Your current parcel shipping strategy may be costing you customers and sales – learn why.

Shipping costs are expensive, there’s no doubt about it. Because shipping expenses pose a significant challenge for so many businesses, it raises the question of whether providing free shipping or quick delivery options is financially viable in the competitive e-commerce landscape.

But the truth is, neglecting these shipping choices might prove an even more expensive oversight.

The traditional customer experience (CX) has evolved considerably, accelerated by recent market shifts from events like the pandemic and more. “By 2020, customer experience will overtake price and product as the key brand differentiator.” This often-quoted statistic is from Walker’s 2013 report, Customers 2020. Today, the customer’s journey is intricately tied to the journey of the product and data shows that as well. Most business professionals agree that their top priority for business in the next 5 years is the CX (46%), compared to pricing (21%) and product (34%). From daily groceries to home improvement tools, the shipping of these essential items has become an indispensable part of customers’ lives.

Furthermore, the product journey is the customer’s journey. As businesses adapt to these changing dynamics, understanding the pivotal role of shipping and logistics is paramount. It’s more than just moving products from point A to point B; it’s a fundamental element for enriching customer experiences and establishing your brand as a standout player in a competitive market.

The Evolution of the Customer Experience

The landscape of the customer experience (CX) has undergone a significant transformation. Unlike the days when interactions with sales representatives defined the customer journey, today’s direct-to-consumer model extends the CX throughout the entire product journey within the supply chain. This journey encompasses the period well before items are placed in shopping carts and extends beyond the moment products are delivered.

In addition, modern consumers have higher expectations. They want real-time insights into product availability, location details, delivery options, shipment tracking, potential delays, and hassle-free return processes. The demand is high for a seamless flow of information throughout the entire shopping experience.

Remarkably, 86% of customers express their willingness to pay a premium for an enhanced and efficient experience. Additionally, a compelling 61% of consumers are ready to pay at least 5% more when assured of a superior customer experience.

Let’s take a look at how shipping affects that customer experience.

4 Reasons for Dissatisfaction with Shipping

Customer satisfaction hinges significantly on the efficiency and reliability of the shipping experience. Online shopping continues to rise – in fact, FTI Consulting released a report predicting that American consumers will drive online retail sales to $1.14 trillion this year, a 10% jump from 2022. As these sales continue to climb, understanding the key factors contributing to customer dissatisfaction becomes essential. Here are four of the primary reasons shoppers express dissatisfaction with the shipping process.

1. Customers will abandon their carts if the delivery options are too slow. In 2022, 18% of shoppers abandoned their orders during the checkout process due to slow delivery. This number has risen to 24% in 2023, emphasizing the increasing importance of swift delivery options. High extra costs (47%) and mandatory account creation (25%) remain top reasons for cart abandonment.

2. Customer satisfaction with shipping has increased. According to a DC360 survey, 77% of shoppers rated their deliveries in the second half of 2023 at least an eight out of 10, which is a noteworthy increase from the 67% recorded in 2022. Over the past four years, shopper satisfaction for online deliveries has remained strong, with ratings consistently reaching eight and above.

3. Negative shipping experiences impact repeat business and customer lifetime value. A poor delivery experience significantly affects customer loyalty, with 85% of respondents stating they would not shop with a retailer again after such an occurrence. This highlights the pivotal role shipping plays in retaining customers and the overall success of an e-commerce business.

4. Top considerations for shoppers include free shipping and returns. Offering free shipping and returns has become crucial for acquiring new customers, with 47% of customers citing high extra costs as a major reason for dissatisfaction. Additionally, customers seek convenient options like buying online and picking up in-store (BOPIS) and expect next-day, 2-day, and same-day delivery choices. Note: Keep in mind that you don’t NEED to match Amazon’s options. Discover what makes sense for your specific customer base, and take a crawl, walk, run approach.

The Changing Landscape for Retailers and E-Commerce Sellers

A sustained shift in consumer behavior is coming – after all, the shopping habits started by the pandemic are projected to continue. In addition, Gen Z and Millennials, driven by their need for instant gratification, will continue to influence the market.

The opportunity is there for retailers and e-commerce businesses that recognize the evolving demands of consumers to bridge the gap between desired shipping options and current industry offerings. By capitalizing on these trends, brands position themselves to thrive not only in the current climate but also in the ever-changing future.

One such trend is non-traditional delivery experiences. And while many shoppers have varying comfort levels, package receptacles in front of the house still lead with 71% finding them comfortable. In-home delivery follows at 52%, and the use of either in-garage delivery or package receptacles stands at 40%. More futuristic options like self-driving vehicle delivery have a comfort level of 34%, and drone delivery, at 31%.

