Estimates show 15 percent of retail sales will come from ecommerce in 2021 and we can’t talk about ecommerce without mentioning the expectation of fast and free shipping. Unfortunately for many businesses, it’s not as simple as it seems to offer fast and free shipping. Logistics can be complex and expensive, so many simply don’t offer it—but it’s an absolute necessity if you want to compete in today’s business environment. The top reason for shopping cart abandonment is a high shipping fee (or any shipping fees in general), slow delivery time, and that the same item can be found somewhere else for a cheaper price or free delivery.
The top reason for shopping cart abandonment is a high shipping fee (or any shipping fees in general), slow delivery time, and that the same item can be found somewhere else for a cheaper price or free delivery.
Customer centricity is key
Amazon is an example of a company that has prioritized customer centricity over absolutely everything else. It’s because of this customer-focused business model that customers have grown to expect fast and free shipping from all retailers. Studies have shown that more than 63 percent of consumers start product searches on Amazon and that Amazon Prime members spend an average of $1,400 on Amazon every year, compared to $600 per year for non-Prime members. The convenience of the platform is what increases the amount of money people spend on the platform—especially Prime members. Amazon has made fast and free shipping the industry standard and if you are not offering it, it’s time to reevaluate your strategy.
Studies have shown that more than 63 percent of consumers start product searches on Amazon and that Amazon Prime members spend an average of $1,400 on Amazon every year, compared to $600 per year for non-Prime members.
Why you need to offer free shipping now
Free shipping can be difficult, especially because products are expensive to ship, and including the shipping cost in the order can make the price too high and deter buyers. However, it’s important to keep in mind that 73 percent of people are more likely to purchase an item if it includes free shipping and 24 percent of customers state that they would spend more money to qualify for free shipping and 53 percent of US online shoppers won’t purchase a product if they don’t know when it will arrive. While customers might have a bit more patience with fast shipping options, consider that if the same product you’re selling can be found on Amazon with a guarantee of free two-day shipping, then there’s nothing to stop them from going there instead.
Fast and free shipping is still more important than ever
The reality of the situation is that these expectations are not going away and it’s more important than ever to offer free and expedited shipping to keep your customers happy. If you’re worried about the cost, there are a few things you can do to make it more affordable.
- Position goods in fulfillment centers that are closer to your end customers so you can offer better and more accurate delivery promises.
- Diversify carrier base from the standard carriers like UPS, FedEx and USPS, and add in some regional carriers and expand your logistics network to mitigate disruptions.
- Improve last-mile delivery costs and speeds by ensuring your logistics network is flexible and able to meet your customers’ expectations.
At the end of the day, if your competition is offering free and faster shipping and you’re not, they’re going to get the sale. It’s also very important to make adjustments to your supply chain, free shipping thresholds, and delivery times in a way that is advantageous for your business but also meets your customers’ expectations. This is still more relevant than ever, so make sure you offer both. Learn how ITS can help you offer cost-effective fast and free shipping today.