Shipping costs: Nine mistakes that slow down retailers
Although the negative trend in e-commerce continues, the shipping policy of many retailers is poor shortly before the peak season. As a result, numerous purchases are being canceled. What are retailers doing wrong? And how can the balancing act between competitive customer benefits and rising costs be achieved before Black Friday?
Consumers are cutting back on their consumption, and competitive pressure is increasing. At the same time, it is becoming increasingly expensive for retailers to ship their goods. A dilemma just before the Christmas season. Now retailers must avoid the nine following mistakes.
Flat rate shipping costs
Undifferentiated shipping costs that are not aligned with the market environment? A big problem. Just as shipping a sofa usually costs more than shipping a picture frame, shipping one bracelet may cost more than shipping three watches. Because shipping costs should be calculated not only by weight, but also by margin. Of course, industry standards, customer expectations and the actions of core competitors must be taken into account.
No or wrong minimum order value
Another problem is that many retailers do not require a minimum order value for free shipping. This is a missed opportunity to optimize the size of the shopping cart and achieve an efficient shipping volume. However, it is important to note that the minimum order value must match the product world. 500 francs may not be a problem for large electronics, but it is for simple drugstore items.
No offers for price-sensitive customers
Specify delivery costs and then wonder why price-sensitive customers don't buy anything? What has been forgotten here? There needs to be emergency exits for price-sensitive customers, i.e. coupons for free deliveries, defined time windows without shipping fees and/or loyalty programs for free shipping.
Offer only standard shipping
Five days delivery time, although the product is needed as soon as possible. No one is likely to click on order here. Anyone who does not offer alternative shipping options today is missing out on important revenue. In addition to express delivery, flexible delivery times and weekend delivery should also be considered. Important: Alternatives - beyond standard shipping - must be monetized according to the added value for the customer and not offered free of charge.
Do not use shipping for marketing
What the marketing department lost at the shipping strategy meeting? Whether CO2 offsetting, re-use of cartons, reduced plastic consumption or digital invoices: Sustainable initiatives around shipping should be actively communicated. Even in the digital shopping cart. This not only serves customer loyalty, but also helps with brand positioning.
Offer free returns for all products
From a retailer's point of view, returns are considered a "profit killer," but consumers often take them for granted. Nevertheless, it is important to differentiate. For particularly large or heavy products such as furniture, sports equipment, etc., returns should be subject to a charge. At the same time, a minimum order value for free returns can help to contain the cost factor. The only exception is damaged goods. These should always be able to be returned at no extra charge.
No measures against bracketing
If you order several similar products but only intend to keep one, you're bracketing. A nightmare for retailers - especially with free returns. How can retailers limit the damage? By allowing free returns only in stores, charging return costs but refunding them in the form of a voucher, or allowing free returns only on condition that the customer has a user account, does not keep any of the products, or exchanges returned goods directly for other products.
Costs are not transparent
Unexpected shipping costs and hidden fees spoil the shopping experience. If you have to pay a higher amount than expected when you check out, you're likely to abandon the purchase. Equally a problem, advertise free delivery when there is a minimum order value or other conditions. Merchants can't afford to gamble away their customers' trust. And often do it anyway. The right thing to do would be to clearly communicate shipping conditions throughout the entire customer journey. And instead of making false promises, it's better to show the outstanding amount at which shipping becomes free. This also motivates customers to add more products to their shopping carts.
Those who optimize their shipping policy can not only increase their revenues, but also strengthen their brand and customer loyalty. Retailers should therefore regularly review their own strategy.
Source: www.simon-kucher.com