For how customers want to hear about their shipments, consumers increasingly prefer information delivered via text messages rather than email. Klaviyo’s study of U.S. customers found that a growing number prioritize text messages as their primary communication channel, with the vast majority checking SMS messages (98% vs. 20% for email notifications). This makes text messages ideal for time-sensitive shipment alerts.

Finally, 58% of shoppers express a willingness to pay at least 10% more for personalized online shopping experiences. This highlights a significant opportunity for businesses to enhance their offerings and cater to the evolving preferences of the modern consumer.

Even though Amazon has set a 2-day delivery standard, it doesn’t mean that you can’t compete. Retailers who can provide low-cost or free shipping and increase delivery speed will be well-positioned to gain a competitive edge. The e-commerce landscape is evolving and doing so quickly – those who adapt to these changing preferences will not only meet but exceed customer expectations, ensuring continued growth.

Optimizing Shipping for Customer Satisfaction

And the trend continues: consumers agree that free shipping is their most important consideration when shopping online. Even more, shoppers typically order 2.5 items with free shipping, compared to 2 items with paid shipping.

While historically considered a significant cost of doing business, free shipping has evolved into a strategic tool for customer acquisition and value creation in the eyes of modern consumers. However, many businesses find it challenging to offer free shipping due to the perceived high costs. However, the true hurdle may lie within the shipping systems utilized.

To overcome these challenges, consider assessing your current shipping solution. If you’re relying on carrier-specific software from commercial carriers for the majority of your shipping needs, transitioning to multi-carrier shipping software (MCSS) could be a game-changer. This shift facilitates seamless carrier rate shopping and often results in a remarkable 30% reduction in shipping costs when looking at all angles including workflow efficiencies.

In addition, businesses are transitioning from a broad carrier diversification approach to a more strategic carrier rationalization approach, made possible by MCSS.

Unlike simply diversifying carriers for the sake of variety, which was necessary during the past when capacity was at a premium, carrier rationalization involves optimizing a core set of carriers personalized to your specific shipping needs, target markets, service requirements, and cost-efficiency goals. This approach includes evaluating carrier performance, negotiating favorable rates, and creating customized partnerships to ensure reliable, efficient, and cost-effective deliveries. The emphasis is on minimizing disruptions and maintaining an optimized shipping process.

This shift from carrier diversification to rationalization reflects a strategic effort to work smarter with fewer carriers, maximizing cost-efficiencies. Shippers are auditing their carrier portfolios to determine which carriers provide the most value, offering flexibility based on unique customer demands, such as faster shipments, enhanced visibility, varied transit times, or specific delivery windows. [Listen in to learn more about carrier rationalization.]

Exploring creative shipping tactics which will meet your business needs is key for brands as the landscape continues to change. Instead of universally offering free shipping, strategically implement it to attract new customers, retain customers within a loyalty program, or re-engage those with a history of cart abandonment.

In essence, optimizing your shipping strategy involves more than just addressing costs – it’s about leveraging innovative solutions and customer-centric approaches to enhance the overall shopping experience and build lasting brand loyalty.

Elevating Your Business with Dynamic Shipping Solutions

Overall, the significance of shipping in helping to shape purchasing decisions cannot be overstated. The absence of free and fast shipping options can lead customers to abandon their carts, looking to alternatives that better align with their preferences.

At the same time, the broadening definition of CX emphasizes the growing desire for enhanced visibility and communication throughout the shipping process. This presents an opportunity for businesses to address the gap between customer expectations and current offerings to stand out from competition.

The barrier of cost should not stop your company from capitalizing on the growth of e-commerce. Transitioning to a multi-carrier shipping solution is a strategic move that not only helps in cost savings but also contributes to your bottom line – not to mention, delighting your customers with efficient shipping processes.

ProShip is the robust multi-carrier shipping solution for enterprise shippers looking to equip their operations with unmatched functionality and elevate the CX. Explore the diverse benefits of ProShip’s unique features:

  • Automated Compliance Solutions: Implement versatile business rules with automation for seamless compliance across diverse industries from retail to manufacturing to healthcare.
  • Efficient Rate and Date Shopping: Optimize transit methods with market-leading rate shopping functionality. Bonus: Plan deliveries with precision using Advanced Date Shopping, evaluating nine data sets for maximum efficiency.
  • Streamlined Carrier Management: Onboard carriers easily with a broad carrier library to take advantage of expanded shipping options and cost-effective solutions.
  • Omnichannel and DTC Excellence: Optimize omnichannel fulfillment logic for reduced transit times and enhanced customer experiences. In addition, master direct-to-consumer (DTC) strategies with compliant shipping and multiple delivery options.

Embracing this win-win approach will position your business to not only meet but exceed customer expectations. For more insights and to explore how ProShip’s multi-carrier shipping software can elevate your customer experience, reach out to our shipping experts.