Why Shipping Costs are Costing You Customers

Posted on Nov 3, 2020 By tpawelka Share:

Shoppers will quickly abandon their carts and choose another seller if free, fast shipping isn’t available

Shipping is expensive, there's no doubt about it. As a result, you might think you can't afford to offer free shipping or popular next day or two-day delivery options to your e-commerce customers.

But the truth is, it could be that you can't afford NOT to.

You see, the traditional customer experience (CX) has changed, and the pandemic has only hastened this trend. Customer experience was already poised to become the key brand differentiator by 2020, growing more important than both price and product in recent years.

Now, as people rely more on shipping for everything from their daily groceries to home improvement tools, from their entertainment needs to supplies for working and learning from home, they're more invested than ever.

Today, the product journey is the customer's journey. Shipping and logistics are now fundamental to improving your customers' experience and differentiating your brand.

The Evolution of Customer Experience

Your customers' experience is no longer limited to their interaction with the sales rep while they place orders. Instead, in today's direct-to-consumer model, CX really encompasses the entire product journey throughout the supply chain—long before items are added to their shopping carts and long after the products have been delivered.

Consumers want to see what's in stock, where it's located, how quickly they can get it, what their shipping options are, where the product is in transit, whether delivery is delayed and how easy returns might be—and they expect to find all this information quickly, seamlessly and painlessly.

And 86% of customers are willing to pay more for a better experience.

In addition:

1. Customers will abandon their carts if they don't see a shipping solution that matches their needs at that moment. 18% of shoppers abandon carts during checkout because of slow delivery, which is the fourth highest reason behind cost, forced account creation and a complex checkout process.

Reasons for Dissatisfaction with Shipping During COVID-192. Customer satisfaction with shipping is down during the pandemic. In a recent survey done by LaserShip on COVID, retail and the customer experience, only 67% of consumers surveyed are satisfied with their shipping experiences during COVID-19 compared with 80% of consumers before the pandemic. The most common reasons cited are late deliveries (32%), slow delivery time/lack of delivery options (27%), and high shipping costs (19%).

3. Negative shipping experiences impact repeat business and ultimately, customer lifetime value. A whopping 98% of consumers say that shipping impacts their brand loyalty and nearly 84% of consumers would not return after a single bad shipping experience.

4. The top two considerations for shoppers of all ages are free shipping and returns. These offers are now key to acquiring new customers, as many choose a new e-commerce retailer solely based on shipping costs. Customers also want to buy online and pick up in the store (BOPUS), as well as to be offered next-day, 2-day, and same day delivery options.

The Opportunity for Retailers and E-Commerce Sellers

Don't expect the situation to return to 2019 normals. The new shopping habits brought on by the pandemic are expected to continue, and Gen Z and Millennials will provide ongoing pressure for years to come with their desire for instant gratification.

There's huge opportunity, though, because of the gap between the shipping options customers want and the ones most companies are currently providing. Retailers and e-commerce businesses who capitalize on these trends will capture more market and position their organizations to thrive—both during the pandemic and after.

For example, 77% of consumers have used or would like to use guaranteed weekend or after-hours shipping, and 42% would pay a premium for it—but only 34% of retailers offer it!

Additionally, 80% of customers want to be able to track their orders not only online, but also on their mobile devices. And of those 80%, 76% of them want SMS communication throughout the entire shipping process. Over 70% of all online retailers already give their buyers a communication choice at checkout. It's now less of a feature and more of a necessity to stay competitive.

Even though Amazon has commoditized standard 2-day, 1-day and same-day delivery with a Prime membership, it doesn't mean that you can't compete. Retailers who can provide low-cost or free shipping and increase delivery speed will be well-positioned to take advantage of e-commerce growth during the pandemic and beyond.

The Free Shipping Solution That Pays For Itself

For the sixth year in a row, 77% of consumers say that free shipping is their most important consideration when shopping online. 35% of consumers also say they would purchase more online if they could choose next-day delivery.

In the past, retailers considered free shipping a cost of doing business. Today, as customer expectations have evolved, free shipping should instead be viewed as a value creator and part of your customer acquisition strategy.

For many companies, free shipping doesn’t seem feasible because of the high cost. However, the real issues may lie in the shipping system itself.

1. Look at your current shipping solution. Are you using the carrier-specific shipping software provided by commercial carriers to handle the bulk of your shipping?

If so, it will be difficult to switch carriers seamlessly and find more favorable pricing quickly. Rethinking your shipping solution and switching to multi-carrier shipping software can help speed up your process and allow you to provide free shipping. That’s because adding more carrier options commonly results in a 30% reduction in shipping costs. [7 Ways to Accelerate ROI with ProShip Multi-Carrier Shipping Software]

2. Diversifying your carrier mix and adding regional carriers can help you provide next-day service and faster delivery times while simultaneously improving your margins. It's no longer enough to rely on a single, large carrier. Regional carriers often experience less disruption and offer more flexibility, speed and cost advantages when compared to the big nationals.

You can use other creative shipping tactics as well.

For example, it's not necessary to offer free shipping to everyone. Instead, offer it to attract new customers, or to your highest spending customers or those with a high cart abandonment rate.

According to LaserShip’s survey, keep in mind that 63% of consumers say that faster delivery would encourage them to sign up for a loyalty program.

Is Your Shipping Solution Positioning You to Thrive?

Consumer expectations around shipping are evolving quickly, spurred on by the pandemic. Shoppers will quickly abandon their carts and choose another seller if free, fast shipping isn’t available.

At the same time, the expanding definition of customer experience means that people want more visibility and communication than ever before, and there's loads of opportunity to position your business to address the gap between the popular options customers want and how retailers and e-commerce sellers are currently responding.

Cost doesn't have to be the barrier that keeps your company from taking advantage of the surge in e-commerce. Switching to a multi-carrier parcel shipping solution can help you save money, grow profits, and thrill your customers at the same time. It's a true win-win all around. Contact us to learn more.

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