Shippo Offers Online Merchants Strategies to Succeed
As consumers pull back on discretionary spending, retailers have to up their game.
While consumers are being more frugal due to the impact of inflation, analysts are anticipating an ongoing pullback on discretionary spending, which will challenge retailers to balance their inventories, but not at the expense of profitability. Despite the pullback on spending, shoppers are heading back to physical stores, and traffic data has shown an uptick in this postpandemic period.
And while consumers are headed back to stores, they are still shopping online, too, according to Shippo's sixth annual State of Shipping Report. In fact, the survey showed 60 percent of shoppers polled preferred to shop online versus in a store. And that's an opportunity e-commerce merchants can take advantage of to drive conversions and the bottom line.
Online merchants “certainly feel the crunch to optimize fulfillment costs — there are plenty of opportunities to get creative with shipping and other strategies to satisfy customers' evolving expectations without sacrificing their own profit margin goals,” the report's authors said, adding that the consumer preferences found in the report can help inform business strategies.
For example, Shippo found that 45 percent of shoppers polled “want a retailer to let them know when an order is delivered, and 42 percent said their willingness to shop with a retailer again if a package is lost depends on how the merchant responds to or resolves the issue.” The survey also revealed that while 45 percent of consumers polled said free return shipping “is most important to them when purchasing an item online, roughly a forth said it's the ease of processing a return,” the report stated.
The data also showed that 47 percent of shoppers polled said they will spend a minimum amount “to get free shipping, creating an opportunity to meet expectations while increasing AOV [average order value],” the report said.
Of the merchants polled, the top challenge is the cost of shipping — 44 percent said they spend more than 11 percent of a single order's total value on shipping.
Based on the results of the survey, Shippo had some recommendations, including driving more conversions by “providing shipping policy details and fulfillment options upfront.” The report said communicating “shipping and e-commerce return policies clearly, and upfront and offering a variety of fulfillment options to suit differing preferences can gain consumer trust and inspire more confident purchases.”
Another recommended strategy is to implement a multicarrier strategy and better technology to optimize investments. “By comparing more rates across a variety of carriers and service levels, you can ensure you're choosing the most cost-effective option for every order,” the report's authors said. “If you haven't already, 2023 is a great time to explore a multicarrier strategy because of benefits afforded by increased ground competition, competitive pricing and a variety of new service levels offered by carriers.”
Shippo said it could help merchants “identify the most optimized choice when comparing cost, reliability and service levels. In addition, streamlining label purchasing and other fulfillment workflows with better technologies and more automation leads to more efficient processes, optimizing for further savings.”