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2020 Holiday Season Shipping: Expectations vs. Reality
Brandi Smith, Marketing Director
Holiday 2020 promises to be like no other for the e-commerce industry. There is little doubt that this year will set records for online sales. But by how much exactly is unclear. Record-breaking sales has been the case every year since e-commerce first emerged. However, COVID-19 this year has compelled consumers to develop new online habits, buying new categories online, from new merchants, using new payment and shipping methods and buying more frequently than in the past. As a result, Deloitte is projecting that holiday e-commerce sales will be up somewhere between 25% to 35% this year, compared to 14.7% last year as people remain hesitant about visiting stores.
With this influx and surge in online purchasing behaviour, merchants are worried about their ability to deliver packages to customers on time without sacrificing too much profit due to shipper surcharges and capacity limits. This was a top concern reported in a recent CommerceNext report, stating that 63% of retailer’s are concerned that consumers will demand fast, free shipping at a time where third party shippers plan to implement peak-season surcharges which may strain profitability. Online retailers are more than justified in this concern given 83% plan to offer free shipping as their preferred promotion this year, which is consistent and aligned with consumer demand for it.
Shipper-related issues seem to be the overall theme for online retailers this year. In addition to the peak surcharge concerns, 60% of merchants worry that third-party shippers may cap deliveries during peak demand periods. This is something that FedEx already did in May, when it was experiencing a huge surge in package deliveries during stay at home orders, while rival UPS added a peak surcharge around that time. Now, the fear is that delivery times could be even further delayed, given that November and December are already the busiest times of year for many e-commerce companies.
These concerns from online retailers are quite valid given that UPS, FedEx, USPS and Canada Post have all published peak season surcharges for holiday 2020 and that many retailers were told they can’t exceed newly imposed caps on packages delivered during peak COVID.
It’s not all doom and gloom, however. Consumers are easing expectations and offering retailers some leeway this year. In CommerceNext’s pre-holiday consumer survey, they asked consumers about the compromises they would be willing to make knowing that retailers are facing increased delivery costs this year. 31% of consumers indicated they would be willing to wait a little bit longer for their packages to arrive for a more cost-effective delivery.
Another way to prepare for the surge in e-commerce orders and combat the capacity crunch is to diversify the number of carriers you work with. Working outside of the big, traditional couriers and working with more regionally based providers are a viable solution, oftentimes providing better delivery service level agreements that get your parcels to your customers faster. For example, ShipperBee beats the current industry average of 60-70% with a 99.7% on-time delivery rate. How can you beat that when it comes to your customer experience?
You can also try to encourage customers to buy weeks in advance, instead during historically busy periods like Black Friday, Cyber Monday and the approach to Christmas season. Adjust your marketing strategies, promotions and messages to entice shoppers to make purchases earlier in order to receive them in time for the holidays this year. Signal to shoppers to expect longer delivery timeframes and offer a variety of shipping options at checkout with estimated delivery times to set the right expectation to avoid hurting the customer experience. You can also incentivize shoppers to choose longer delivery lead times in exchange for discounts or gift cards toward their next purchase.
According to a recent Inmar Intelligence survey, concerns around COVID-19 have shifted consumer returns preferences. 67% of holiday shoppers say they’d rather ship their holiday returns this year than return in stores because of the perceived risk of exposure to the virus. This means returns must be a key component of your customer-satisfaction strategy. A seamless returns process is a critical element to building and retaining customer relationships, while also gaining valuable insight into product performance and ultimately impacting the bottom line.
Now, this doesn’t mean that you need an industry-leading returns policy to attract consumers. But you do need to make the one you have simple, clear and easy-to-find on your website. Anything less can put a potential sale at risk. Cart abandonment rates help tell this story with 18% cart abandonment rate because there are no free returns, 15% because items couldn’t be returned at all and 12% because the return method isn’t convenient. That adds up to almost half of consumers leaving a site because of a poor return policy and a significant amount of potential revenue lost. Give your returns policy the best chance of incenting customer action. Ensure that it’s prominently displayed on your site and if the policy has been impacted by COVID-19, let your customers know. Also give reassurance for early bird shippers that your entire returns window has been extended from October to January, perhaps even February, to set them at ease.
In our recent blog, Three Ways to Deepen Customer Loyalty with a Sustainability Focused Brand Purpose, we discussed how sustainability has become one of the largest concerns amongst consumers today. Interestingly enough, even when sustainability isn’t a personal priority, the psychology of using a purchase to do good is attractive to many consumers.
As consumers begin to focus more on sustainability and how their consumption impacts the planet, they are seeking retailers that offer a more environmentally friendly approach to their fulfillment practices. In fact, 30% of consumers indicate that they’re willing to pay more for this option with retailers who use an appropriately sized box for a package, offer packaging with recycled materials and consolidate packages so an entire order is shipped in one box instead of multiple boxes.
Packaging goes beyond right sizing the box and recycled materials though. When shipping with one of the courier giants, investing in stackable boxes to ensure they hold up in their trucks is a must. With a courier like ShipperBee there is no need because there is no bouncing from truck to truck across distribution centers, which means you don’t need to make that investment. Our drivers move small bundles of parcels safely on their journey in their unused vehicle space and transfer them across our Hive network. No heavy-duty boxes required, which means you not only save on the cost of boxes, but the environmental impact associated with them. Plus, we always remind our customers to pack products with environmentally friendly packaging materials and in as small a package as possible like the 30% of consumers above prefer.
Consumers are also starting to lean toward brands that offer sustainable shipping options. Yes, sustainable shipping is a thing! I bet you’re wondering how that’s even possible. There’s a new way of shipping at a regional level that is reducing environmental impact for every parcel shipped. Sound too good to be true? It’s not. ShipperBee has revolutionized regional shipping by removing the traditional hub-and-spoke distribution model out of the equation by leveraging its innovative, smart, interconnected Hive mailboxes and collaborative delivery driver network. As a result, our first-of-its-kind end-to-end delivery model allows us to reduce carbon emissions for every parcel we ship by an incredible 73.1%.
This holiday season may be unlike any other when it comes to online shopping sales and fulfillment. There are a lot of practices you can put into place however to set the right expectations with your customer’s around the realities we are facing today with what is already peak season volumes for much of the year. Setting expectations up front will help maintain a good customer experience and keep them coming back all year long.
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