There’s no end in sight for the growth of the e-commerce market.
First, retail as a sector just keeps growing. According to MasterCard’s annual Spending Pulse report, retail sales grew 5.1 percent year-over-year in the 2018 holiday season, reaching a total of $850 billion. And second, every year more and more of those sales take place online — e-commerce business is thriving more than ever.
Sellers with digital storefronts don’t have to absorb the costs of brick-and-mortar stores and the employees they require, which can make digital storefronts seem like they offer big savings. But instead, sellers have to develop an e-commerce shipping strategy — one that accounts for both buyer needs and shipping costs.
Modern consumers shop around for the best customer experience they can find. That includes the shipping options that best fit their needs, from price to delivery experience. Offering a shipping solution that meets your consumer’s needs could make or break your business.
Which shipping strategy should you focus on? It depends on what your customers want and what products you offer. It’s also important to have a strong fulfillment team to efficiently carry out orders.
Free standard shipping
Free shipping can be a powerful driver of sales. Customers often abandon items in their digital carts when they get past their order subtotal and see how much shipping costs. Offering free shipping removes that pain point.
But if you want to offer free shipping, you’ll need to build shipping costs into your pricing elsewhere.
Many shippers solve this problem by using free shipping to upsell customers. They limit free shipping to orders over a certain dollar amount, encouraging buyers to spend a few extra dollars which in turn covers the company’s shipping costs. Others use a similar strategy, but with a certain number of items instead of a spending amount.
E-commerce businesses can use free shipping as a promotional tool, too. Offering free shipping for a week or another limited time frame can help drive sales during slow seasons or help you win customers during the year’s most competitive periods. Removing the shipping fee using any of these methods could be the right move for your business.
Flat rate shipping
Flat rate shipping offers some of the same benefits as free shipping, with less impact on shippers’ bottom lines. When customers know exactly how much shipping is going to cost at the beginning of their shopping experience — for instance, if there is a banner ad on the homepage advertising flat rate shipping of $5, no matter what you order — the shock of discovering shipping costs at the end of the purchasing process is reduced with a flat rate.
A recent survey from LaserShip found that 75 percent of customers consider free returns when deciding which online stores to patronize. When asked about policies that made them dislike online shopping experiences, 30 percent cited poor return policies.
According to another survey by Radial, 51 percent of U.S. customers avoid shopping with online retailers who don’t offer free returns.
No retailer wants to encourage returns. But all retailers want to encourage sales. ReturnLogic data scientists have found that as revenues grow, returns increase, but at a slower rate than revenues do.
Paying for returns costs money, of course — but it can generate more money in the long run, if customers feel secure in their purchases and come back again and again. High purchase rates should easily offset any negative impact that returns have on your bottom line.
Shipping rates don’t differentiate between purchases and returns, so it’s still important to protect your bottom line. Limiting returns to full-price items is one way to do this.
Generation Z, the generation after Millennials, is coming of age. Its eldest members are now 22 and 23, meaning they have independent purchasing power. These young adults have been buying goods online all their lives, including everything from dorm room furnishings on Amazon to dinner on GrubHub, and they expect a variety of shipping options to meet their needs.
Shippers of all ages, including but not limited to Generation Z, often leave purchases to the last moment. Roughly 75 percent of them are willing to pay for it, according to Velox Express. And it’s important that this option is available: According to a 2016 report from MetaPack, 45 percent of customers have abandoned a digital cart because they were dissatisfied with delivery options.
That’s good news for shippers: Customers expect an expedited shipping option, but they don’t expect the shipper to absorb the cost. All shippers need to do is offer the service, ideally at a fairly affordable rate, to meet customer expectations. If you can offer same-day delivery or next-day delivery with your shipping services, the odds of a purchase increase, especially with last-minute shoppers.
In the e-commerce shipping industry, offering a range of options can also build customer loyalty and ensure customer satisfaction. According to the MetaPack survey, 38 percent of shoppers said they were likely to never shop with a retailer again after negative delivery experience. Even negative reviews of transit times and shipping charges can dissuade potential customers.
In the e-commerce economy, when 43 percent of revenue is generated from repeat purchases, customer loyalty is essential. Free and flat rate shipping can help get customers from cart to conversion. Free returns can win positive reviews. And a range of expedited shipping options remind customers that your brand is an option no matter how fast they need their items shipped — and hopefully, if the price is right, they won’t turn to other e-commerce platforms for fulfillment.