Is Shipping Still the Poor Cousin of Retail?
As e-commerce continues its upward trajectory, representing close to 10 percent of U.S. retail sales in the first quarter of 2017, we’ve seen retailers experience a tumultuous period of change. This has included store closures and bankruptcies for some of the nation’s well-known department stores and apparel brands, which failed to innovate at a pace that today’s business environment demands. Temando’s recently published State of Shipping in Commerce report sets out to show one striking reason why this might be occurring — the constant gap that exists between consumer expectations and retailer capabilities. Here are some of the highlights from the report:
Conservatism on New Ways to Ship
Despite clear demand from shoppers on wanting a range of shipping options, retailers seem hesitant to offer them. Over 40 percent of shoppers want weekend, after-hours or same-day delivery, but under 30 percent of retailers offer these options. To understand why this gap exists, we need to consider the modifications that retailers need to make to their shipping and fulfillment infrastructures to enable new shipping services to run seamlessly and in a cost-effective manner. Without the right tools to support this change, prematurely executing on premium shipping services can be a costly experiment.
Convenience and Choice Are Increasingly Important
Compared to last year’s report findings, a higher share of shoppers indicated that 24/7 access and increased choice are the main reasons they shop online. Are retailers serving shipping experiences that reflect this? We don’t think so. Up to 63 percent of shoppers stated that shipping-related friction caused them to abandon their carts. Moreover, close to 60 percent of shoppers will buy from a competitor when the shipping option they seek is not available. By diluting the convenience equation, online retailers lose out.
Customer Lifetime Value Impacted by Shipping
When customers enjoy their shipping experience, 73 percent will shop with that retailer again, 50 percent will trust the retailer more and 35 percent will leave a good review. Likewise, when they’ve had a poor shipping experience, 50 percent will stop shopping with the retailer, 29 percent will lose trust of the retailer and 21 percent will leave a bad review. In a world where fickle shoppers are constantly looking for the next best thing, nurturing positive sentiment at this key stage of the online shopping experience will help to extend customer lifetime value.
CX Struggles Even for Large Retailers
The report shows that 63 percent of enterprise retailers struggled with shipping over the busy holiday season, while 49 percent of retailers across the board acknowledged that they needed to improve customer experience (CX). This indicates that while retailers are aware that they’re not meeting consumer expectations, many are still in the dark as to how they can solve this issue. Retailers may want to take a leaf out of the playbooks of the 33 percent of enterprise retailers that stated that they reduced their cart abandonment rate by introducing better shipping options.
The four points above cover some of the sobering insights that make up the State of Shipping in Commerce report. With close to 1,300 shoppers and 300 retailers in the U.S. lending their voice for this report, it’s a true reflection of current practices in the retail sector. However, it’s not all doom and gloom. With change comes true opportunity to innovate and a push for excellence, and this can only be a positive thing for our economy.
Carl Hartmann is the co-founder and CEO of Temando, an intelligent fulfillment and shipping platform.
