All Things Shipping
Jan 11, 2018

Here’s How Fast, Low-Cost Shipping & Easy Returns Supercharges Your Bottom Line

This post was written by Michael Jon Lazar, the Executive Director of Marketing at ReadyCloud ecommerce CRM that offers a Shippo integration for easy fulfillment. As an established digital marketer, serial entrepreneur and owner of several cross-channel online stores, e-tailing is dear to his heart. Follow him on LinkedIn to stay up-to-date on his most recent endeavors. 

Online retailers have enough on their plate just managing their day to day options that it can be easy to overlook the benefits of seamless fulfillment and reverse logistics. At the core of the ecommerce experience for consumers, though, is just that.

Amazon Prime has set the standard. Shoppers now expect other stores to follow suit with a similar model, or they’ll just scoot on over to Prime and place their order there instead.

Last year, Amazon upped the ante—part of a back and forth battle for e-tailing dominance that was waged between it and rival Walmart. Consumers were first offered free two-day shipping on orders of $35 or more from Walmart, with Amazon besting the offer days later by featuring free two-day shipping for non-prime members on orders of $25 and over.

This case study helps us better understand just how important a fast fulfillment model is for online retailers.

On the flipside are the returns. They’re certain to come, and they increase when your store is selling well. The truth is that about one out of three (33%) products ordered online are ultimately returned by consumers. Making your returns process as seamless as your shipping is ripe with benefits, too.

They both matter greatly and have the potential to boost your bottom line. Here’s why.

Consumers Want Fast Shipping

Consumers have made it clear: They want fast shipping at a reasonable price. If your online store can’t offer them this, there are countless other options that are just a mouse-click or a Google search away.

What do consumers define as fast shipping?

According to a CNBC report, 96% of shoppers consider same-day shipping to be the definition of “fast.” Around 95% still consider next day shipping to be just as fast. This drops to 92% when shipping takes two days, and dips all the way to 63% when shipping takes three to four days. 

Low-Cost Shipping is the Standard

Overall, the cost of shipping can either make or break your online store, especially in an Amazon Prime world where more than 63 million Americans with Prime memberships can click over to this marketplace and get two-day shipping at a rock bottom rate.

But just how much of a factor is it?

According to Baymard Institute, the leading reason for cart abandonment is extra cost, namely: Shipping cost. While slow delivery, as mentioned above, does factor in, comparably it’s just 16% of the reason why consumers abandon the cart at checkout.

By comparison, the cost of shipping factors into more than 60% of cart abandonment rates, telling of how low-cost shipping immediately benefits your bottom line. Driving this point home is an Econsultancy report that finds that four in five consumers (58%) will take action to add more items to a shopping cart just to qualify for free shipping

Why Customers Want Seamless Returns

Imagine the mindset of the average online shopper for a moment. With local brick and mortar options like Best Buy, Costco, Target and Walmart available—all which make returns a simple process—they aren’t going to be motivated to buy online if it’s hard to return later.

To win over these consumers, online retailers need to offer no-questions-asked returns. Amazon Prime has set the standard on making ecommerce returns easy and fast, and it’s a model that all retailers should emulate.

Here’s why:

  • Multiple ComScore studies have found that 58% of consumers want no-questions-asked returns, with 47% wanting a return label included in the box.
  • 67% of consumers don’t want to pay return shipping fees.
  • 65% of shoppers read your return policy before placing an order.
  • 65% of returns are the retailer’s fault (e.g. wrong size; damaged item; misleading description, etc.).

With these facts in mind, it’s easy to understand the consumer mindset. This being: Ordering products online should be convenient from start to finish. Retailers streamline the checkout process, with many offering one-click ordering, but few make returns easy and fast.

Aside from improving loyalty, average conversion rates and decreasing cart abandonment, easy returns also help your bottom line in the form of repeat, new purchases—many which come when the consumer has returned to your website to place the return.

The proof? According to a study from Lee University, shoppers who returned to an online store to process a free return spent 58% more time at the site—with a related Adobe study finding that shoppers spent three to five times as much on a future purchase as a result.

Confidence Booster, Profits Supercharger

Making shipping and returns seamless reaps many rewards. As we’ve already discussed, doing so will help dramatically reduce your cart abandonment rate. What’s more, it will also help to improve the average order value, while serving as a customer loyalty booster in the process.

But doing so also helps your store make a lot more dough, too.

  • A related Science Daily study that followed three large retailers over six months and millions of dollars in transactions found that when a no-questions-asked return policy was put into place, sales improved by at least 25%.
  • Speeding up your shipping process has the potential to decrease abandonment rates by 60% or more, while offering free shipping (if possible) can improve sales by 73%, according to Econsultancy and ComScore.
  • A free shipping threshold has the potential to appeal to four out of five shoppers visiting your store, who will actually add more items to the shopping cart just to get that shipping deal.

The Decision is Obvious

Offering shipping low-cost may seem like a hassle, but it’s a proven profit booster that shouldn’t be ignored. A simple workaround involves creating a free shipping threshold, which as described above, can win over four out of five customers.

Streamlining the pick and pack process to get your items out the door on time to customers is a no-brainer in today’s Amazon led ecommerce world. Matching this diligence with a seamless returns policy is equally as obvious.

The results of doing both will feed your bottom line for years to come. The lack of doing so, however, will just send more customers over to your competitor. Which do you prefer?

Shippo is a multi-carrier API and web app that helps retailers, marketplaces and platforms connect to a global network of carriers. Businesses use Shippo to get real-time rates, print labels, automate international paperwork, track packages and facilitate returns. Shippo provides the tools to help businesses succeed through shipping.

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