There is a major disconnect between retailers and consumers when it comes to shipping expectations.
Retailers understand that consumers want free shipping. But they are challenged by and grappling with the rising costs of shipping online orders, according to “The State of Shipping in Commerce,” a report from Temando, a shipping and fulfillment software platform provider.
The report confirms that shipping causes shopping cart abandonment. Fifty-four percent of shoppers abandoned their carts due to expensive shipping, while 39% abandoned their carts due to no free shipping. And 26% abandoned their carts due to slow shipping.
According to the study, 59% of shoppers will opt to buy from a bricks-and-mortar store if they perceive that the delivery fee for buying the same item online is too high. And while 66% believe that the high cost of shipping is not relative to the experience provided, 51% of retailers listed the rising cost of carrier services as a key challenge.
While retailers are experimenting with premium delivery services, they have limited knowledge of how much these services cost and/or are held back by operational barriers. Temando’s research highlights that retailers are struggling to find a profitable model for premium delivery services, and as a result, retailer adoption has slowed down:
● 53% of retailers offered same-day delivery in 2016 compared to only 29% this year.
● 49% of shoppers wanted hyperlocal delivery in 2016, but only 24% of retailers offered it this year.
● 34% of retailers in 2016 offered weekend/afterhours delivery in 2016 compared to only 25% this year.
Meanwhile, 40% of consumers expect to access Amazon Prime-style memberships in the next 12-36 months. Only 25% of retailers plan to introduce these services in the same period. Almost 100% of shoppers would like delivery date estimates, but currently more than half of retailers don’t offer this feature.
The good news is that some retailers are getting it right and turning shipping into a profit center. For example, 43% of retailers found that offering better shipping choices created more revenue.
Meanwhile, 33% of enterprise retailers reduced their cart abandonment rate when offering more shipping choices, while 50% of mid-market retailers experienced increased sales. Another 27% of small retailers reduced carrier costs, and 47% of micro retailers improved customer service with new shipping choices.
Additional results revealed that:
• Shoppers are willing to pay up to $18 for same-day delivery and $19 for international shipping, and 65% would increase basket size to qualify for free premium shipping.
• Tracking is an area for improvement for retailers, with only 31% of companies offering email tracking updates today, despite demand from 78% of shoppers.
• Returns influence conversion with 43% of Americans stating they would shop more online if offered free and easy returns.
“Competition in e-commerce is not going to subside – in fact, the scale and speed of it is accelerating with the continued growth of Amazon and international shopping,” said Carl Hartmann, co-founder and CEO of Temando.
“It’s not only U.S. consumers shopping abroad more, the number of cross-border shoppers globally is increasing,” he added. “The retailers who can cross borders and use this changing landscape to evolve will be successful at e-commerce.”