Online Retailers: Shipping and Fulfillment is More Important Than You Think

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If you are an ecommerce retailer trying to grow a loyal customer base, you’ve invested time and resources into developing a unique product offering, 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 your customers’ satisfaction and your operating costs.

According to a 2016 survey by AlixPartners, online consumers have become increasingly demanding when it comes to their purchases. Consumers who made an online purchase in 2012 received delivery in 5.5 days on average. In 2016, this number decreased to 4.8 days.

Consumers’ expectations for faster delivery have forced online retailers to keep up with this trend. The survey also found that one of the main reasons online shoppers did not purchase items in their cart was because their estimated shipping costs came out higher than anticipated. Clearly, shipping is important to online customers.

Another study, which was conducted by UPS and comScore, found that online customers abandon their shopping carts due to shipping issues 5 out of 8 times. It found that many consumers only load their cart to compare shipping costs with other retailers, while others abandoned their order because they did not have enough to qualify for free shipping. For another large group, the estimated shipping time was too long.

The lesson for online retailers looking to overcome these challenges is to not assume transit times and shipping costs ‘are what they are’. The most direct factors influencing these things 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. This makes having a sound process for carrier evaluation and negotiation vital to online retailers. As the surveys illustrate, offering low shipping rates 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. This is 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.

All this is much easier for online retailers located close to their customers. For many, strategically setting up, or working with, a network of fulfillment centers across the country is a good way to achieve this same goal.

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 very heavily in driving traffic to their website and maximizing conversions. Just as much attention needs to be placed on the final touch point they’ll have with their customer —a good delivery experience.

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