May 23rd 2017 – By Simon Wright, Parcelhub
Ecommerce sales are growing at around 15% per year, according to IMRG Capgemini, and so whatever you sell, wherever you sell it, you are going to spend a large chunk of your time shipping goods to consumers.
While shipping is a key cost and operational issue for retailers of any size, for consumers it is increasingly becoming a ‘make or break’ when it comes to selecting from whom they buy. Get it right and their loyalty comes too; get it wrong and you won’t see them again – and they will probably skewer you in online reviews. In short, shipping is now a key area to build customer loyalty.
In the traditional world of retail – even in the ‘olden days’ of ecommerce– price was always the key differentiator. Today, marketplaces have won the race to bottom on cost to consumer, and shipping is the real battle ground for winning hearts, minds and customers!
Now this takes many forms and there are some simple, yet highly effective steps you can take to use your shipping policies to garner customer loyalty. This is demonstrated in the UPS Pulse of the Online Shopper study, which found that 64% of orders taken online these days include free shipping. Furthermore, 44% of shoppers have abandoned a cart when their order value didn’t qualify for free shipping.
According to Visual Website Optimizer’s eCommerce Survey 2014, 28% of shoppers will abandon their cart if presented with unexpected shipping costs and, most tellingly, 55% of customers who have had a bad shipping experience say they won’t order from that retailer site again, according to Nosto.
So how are you going to win in this shipping loyalty war?
For many, the allure of Amazon is its Prime service, where eligible products offer next day, free delivery. The next day delivery option has become a part of the main criteria for online purchases, with many customers prepared to pay extra for a faster delivery. Choice is often what shoppers really want. The key is to offer the shopper the choice of delivery options to suit them.
But there is a caveat: don’t offer too much choice as it can get confusing. The best thing to do is to offer – and clearly display the cost thereof – three ‘standard’ types of shipping: next day, 48 hours, and 3 to 5 working days. Retailers can offer a range of other options too, but perhaps hide those behind a ‘click for more options’ button. Amazon does exactly this; they offer around 50 different ways to get your goods delivered, but don’t show them all.
Another option that retailers must include with delivery choices is collection. It seems counter-intuitive, but many people do like to go and pick up the goods at a time of their choosing. Witness the dramatic rise of ‘click and collect’.
To add to the complexity of customer experience, a retailer must also be prepared for the rise in same day delivery. The customer’s desire to receive a product as quickly as possible, is driving many consumers to look at how to get things within an hour or two of the order, and whole businesses are being built around using robots and drones to make this happen, especially in urban areas. While not fully developed yet, retailers need to be ready to compete. Of course the costs associated with this are high, but consumers are willing to pay a premium for speedy delivery.
The best tip is to build the extra cost of shipping into your baseline price and then offer ‘free’ instant or next day delivery – this will, for a while at least, really set you apart from the competition.
While speed – or rather convenience – is key to using delivery to help loyalty, knowing where their package is and when it is likely to arrive is also becoming essential to their criteria. Tracking is standard these days, with most consumers able to log on and see where their goods are. What sets services and retailers apart, is how to let the customers interact and shape how, where, and when their goods are delivered.
The first part of the puzzle is to make sure that you use a courier firm that can offer the insight into where a package is, right down to which van driving down which street. You also need to rely on couriers with the ability to alter delivery patterns easily, so that the customer can push back delivery times if needed.
Customer loyalty may lay in the ability to manage the flexibility of delivery rather than the need for speed will. The technical challenges are large, and again there is a cost, but it can – and does – win business.
The return process is often an overlooked area by retailers. As ecommerce grows as a proportion of overall retail, many shoppers are going to have products to return. Indeed, in the fashion market, there is already a propensity among shoppers to buy many sizes and colours of items knowing full well that they will keep one and return the others.
Managing the returns process is vital to not only keeping tabs on costs and stock levels (as much as 50% of stock can be ‘out’ at any given time in the worst case examples) but it is also becoming vital to helping build loyalty.
An e-tailer’s returns policy must be clear to the customer, both when ordering on the website, but also included within the packaging. ASOS does this very well by making returns easy for customers to complete by printing a return label on the re-sealable bags that its products are delivered in – all free of cost to the customer. Free returns create customer loyalty but comes at a cost to the retailer. Factoring this in is vital to balance the loyalty elements against added costs.
But for a retailer, organising a good returns policy is again a tough logistical challenge: one has to consider whether the returns are going to be free to the consumer, chargeable under some circumstances or having to be entirely borne by the customer. Overall, customers want free returns and, as with speed and convenience, will probably choose a slightly more costly retailer over a cheaper one if they know the retailer offers a better return policy as well as flexibility and speedy delivery.
Packaging is the final aspect retailers must consider can also play a role in loyalty – as can what else you put in the box. Part of Amazon’s charm is that its packaging is easy to open. Other retailers can send things out in nice boxes that look attractive, while others can offer free gift wrapping. All these small things can delight consumers and have an impact on their overall impression of you as a business.
Just look at the effort Apple makes with its packaging: Its boxes and how things fit in the box are a delight and part of the experience of opening a new Apple product. The same applies to any products that are delivered.
What you put in the box with goods can also be used to help generate customer loyalty and repeat business. Include a nice note, a gift voucher or even information about other products (based on the “shoppers who bought X also liked Y principle).
Also include information about returns and anything that makes facilitating that return as easy as possible for the customer in order to stand out from your competitors.
Bring it all together
All these things help to make the overall experience of delivering (and returning) goods a pleasure and easy experience. But it isn’t about picking just one or two, any online retailer has to offer all of them to stand out. Consumers will, for some goods, pay more to get a quicker, more flexible, convenient service and this, rather than price, is what will make people come back for more.
As technology such as drones and robots come into their own, these too will also add a certain cache to deliveries. Until they become mainstream, the retailers that deliver using a drone or a robot will have an edge: who isn’t going to want their new iPad to arrive at their office dangling from a drone?
Parcelhub is a multi-carrier shipping and customer services solution. Flexible and scalable, it integrates seamlessly with order management systems, providing hundreds of eCommerce and wholesale businesses with one access point to many of the largest UK and international parcel carriers.
Multi-channel eCommerce platforms are easily integrated and dedicated pro-active parcel management comes as standard.
Distributing more than 4.5 million parcels on its own carrier contracts every year, Parcelhub’s free
multi-carrier shipping software grants hundreds of national and global businesses access to ‘pooled volume’ discounted rates from its carefully selected range of carrier partners, including: Yodel, Hermes, DPD, UK Mail, DHL, Whistl, UPS, DX, Parcelforce, CollectPlus, SkyNet, Panther Logistics, Direct Link and Palletforce.
Tags: Business courier services, Ecommerce customer service