpin for a true omnichannel customer experience—and the most important improvement retailers can make to address ecommerce fulfillment challenges. Reliable data and the assurance of complete visibility across the entire ecosystem lays the foundation for every decision that impacts fulfillment and customer experience. This holds true online and for the in-store experience. Fixing the data challenge will make significant improvements to every area of order fulfillment, including costs. Without it, changes to other aspects won’t be as effective.

If you could start a movement that would bring the most good to the most people, what would that be?

We are experiencing an unprecedented mental health crisis impacting our children, our friends and family, and our associates. There are multiple reasons why, including increased isolation from the pandemic and the impacts of social media. As a leader and as an executive of a business, I believe that we have a social responsibility to partners in our communities to provide better access to resources. If we partner with our community and business leaders, the collective influence of that group and the resources at our disposal would make a meaningful impact and change the trajectory of many lives.

What "next big thing" tactic or strategy should leaders in ecommerce be digging into?

Making the returns process simpler and more cost-effective.

What is everyone wrong about in ecommerce?

Ecommerce is about convenience, so demand will fluctuate with how the customer defines convenience.

What are you reading right now?

On Becoming a Leader, by Warren Bennis. Also, a good re-read!

What product, tool, or service do you wish existed?

A better solution for engaging and managing our associates in our fulfillment centers and call centers.

What product are you obsessively using right now?

My Mesa Solo Stove—to make smores on the patio!

How can our readers further follow your work online?

Feel free to follow me on LinkedIn or Radial’s Twitter @RadialCorp.

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