Online Retailers: Why shipping and fulfillment are key to customer loyalty
If you are an e-commerce retailer trying to grow a loyal customer base, you’ve invested time and resources into developing a unique product offering, an easy-to-use website, and a thoughtful marketing strategy. These are all done in the hopes of gaining new customers and, of course, return customers who keep coming back.
But you may be overlooking something just as important — logistics. How online retailers manage their fulfillment and shipping has a direct impact on both customer satisfaction and operating costs. Online consumers have become increasingly demanding when it comes to their online purchases and expectations around delivery. Consumers who made an online purchase in 2012 received delivery in 5.5 days on average. In 2019, this number was halved, with 48% of e-shoppers receiving delivery within 2–3 days according to a survey by business data consultants Clutch.
The Channel Advisor survey also found that one of the main reasons that online shoppers did not purchase items in their cart was because the estimated shipping costs were higher than anticipated. A study by UPS and Comscore reinforces that shipping is of key importance to online shoppers. The study found that e-shoppers abandon their carts due to shipping issues 5 out of 8 times, and many consumers only load their cart to compare shipping costs with other retailers. Others abandoned their order because they did not have enough to qualify for free shipping, and for many, the estimated shipping time was too long.
The lesson for online retailers looking to overcome these challenges is to be proactive about finding and offering your customers the best shipping options. Don’t just assume that transit times and shipping costs “are what they are.”
How do you do exert some control over transit times and shipping costs? The most directly influenctial factors are the location(s) of your fulfillment centers and the carrier options you provide to customers.
Yes, carrier choices are limited when it comes to B2C deliveries. For you as an online retailer, therefore, it’s vital to have a sound process for carrier evaluation and negotiation. As the surveys illustrate, offering low shipping rates for fast delivery will go a long way towards reducing cart abandonment. And for online retailers offering FREE shipping, low rates are your key to protecting profit margins.
With time in transit so important, where you ship from matters, too. Shipping from points as close as possible to customers cuts down on the amount of time it takes to deliver packages. It also enables lower-cost service levels to be used to realize a similar transit time. For example, a Zone 2 package shipped UPS Ground will deliver next day. This makes sending the same package Overnight Express at a much higher rate unnecessary. That’s an obvious example, but there are surprisingly few shippers with the ability to make such carrier routing decisions on the fly within their shipping operation. (If this describes you, consider investing in a parcel TMS.)
All this is much easier for online retailers located close to their customers. If, however, you are sending packages all over the country, strategically setting up, or working with, a network of fulfillment centers across the U.S. is a good way to reduce the distance between your goods and their purchasers.
It’s clear that shipping matters to your customers. It’s also obvious that the pressure and expectations for ever faster and cheaper shipping are only increasing. Online retailers invest heavily in driving traffic to their website and maximizing conversions. Give the same amount of attention to the final touch point you have with your customer — a good delivery experience — and you’ll gain customer loyalty.