How High Fuel Prices Affect eCommerce Brands

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Gas prices are increasing almost daily, causing financial strain for millions of Americans. The average retail price most recently is at $4.1 for a standard gallon, rising from $2.11 at a time like this a year ago. The rapid increase of 61% over the last 12 months has alarmed consumers.

Although fuel price hit this high in July 2018, when regular gasoline cost was $4.12, the swift wasn't anything like what's happening now. According to the U.S Energy Department, various factors affect gasoline prices. Usually, the demand and supply in the world determine fuel price. Consumers have to cater to the costs of blending ethanol and other additives, including the distribution and marketing price.

According to the head of Oil Price Information Services (OPIS), Tom Kloza, these costs have increased significantly. The fuel you see at the pump contains at least eight to nine different elements, and the price of these elements has increased over the last few months.

Approximately 17% of the price comes from taxes. The government tax is 18 cents, and the average fees and taxes per state are 30 cents, but this varies.

The swift increase in fuel prices significantly impacts eCommerce companies since they rely strongly on fuel for order fulfillment services. High fuel prices can hinder most eCommerce companies from achieving their 2022 financial goals. Learn how fuel prices have affected online businesses and how they can mitigate the growing cost.

increased gas price ecommerce shipping - Rakuten Super Logistics

Impact of High Fuel Prices on eCommerce

1. Service Areas

The high fuel price has heavily impacted the eCommerce order fulfillment sector since they depend on fuel to transport and deliver products to consumers. If eCommerce companies wish to save on fuel costs, they will have to reduce their geographical target regions. They can also develop ways to reduce shipping costs in their current areas of service by changing routes, outsourcing to 3PL providers, or adjusting driving habits.

2. Increased Operation and Shipping Cost

As the fuel prices increase, most eCommerce businesses will have to absorb the extra costs. Online companies will have to compensate for the rising fuel cost by increasing shipping costs. Passing the added costs to consumers will be necessary. The margins in the eCommerce sector are too competitive and tight to withstand the added fuel cost. But eCommerce brands will have no option but to increase the shipping bill, which means consumers will have to pay more for products.

3. Jobs

If fuel prices continue to increase, it will be hard for any online business to make ends meet. If the eCommerce brands try every cost-cutting strategy and prove insufficient, brands will have no option but to look at staffing levels. Reducing the workforce may be unavoidable, which means people will lose jobs or have reduced working hours.

How To Mitigate Fuel Cost

eCommerce brands need to use various ways to minimize the impact of rising fuel costs on their business. Here are some ways eCommerce brands can reduce the effect of high fuel prices.

1. Partnering With a Trusted 3PL

Working with a 3PL shipping and order fulfillment company helps eCommerce brands save on shipping costs and become the most accurate and reputable online brand.  These companies offer an all-in-one solution. Partnering with a 3PL company will help your online business curb the fuel prices since they have the flexibility and discounted shipping rates that will be difficult to manage on your own. Their 3PL software solutions can help you streamline your eCommerce business operations.

2. Use of Xparcel

eCommerce brands can use Xparcel products to cut their shipping cost. Xparcel is a ground-breaking shipping solution perfect for any eCommerce brand looking to save money on shipping costs and deliver fast and accurate order fulfillment with our flawless or free guarantee.

Benefits Of Using Xparcel

1. Increase Shipping Speed

How fast does your online business deliver to customers? Xparcel Priority will improve your eCommerce business by speeding up the delivery of your orders. With Xparcel Priority shipping services at your fingertips, you can reduce your transit time to an average of 1-3 days anywhere in the country.

2. Minimize Shipping Cost

With the increase in fuel costs, shipping costs can reduce your business profits. Luckily, Xparcel Ground is the solution to overcoming this challenge for any eCommerce brand. In addition to lowering transit time, Xparcel also helps cut out any additional costs and surcharges by leveraging a network of national and regional shipping carriers. Xparcel Expedited allows brands to deliver products to consumers at the speed they demand and at a price that doesn't minimize your profits.

3. Compete With Large eCommerce Brands

Your online business can stand out among your competitors if you provide fast and efficient shipping at a minimal cost to their consumers. For many brands, it can be hard to offer excellent eCommerce shipping and order fulfillment without breaking the bank. Because of this, big brands monopolize shoppers, leaving small and medium businesses fighting to keep up. Thankfully, Xparcel Expedited changes the game for online retailers. Our nationwide network of shipping carriers and strategically placed fulfillment centers can help eCommerce retailers compete with big brands without emptying their pockets.

Key Takeaways

Although fuel prices are high, eCommerce brands can still offer flawless shipping and order fulfillment to their consumers at a fair price. Partnering with an experienced 3PL will help your brand during these challenging times. Learn more about how our services can help give you more time to focus on things that will improve your online business and reputation.

Need a quote? Receive your free shipping analysis here and see how we can help you start saving on shipping costs.