You’ve got to keep customers happy and run a successful business, but the advent of Amazon Prime and similar services is making that dance much more difficult.
The biggest lesson from the current and previous holiday season is that shipping matters and waiting is unbearable. Even if you’re not competing directly with e-commerce giants like Amazon, your customers are going to bring the same expectations to your business. Your task is to understand these different priorities and figure out how to deliver the best experience, without cutting into your margins.
The good news? There’s research on your side to help understand customer needs and you have access to partners who can make the whole thing easier to manage.
Promise free and then fast
Your customers want shipping that’s free and fast, but they’re willing to wait a little longer to guarantee that free price. So, on your site and in your marketing, free is the promise you want to highlight to bring them in and keep them happier.
According to a survey from Internet Retailer and Bizrate Insights, a little more than half of consumers say free shipping is more important than fast shipping. Roughly 47 percent said that the two are equally important, and 2.5% say that fast shipping is more important than free shipping.
That being said, roughly 90 percent of this group said they would wait longer for their goods to arrive in exchange for free shipping. Only 1 percent expect goods like apparel or electronics to be delivered within 24 hours.
A UPS report backs up the findings of consumers saying that free is the most important delivery option and notes that 44 percent of people will choose slower shipping if it means free shipping.
The broad data tells us that free has a dominant position and is the better option to give if you can only provide one. Fast is useful, but with 2.5% saying free is more important, you can use fast as a special deal or provide the option at an extra cost and still stay in customers’ good graces.
Tackle what people see first
One surefire way to upset customers and lose a sale is to have a large gap in delivery-time promises and customer expectations.
Even your biggest fans will abandon shopping carts if shipping doesn’t align with their needs. As the previous reports and many others establish, this means your costs can’t be too high and that fast options must be available.
Most of today’s digital shopping carts give us cost estimates before we enter all our details. Even if it isn’t a final price, we judge the viability of the purchase by looking at the cost of this cart before the actual checkout process.
If shipping costs aren’t included, that means the customer isn’t sure of how much it will cost. You’re creating a little bit of apprehension that might push them to abandon the sale. This is especially true for price-sensitive customers: if they have $25 to spend and the cart comes up to $22.50, that’s not a lot of room for shipping costs.
You can immediately alleviate these fears by plastering the word “free” in a line above the cart’s subtotal. The goal here is to get them to click through from the cart to the checkout process.
Then they’ll enter their information, review their picks and say one final “yes,” after they have mentally committed to the purchase at least three times: 1) adding items to the cart, 2) looking at the cart before checkout, and 3) entering information at checkout.
After this, you can offer free shipping and provide pricing options for speedier delivery.
Do I have to promise free two-day shipping?
Amazon Prime is always in the back of any e-commerce entrepreneur’s mind. The biggest worry is: do I have to match their shipping promises?
In most cases, you don’t. This is especially true if you’re a smaller storefront or working in a niche area. A little more than half of businesses expect two-day shipping all the time, while consumers have preferences that run a larger range.
In this case, you’ll need to do some research for your specific category. For example, most consumers who buy housewares like linens and décor expect goods to be delivered in three to five days, though they’re willing to wait into the six to 10 range. On the other hand, cleaners and similar household goods have about 30 percent of people willing to wait three to five days, but roughly 29 percent want goods delivered either next-day or within two days.
Another bit of good news is that consumers who want faster shipping times, especially those asking for goods within a 24-hour period, are willing to pay a little more.
How do e-commerce brands get there?
Now that you know customers want free and fast shipping options, you must figure out how to offer it. If you’re a small shop trying to do it on your own, that could be a problem. If you’re a growing brand, you have more options but will need some serious negotiation skills to make it all happen.
The two chief ways brands like yours are stepping up to meet customer demands are moving operations to their own warehouses or choosing a shipping partner who has guaranteed rates and delivery options.
Setting up your own warehouse is a complicated process that can involve renting new space and purchasing equipment, as well as warehouse management software, for order management and fulfillment. You’ll need a larger team to monitor sales and delivery options, while also maintaining equipment.
One surprising part to many is that you don’t automatically get better shipping rates from carriers like UPS and FedEx. Individual businesses must negotiate with carriers and show their shipping volumes if they hope to secure better-than-normal rates. One downside is that these negotiations are getting more difficult because of the meteoric rise in e-commerce competition.
Amazon FBA: a balancing act
As e-commerce brands grow, Fulfillment by Amazon can be a tantalizing choice. It enables you to focus on sales easily and directly. It’s smart if you reach a point where you only want to sell on Amazon and don’t want or need to have unique control over the e-commerce fulfillment process.
One major benefit is that you get the Prime logo next to your products, which will significantly increase your click-through rates for shoppers on Amazon. And there’s little worry about things arriving in an acceptable timeframe.
Amazon allows you to fulfill customer expectations and it even offers some gift wrapping and message services for certain products, so it can make the entire process a little nicer for your customers.
The downside is that you lack the ability to do some customization, such as packaging, coupons and other inserts inside of the box. There’s a little less of an opportunity for you to immediately create opportunities for an additional sale.
So, if you are in a business where upsells work well, or you want more control over the presentation of your parcel to your customers to capitalize on the excitement of opening a package, then FBA may not be the best option.
A little easier: finding a good third-party fulfillment partner
Most e-commerce brands must focus on sales above all else because the customer experience during the sale is just as important as their experience receiving an order—and it’s easier for you to control that sales experience.
So, we recommend you look for a partner who has a similar level of commitment to making the delivery and fulfillment experience as good as possible for your customers. When e-commerce fulfillment is their mission, it makes it easier for you to accomplish yours.
The benefit of a partner handling your shipping and warehousing is that they have already negotiated special carrier rates and can provide you with accurate cost estimates for individual packages as well as broader estimates for your next month of business.
A benefit to you is that you can secure a partner with an e-fulfillment guarantee ensuring orders are accurate and on-time 100 percent of the time. Plus, you’ll get access to rates that are hard for you to offer on your own, such as same-day fulfillment in certain shipping areas by 5 p.m.
Warehouse partners also have experience managing and optimizing inventory, so they can look at your orders and help you figure out when to restock, limiting the number of extra goods you’re just paying to store. Plus, you get access to the latest warehouse technology, like advanced shipment tracking and visibility, without having to purchase that equipment and pay new staff to manage it.
Wrapping it all up is a return to our first point of free and fast shipping. Third-party fulfillment companies work diligently to integrate with the latest e-commerce shopping carts. This allows you to properly display shipping costs (including free) and delivery estimates that are accurate and require almost no additional work on your part.