Now that you know from our previous article, how to choose the best logistics provider for your e-commerce, it is time to talk about another important part of your logistics management: the different delivery options that lie before you.
In recent years, marketplaces like Amazon have taken the game to a whole new level when it comes to product delivery which has led customers to raise their expectations towards the e-commerce standards of service. Almost half of the shoppers (46%) said that one of the key factors in the online buying decision is a convenient and personalized delivery service, according to a survey by Sorted.
Product delivery is a crucial touchpoint in the customer experience. The latter starts when your customers enter your website sees your products and make a purchase online, all the way up until those products are delivered.
Fortunately, you have the ability to control and to make sure this experience is a good one. A good delivery experience will help you improve customer satisfaction and retention which in turn will lead to an increase in sales and revenues.
1. What is a good delivery experience?
In order to provide a good delivery experience, there are 2 major factors you should consider:
Your customers need to be able to track at which stage the product delivery is. They also need to receive details about the delivery such as: the expected arrival time, the live position of the delivery etc…
Traceability is an essential factor in designing the best experience possible, as it can save a lot of wasted time and frustration. I mean, are you satisfied when the toilet paper you just ordered is 3 days late, and you don’t have any way to know it? This can lead to serious problems.
As soon as the order is made, you’ll need to be proactive when communicating with your customers. You can send them the tracking link or keep them updated about the delivery by email, SMS, or with a pigeon…
While the last one might not be my best advice, my point is that your customers like to know about the evolution of their order and won't be bothered by a tracking email. It is also crucial to keep in touch with your customers when issues occur as you might be facing delivery issues.
In order to offer a good delivery experience, you’ll need to set a shipping strategy. Having a clear strategy to manage your logistics and your products' delivery is essential so that everyone involved understands their role in the process.
This will also provide your different teams, from the marketing one to the customer service one, with a clear idea on how the process works. How to promote the different delivery options and how to better answer and resolve customer queries.
Setting a clear shipping strategy can help you differentiate yourself from the competition, increase conversions, turnover and average cart value. It also helps to cut costs, gain margins, increase customer satisfaction and brand recognition.
Now, in order to set your strategy, you’ll need to define which shipping options are best for your business.
This obviously isn’t an easy task, that’s why we prepared a list with some of the best shipping options to consider implementing in your strategy.
2. Free shipping:
Free shipping became popular since Amazon introduced it for orders over $25. It is the simplest strategy to increase conversions and reduce cart abandonment.
According to Pitneybowes, 91% of customers leave when shipping isn’t free or fast enough and 79% prefer the shipping to be free rather than fast.
That’s why using free shipping is clearly an opportunity to meet your customers' expectations. You can also use it as powerful marketing option to differentiate yourself from your competition but (yes, there’s always a but) free doesn’t mean free of cost. You’ll still need to pay for the logistics provider to get your products delivered to your customers.
So before offering free shipping, you need to understand how it affects your profit margins. Even if free shipping is driving more sales, there’s no point to offer it if you end up losing money on each order.
Now in order to strategically use free shipping, there are many options that you can try:
- Including free shipping only when a certain amount is reached for the order. Amazon for example uses the $25 as the threshold. Don’t set any random price, make sure that the amount you choose covers the shipping costs.
You can also set the minimum amount for free shipping based on your average order value. For example, if your average order value in $37, you can set the minimum amount for free shipping to $40, which will lead to an increase in your average order value.
- Including free shipping for a certain category of products where your margins are high enough to cover the shipping costs or products that have small shipping costs such as jewellery or fashion.
- Including free shipping as a promotional event for a certain period of time. This can be a good way to push sales especially in peak season. Don’t forget to back this initiative with clear communication on your website, social media and other communication channels.
- Including free shipping for standard delivery which usually are slow but cost less. You’ll lose less money on each order and ensure to satisfy the customers that are looking for free delivery.
If you’re not sure which one is best for your e-commerce, you can still A/B test all the options and see which one works best.
3. Flat rate shipping:
Flat rate shipping is when you assign the same price whatever the product you deliver. The subtle part is to find the right balance to not undercharge or overcharge your customers.
For example, you charge your customers $6 for any delivery without taking consideration of the size, weight, or value of the order. Flat rate shipping is a good option when you sell a similar product line in size and weight. It is also a good way to set clear expectations and give the right information to your customers. The good thing about flat rate shipping is that you have total control over the delivery price, which means that you can cover your logistics provider costs.
You can also choose to “sponsor” part of the shipping as a marketing gesture/stunt (depending on if you effectively take the loss or add it to your product price). Your customer will be more likely to buy something from you that costs $40 with $2.90 shipping fees than the same thing at $30 with $12.90 shipping.
4. Table rate shipping:
Table rate shipping consists on providing different prices based on different factors such as destination, product’s size and weight or the number of items ordered. For many customers who live just next door, it doesn’t make much sense to pay the same amount as others who live thousands of kilometres away.
Table rate shipping offers the flexibility to set up your different shipping options in any way you want. One simple way to do it is to differentiate your shipping price by zones. For example, let’s imagine you have an e-commerce to sell sneakers and your warehouse is located in Paris, you charge $5 for local deliveries, $6 in France, $8 in Europe and $12 for international deliveries.
This solution is ideal for online store that ship to many destinations, it allows you to offer affordable rates for local customers while still providing fair ones to customers located in the other half of the world.
5. Live carrier rate:
Live carrier rate can be a good option as you’ll give the opportunity for your customers to choose and pay for the exact service they need.
The option basically enables to generate live quotations when building an order and to cover your carrier costs. It takes the weight, size, origin, and destination address to calculate the shipping costs.
The best way to use it, is if you have a small line of items, with the same dimensions approximately. But if you have multiple product lines with different dimensions and sizes, this can turn out to be problematic. Especially when customers add several products to the cart, as it can generate charges that aren’t realistic, all of that due to different items dimensions.
Many CMS platforms such as Shopify integrate a real-time comparator to generate live pricing and all the possible shipping options.
The downside with this option is that you can’t use it as a marketing and promotional tool because you can't sponsor any part of it. You can't differentiate yourself with it as it is an outsourced service. It also doesn’t integrate stocking, packaging, and fulfilment costs which you’ll either to support or to add as a surcharge during the checkout process.
6. Mixed options:
Another great way to master shipments and deliveries is to use multiple options between the ones we’ve talked about above. This approach can be really effective as it helps you control and cover your costs while still making the most out of promotional opportunities.
Finally, now that we’ve gone through all the customer expectations and options to satisfy their needs. You can design a clear strategy to differentiate yourself from your competition while still offering the best customer experience possible. Let us know which strategy and options do you use, and how does it affect your e-commerce and your goals?
PS: Customers don’t want their toilet paper to be delivered late.