Ship it their way
What’s another way to increase sales revenues without coupons or lower prices?
One answer might surprise you: make it easier for customers to return their purchase. Nearly 80 percent of customers say they’re more motivated to shop with a retailer who makes returning a gift a positive experience, according to LoyaltyOne.1
When it comes to shipping, consumers want flexibility, and they reward retailers who give them want they want. When retailers provide the option to order online and pick up in the store, 40 percent of shoppers who do so purchase additional items at the store, a comScore study for UPS® found.2
Top Five Tips
Satisfying the fickle desires of consumers isn’t easy. Retailers have to carefully evaluate their customers’ preferences, carriers, shipping policies and even their warehouse locations to ensure their operations are designed to satisfy a wide range of individual customer requirements. Here are five ways retailers can give consumers control without having their costs spiral.
1. Prioritize cost over speed. Retailers need to consider how shoppers weigh tradeoffs of cost and convenience. “Customers are choosing cost over timeliness — in general, they’d rather pay less and have the package come a little later,” says David Bilodeau, a product marketing manager for Pitney Bowes. “However, they want the option to pay more to have it delivered faster.”
According to a Pitney Bowes survey, 82 percent of Americans prefer free shipping and have their purchase arrive in five to seven days. The rest would prefer to pay a fee ($8.50, on average) to have the purchase delivered in one or two days.3
Savvy retailers, who study and track their customers' preferences, can provide an appealing combination of offers. They can raise the price slightly on fast-selling items to keep shipping costs lower, offer free shipping to customers who spend more or on second orders to encourage additional business, or provide free shipping during flash sales to push goods.
But don’t have so many offers that consumers feel overwhelmed. “Customers want retailers to provide them with shipping and return options, but they don’t want to have to wade through a thousand choices,” Bilodeau says. “They want flexibility, but simplified flexibility.”
2. Re-examine your carriers. Retailers should continually analyze their selection of carriers, not only in pursuit of the best price, but for better levels of services. “Some retailers are locked into the thought process of only using UPS,” says Mike Graves, director of channel sales for Pitney Bowes. “That’s dangerous because you are missing out on regional carriers who can move faster in particular areas and provide next-day delivery much more cheaply.”
This year, UPS® and FedEx® both shifted to dimensional weight pricing for all packages, meaning that customers are charged according to the length, width and height of the package, not just weight. Such changes can dramatically change the economics of shipping choices. “You need to keep your finger on the pulse of industry changes,” Graves says. “Auditing your shipping operations and implementing multi-carrier software can help you strike the balance between cost and customer satisfaction.”
3. Be a wiser warehouser. The concept of warehousing is in tremendous flux. Warehouses that used to only replenish retail stores are now being positioned for ecommerce customers and other needs as well. “Many retailers were starting to think that storefronts were dinosaurs,” Graves says. “However, they are beginning to show new benefits, such as acting as mini-warehouses that goods can be shipped from.”
The changing nature of warehouses requires companies to develop better systems for tracking inventory and determining granular costs for all types of shipping. In the past 18 months, 44.1 percent of online retailers upgraded their fulfillment, inventory or order management software, according to a survey by Internet Retailer.4
This helps to ensure the right product is shipped from the right place to increase efficiency and reduce delays.
4. Make returns easier. Your return policy is a huge factor in whether someone buys your product. Today, 39 percent of customers examine a company’s return policy before buying; that’s up from 33 percent two years before, according to comScore.5
“Companies like Zappos built their brand on their return policy,” Graves says. “They turned their site into a virtual dressing room.”
Companies are finding ways to take the hassle out of returns, such as online software that allows customers to generate return shipping labels and track the package. Some retailers are providing a return shipping label with the product when it goes out. Others are giving customers a longer time frame to return products — and there’s good evidence that actually makes it less likely the product will be sent back.6
5. Prepare for tomorrow. “You need to pay attention to your customer base and examine regional and global trends,” Graves says. “Flexibility means truly paying attention to where customers are going. The next phase might be that customers want to pick up their goods at an intelligent locker, where a package or express envelope is delivered to a secured location and an email automatically notifies the customer it has arrived.”
The comScore study found that 2 percent of customers have already used intelligent lockers. In addition, 5 percent have had goods shipped to their workplace; 5 percent to a friend or family member; and 3 percent to another location, like a grocery store.7
While those might seem like small numbers, remember that consumer attitudes and expectations can change fast. As shipping becomes a more nuanced and critical element in the shopping process, retailers need to keep one step ahead of competitors and consumers.
By keeping an eye on what customers want, and constantly examining new ways to satisfy them, retailers can expand their shipping from a service to a competitive advantage that can result in stronger relationships and more sales.
1 “Half of U.S. Shoppers Say Returning Gifts Turns Holiday Fest Into New Year Stress,” LoyaltyOne, February 6, 2015
2,5,7 “2014 UPS Pulse of the Online Shopper™,” ups.com
3 “Pitney Bowes Research Shows Half of Americans Plan to Shop Online Earlier for Holiday Gifts,” news.pb.com, September 23, 2014
4 “Exclusive survey results on fulfilment and delivery,” Internet Retailer, February 3, 2014
6 “Your Shipping Charges Take Shoppers by Surprise,” crazyegg.com, June 23, 2014; “4 Ways to Improve Your Ecommerce Customer-Return Policy,” Jane Porter, Entrepreneur.com, January 14, 2013