Why Shipping Must Be a High Priority for Online Retailers
The global e-commerce market is continuing to boom, and as the industry matures it’s clear that shipping is as important to success as any other aspect of business. Shoppers might love the product, but if they don’t like the shipping options, they won’t buy. Offer them cheaper or better choices at checkout, and they’ll probably buy more and continue to come back to your site.
To some degree, that makes perfect sense. Everyone likes value and quick delivery. However, the results of a new survey from BigCommerce show just how tight the connection between online retail and shipping is, and how much consumers love free shipping.
They love it so much, in fact, that 36 percent of the 3,000 consumers surveyed said they would give up alcohol in exchange for free shipping (the horror!). Another 25 percent would give up coffee, and 22 percent would forego Netflix.
If those numbers don’t catch your attention, how about this: an alarming 77 percent of shoppers reported they have abandoned a purchase due to unsatisfactory shipping options, and another 58 percent have actually stopped shopping with particular retailers because of a bad shipping experience.
So the stakes are high, and consumers are very clear about their expectations. The problem is that not enough merchants recognize the impact of shipping on revenue and don’t know how to compete with the new “normal.” Nearly half of the 800 merchants surveyed (47 percent) didn’t know their online cart abandonment rate, let alone how much of it was due to a shipping issue. If they aren’t aware of the connection between dissatisfied shoppers and shipping operations, they’ll never make the changes needed to improve the buying experience and increase sales.
Retailers absolutely must take shipping as seriously as they take selling quality products and providing a variety of payment options. It' equally, if not more, important to customers.
It’s no secret that that Amazon.com's free and two-day (and soon, next-day) shipping options have gotten consumers used to fast, cheap delivery. Amazon accounts for 49 percent of all online spending in the United States. That’s roughly 5 percent of all U.S. retail sales. The online giant is putting a ton of pressure on other retailers, and, not surprisingly, they don’t love it. Two-thirds of merchants surveyed said Amazon’s shipping practices are unfair to independents — and that was before Amazon started offering free one-day shipping for Prime members. Many e-commerce shops struggle to ship an order the day after it’s received, let alone have the product in their customers hands the next day.
Retailers may not be able to match Amazon’s free one-day standard, but they’d be wise to find a way to at least match the free part. Many are trying. Sixty percent of merchants in the survey offer free shipping on some purchases, but only 22 percent offer it on every purchase, while 64 percent offer it for purchases over a certain amount. That’s smart considering 84 percent of shoppers said they typically add items to their carts in order to qualify for free shipping. And while Amazon offers free two-day shipping on every purchase, only 6 percent of the merchants surveyed do. However, merchants were five times more likely to offer free standard shipping (three days to five days) as two-day. That might not be exactly what shoppers want, but it's smart and will lead to sales.
There’s something about “free shipping” that gets consumers to latch on. It helps them feel like they’re getting a deal, even if they have to spend more to get it. Depending who the store’s target customers are, free shipping might make even more sense. Younger shoppers, those ages 18-37, are even more likely to add items to their cart to qualify for free delivery. One-third of millennials said they do so every time it’s offered.
While retailers worry about the cost of shipping, it’s in their interest to make it free. Rather than take a hit to profits, merchants can get creative — e.g., increasing the price of products, offering a membership program in order to qualify, or via promotion products that qualify the entire order for free shipping.
Another area where the survey uncovered some telling things was around sustainability. Sixty percent of consumers said they often or almost always recycle their packaging, and one-third would be open to driving to a physical location to pick up items instead of having it delivered. Beyond that, consumers weren’t willing to do much that requires effort on their part.
Only 34 percent would be open to having items shipped without added packing material, and 28 percent would be willing to have an item shipped in the original box. While sustainability isn’t a high priority for most merchants, 23 percent said they're considering changes to shipping and logistics to decrease their environmental footprint. For example, they’re considering biodegradable packing materials, reducing the amount of packaging, and updating delivery fleets to more fuel-efficient vehicles.
Regardless of all of these findings, one thing is very clear: the e-commerce ecosystem isn't slowing down. That means shipping will continue to be a critical element of any online retailer's business. There are no more mysteries about what consumers expect, and even though Amazon may have a competitive advantage, the company is showing smaller retailers the way to success. They just have to find a way to follow that works for them.
Matt Crawford is general manager of shipping at BigCommerce, an e-commerce platform.
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