As trends in ecommerce rapidly shift towards instant gratification, and Amazon and its rivals see who can offer the quickest shipping options, how can a SMB etailer compete? A company like Amazon can offer ludicrous shipping options—losing profits for a few quarters to grow their market share. If you or I took this approach, we’d have to board up the windows.
Shipping is not the most glamorous part of running your online business, and it’s a balancing act. You have a couple of options:
- Do I charge for shipping and make this a profitable portion of my business? But does that turn away customers?
- Should I offer free shipping while injecting shipping costs into products to cover my margins?
- Do customers prefer premium express options?
With Kickstand, we polled consumers to get first hand insight on what they value most. We’ll break it down further, but customers preferred affordability over express shipping options. However, any delays or hiccups in the process fall back on the online merchant.
It is important to ship out orders quickly, but once they’re in the mail stream, they don’t have to be premium 2-day services. Slow and steady still wins the race, but you do have to keep moving.
Customer Expectations of Shipping
Shipping may be the final step of an online order’s lifecycle, but it is certainly not an afterthought. It also holds more significance to customers than we may give it credit.
A Digital Commerce 360 study found that 54% of consumers from the US and Europe said delivery is what most impacts long term customer loyalty with an ecommerce brand. After all, we’ve all encountered issues buying online and it can seriously tarnish your impression of a business. In fact, we found that 85% of consumers believe a shipping/delivery error to be the seller’s responsibility—even if it is a carrier-related issue.
This illustrates how little visibility a customer has into the shipping process. Giving your customers appropriate insight is important. A major way to accomplish this is to ship packages quickly so they hit the mail stream and your customers can start tracking their parcel’s shipping progress.
Met Expectations: Why The Big Guys Win
When you look at the popularity of Amazon, it’s because customers know what to expect when they order. There are no surprises, and there are rarely any outages. Though Amazon’s available products and prices fluctuate, their shipping policies and delivery fees remain the same.
As any Amazon seller can tell you, Amazon is nothing if not regulatory. A major key to Amazon’s success is that you know an in-stock item will ship out quickly. Their focus on the ship-by date is a major driving factor of what has gotten them from an online bookstore to the behemoth conglomerate they’ve become.
When we venture out onto an independent online store, particularly for more unique or artisanal items, a major annoyance can be how long our order takes to process.
Clearly stating your shipping options and delivery ETA, as well as how long it will take for the order to leave your facility is a vital step in growing your brand’s image.
Free is Still King
If you can get your orders out the door quickly, customers still prefer to have free 3-5 day shipping over paying for more express options. In the study we conducted, consumers are more concerned with shipping costs than they are with delivery speed.
Interestingly, 39% of consumers even preferred affordable shipping over product selection. This is especially helpful if you have surplus products that you need to get rid of and need a quick way to unload them somewhere like Jet.com or even Amazon.com.
How to offer free shipping
Incorporate Shipping Costs Into Items: Free shipping is rarely free. The best way to offer it is to inject the carrier fees into the item price. This is a common practice of sellers that use platforms like Jet or Amazon. When you go to Amazon and see a $4 bottle of mustard that costs $6, it is because the shipping and handling is included.
Free Shipping Over a threshold: The other option for free shipping is to offer it for orders that are at a profitable price point for you. If you sell apparel, for instance, orders over $50 are generally fairly lightweight and not that expensive. Incentivizing a customer to spend a little more money to receive free shipping can be a good middle ground for you and your customers to both get what they want.
Low cost impulse items like enamel pins or iron-on patches are popular ways to bring up an order total that weigh next to nothing and can be included in the same poly mailer as the other items.
When Express Shipping Works
Express shipping (2-day shipping and quicker) is still preferable for some items:
- Personal hygiene items
- Pet supplies
These are rational items to want quickly. You can only be stinky, sick, hungry, and bored for so long. The same goes for our pets. If you specialize in selling these items, consider the most economic ways to offer express shipping. It may require negotiating rates with your carriers. FedEx and UPS offer more guaranteed delivery timeframes, so if 2-day or next-day shipping options are required, opt for these over USPS.
Gifts get the premium shipping experience
Additionally, we found that people are 76% more likely to pay for express shipping if it is a gift for someone else. Perhaps we view it as part of the gift-giving experience. Perhaps there’s a stigma around more affordable, slower shipping options as being less careful. Hopefully, this isn’t because we procrastinate buying gifts until the last moment.
Customers typically prefer affordability over premium express shipping options. However, the major hurdle to get over is quickly getting the packages out the door. The quicker a customer can start tracking their package, the happier they become. If you sleep on sending the packages out, the customer will shop elsewhere. So while slow and steady can win the race, it’s contingent that you stay on top of your shipping. Using a shipping software like ShipStation helps make sure that regardless of how you get your customers their parcels, you’ll do it quickly and efficiently.