Shipping: The Secret Weapon to Win in E-Commerce
By Christoph Stehmann, Pitney Bowes
According to the U.S. Commerce Department, retail e-commerce sales totaled over $304 billion in 2014, up 15.4% from the prior year. Also, eMarketer predicts that U.S. retail e-commerce sales will total approximately $350 billion in 2015.
The growth in e-commerce sales represents a huge opportunity for U.S. retailers. However, to be successful, retailers need to make sure they have the right shipping strategies and solutions in place to encourage shoppers to purchase goods online.
After all, shipping matters when it comes to consumers’ buying choices. Our research shows that 70% of Americans consider shipping options to be an important factor in the shopping experience. In fact, there’s now a blurred line between the decision on a shipping method and the selection of a product when it comes to the overall buying decision and customer experience.
Also, high shipping costs are the most common obstacle to completing a purchase online. Eighty-two percent of consumers prefer free shipping as a method of delivery when the product arrives within five to seven days, whereas only 17% prefer faster shipping that has an associated cost.
Retailers are continuing to adjust their strategies to respond to strong consumer demand for shipping preferences. For example, Target recently lowered its threshold for free shipping to $25, down from $50, following positive response to its free-shipping offering during the holidays. This is giving them a competitive edge right now over several other large online and brick-and-mortar retailers that offer free shipping. And they did this way ahead of the next busy holiday shopping season.
Here are three additional opportunities that can help you build an effective shipping strategy this year:
1) Offer flexible delivery options: Providing a variety of shipping options can help make a huge difference in attracting new shoppers and keeping existing customers coming back to your physical or digital storefronts. Therefore, flexibility for adjusting parcel shipping by carrier and rates is invaluable.
One way retailers can accomplish this is by using a single, automated multi-carrier system that can offer a variety of carrier options including the USPS, which has become more competitive with the Intelligent Mail Package barcode (the barcode is a trademark owned by the USPS).
These powerful, yet scalable Web-based solutions can enable retailers of all sizes to compare and select the most cost-effective shipment method that meets delivery requirements for every parcel shipment.
By automating carrier selection for each parcel based on the most up-to-date pricing, service options, and business rules, shippers can save as much as 25%-40%.
2) Expand beyond the United States: Global e-commerce is continuing to offer a significant opportunity for U.S. retailers to expand their businesses to international markets. Also, our global online shopping research showed that the United States was the number one country where international shoppers would purchase goods online from retailers outside their own country.
To take advantage of this, U.S. retailers should consider what countries hold the greatest opportunity for their business by looking at the purchasing power of consumers in each country and what products are the most likely to sell there. For instance, our study showed that 69% of consumers in China selected the U.S. as the top country where they would purchase online products from.
Also, China has approximately 621 million Internet users. If you multiply these two numbers, there are 428 million potential buyers in China.
India, Brazil and Japan are other countries to consider adding to your global e-commerce mix, depending on what you sell in your product catalogue.
However, adding new countries can be a slow, resource-intensive process when relying solely on in-house capabilities. Also, countries take their import/export laws seriously, and if you don’t ship the right goods, to the right people, in the right ways, you could be subject to penalties or even denied entry to markets.
As a result, many U.S. retailers who are ready to expand globally turn to third-party experts to simplify the complexities associated with global e-commerce, and provide the capabilities and the country-by-country know-how to satisfy both international buyers and local-market regulators.
With minimal set-ups, rapid integration and limited up-front investments, global e-commerce solutions providers can offer U.S. retailers the support they need for rapid and successful entry into one or many new markets.
3) Build an effective returns policy: About half of U.S. shoppers have returned an online purchase through the mail, according to our research. This means retailers are not only paying to send goods out to consumers, they're often paying for packages to come back into their distribution network.
To the extent returns cannot be avoided, retailers need to streamline the process by providing return labels, entering information on returns back into their systems early, and efficiently sorting and repackaging items to get them back into the selling process.
Also, to help drive down return rates, retailers should make sure customers understand exactly what they are buying. Having clear, easy-to-understand and accurate product descriptions on your website can help make a big difference. For instance, a major retailer in the fashion goods industry recently told me that he cut his return rate in half by providing better product descriptions on his website. Also, by offering free returns, retailers can also encourage consumers to buy from their sites more often.
By having the right shipping strategies and solutions in place to meet consumers’ expectations, retailers can not only deliver a satisfying customer experience, they can reduce the complexities associated with shipping and position their businesses for growth and saving opportunities.
Christoph Stehmann is Chief Operating Officer, Digital Commerce Solutions, at Pitney Bowes.