Highlights from Shippo’s 2023 E-commerce Shipping and Fulfillment Benchmarks Report
Routinely looking at your business’s data is critical to ensure you’re achieving your business’s goals for the year. But, without a frame of reference of how others like you are doing or how the market as a whole is performing, you won’t be getting the full picture of what your numbers truly mean. Shippo’s annual Benchmarks Report was made to give you just that.
Through our proud partnership with ShipHero, we’re excited to launch the 2023 E-commerce Shipping and Fulfillment Benchmarks Report. This year’s report looks at key metrics like average order values, shipping spend, rate of returns, delivery times, and more for sellers in 6 different product categories.
We also looked at macroeconomic trends affecting all e-commerce merchants and provide insight into the current innovations that will lead to the future of the shipping and fulfillment industry.
Below, we’ll cover some of the biggest highlights from the report. But, we encourage you to download the report in order to get a more holistic view of the benchmarks most relevant to your business.
People Are Spending More on Average Per Order, But is That a Good Thing?
In our last e-commerce benchmarks report, the average order value (AOV) across all product segments was $82.47. But, in our latest 2023 benchmarks report, the AOV across all product segments was $120.09. That’s an increase of 46% year-over-year!
While this is great to see for e-commerce merchants, digging further into the numbers we notice a few things. The year-over-year change varied greatly for those selling in different product categories. For example, YoY those selling apparel only saw a 14% increase in AOV and those selling jewelry actually saw a decrease of 12%.
When we zoom out of the data and look at the macroeconomic data during the past year, we also see that inflation rates reached upwards of 40-year highs which had different effects for businesses. Inflation hit businesses selling non-discretionary items such as clothing, food, and fuel, particularly hard. The increased operating costs for these businesses were then reflected in the prices that customers had to pay. The higher AOV could then be the result of higher prices, but that doesn’t necessarily mean higher net margin.
For discretionary items such as jewelry and electronics, those merchants had to lower their prices in order to fight for the lower discretionary spending that consumers had. The lower prices could result in a lower AOV for some in these categories, while for others, AOV went up because lower prices meant customers could put more in their cart.
The cost of shipping also went up year-over-year at varying rates for merchants in different categories which cut into overall profit margins. We discuss shipping costs in great detail in the report.
Merchants Are Making the Post-Purchase Better For Customers
There are many ways to make the post-purchase experience an asset to your business. But the three main categories discussed in this year’s Benchmarks Report are delivery times, shipping insurance, and order tracking pages.
With the data, we can see that year-over-year, average delivery times are getting faster. In last year’s report, we saw that the average transit time across all categories was 3.4 days. That number has gone down to just 3.1.
These faster delivery times can be attributed to both merchants fulfilling orders closer to their customers and also advances in carriers’ networks.
We’re also seeing that merchants are more willing to use shipping insurance to protect their customers’ packages. Year-over-year we’re seeing merchants like those in sports/outdoor go from 21% having used shipping insurance in last year’s report to 25% in this year’s edition. Increases in shipping adoption could also be seen for those selling apparel, electronics, jewelry, beauty/skincare, and health/wellness.
With 1 in 10 packages going missing in major metropolitan areas, this increase in shipping insurance shows merchants are looking to give customers more assurance during their post-purchase experience.
Order Tracking Pages
When it comes to providing order tracking pages, no less than 75% of merchants in each product category were shown to provide them for their customers. Given that 96% of customers report checking order tracking pages at least once after ordering online, it’s a crucial part of the post-purchase experience that the majority of online sellers recognize.
E-commerce Took A Hit, But There is Reason to Be Hopeful
The story of e-commerce as of late has been a tale of high inflation affecting every aspect of business (including shipping and fulfillment). But the narrative is shifting. The rate of inflation reported by the U.S. Bureau of Labor Statistics for May 2023 was marked at 4.0% which was less than half the rate for the same month a year ago.
The inflation rate has shrunk every month since the start of 2023, showing a bit more stabilization in the economy. The other factor that shows promise for the e-commerce industry headed into the second half of the year is the state of the global supply chain.
The New York Federal Reserve’s Global Supply Chain Pressure Index has gone down from 4.0 during the pandemic to just 1.0 and the cost of shipping containers has gone down year over year. Port congestions that plagued much of the pandemic have lessened and the global supply chain is close to returning to pre-pandemic levels.
This means you can get your products sooner and avoid backorders. It also means more affordable products from suppliers which will then translate into better prices and more sales for your e-commerce business.
Other Stats And Information to Expect in the Report
To go along with some of the data points discussed in this blog, the report also dives deeper into key metrics and topics involving:
- Average shipping costs broken down for sellers in different product categories and year-over-year.
- The most popular shipping destinations in the U.S. and internationally.
- The average rate of returns broken down for different product categories as well as advanced return data such as the average percentage of those printing return labels and including them in shipments.
- Cutting costs through logistics planning and outsourcing fulfillment
- How AI and robotics will change the future of shipping and fulfillment for e-commerce businesses everywhere.
Download the report today to dive deeper into these topics, get a better understanding of where your business stands when compared to others in the industry, and gain insight to propel your growing business forward.