As the holiday shopping season peaks, consumers are turning to retail and brand sites as well as pure-play e-commerce sites to shop and buy. But consumer expectations are shifting as shoppers now expect free shipping — and they want it in two days.
Here Jarrett Streebin, founder and chief executive officer of EasyPost, which works with small businesses as well as large public companies, discusses changes in consumer demands and how retailers are meeting their needs.
WWD: How have consumer expectations changed around shipping in the past year?
Jarrett Streebin: Each year, customers expect more and more from retailers during the holidays. As the e-commerce market continues to mature, along with it comes nearly insurmountable customer demands — and shipping is no exception. Whereas five years ago customers were happy to receive a package within a week and didn’t question paying for shipping, now they are looking for deep discounts, free shipping and two-day delivery.
WWD: What do you think is the biggest mistake retailers make in regards to holiday shipping?
J.S.: Working with millions of packages a year, there is one mistake that we see again and again — not communicating the shipping status with customers. E-commerce businesses big and small continually ship out packages and never pass on the tracking number to the customer. The absolute worst experience for a consumer is not knowing where their package is and having no way to figure it out. Think about it: a package could take two full weeks to be delivered, but as long as the customer has the tracking number, they can rest assured it’s on its way.
What’s more, by providing tracking, retailers can drastically decrease their support load — customers won’t be asking where their tracking numbers are. And since tracking numbers are free, providing them to the end customer is an easy mistake to avoid. All it takes is setting up an automated e-mail that passes on the tracking number provided by the carrier. Or if you’re using a 3PL [third-party logistics provider] or outsourced fulfillment, almost all of them pass back-tracking details.
WWD: What should retailers strive for in terms of fulfillment?
J.S.: There is no excuse for slow fulfillment, yet it happens all the time. A consumer will put in an order, three days go by, and then finally it’s shipped. What’s worse, the retailer will ship USPS Priority speed. That means they sat on the item for three days and then paid for premium shipping. Had they fulfilled the shipment within a day, they could have bought USPS First Class, or another service, and saved up to 50 percent. Sitting on packages not only delays a consumer’s satisfaction, but also takes money directly from a retailer’s pocket.
Packages should be mailed within 24 hours. No exception. In the customer’s mind, the clock starts ticking the minute the order is placed. So if you’re going to pay for shipping — in which the cost is based primarily on speed — then take advantage of everything you can to get the package out the door.
WWD: Does packaging really matter?
J.S.: Yes, from both a consumer satisfaction and cost perspective. Everyone has had the experience where they open a package and have to dig for the contents. The goods are half the size of the box. Not only do customers dislike having to dispose of a big box they didn’t need in the first place but also, they often think the company spent twice as much as it should have shipping it — and passed that cost onto them.
What’s more, dimension is a critical metric for shipping cost. The rule is, the bigger the box, the greater the cost. To avoid this, retailers should stock up on boxes of all sizes so they can make sure to pack items as tightly as possible.
WWD: What if a retailer can’t afford to offer free shipping?
J.S.: Like it or not, free shipping is the new normal. How do you avoid churn when you must charge for shipping? Wrap the cost of shipping into the item and only charge extra if a customer requests express shipping.
Amazon has proven that if you strap free shipping to an item you can sell almost anything. Follow their lead and offer free shipping, but make sure each item has enough extra built into the price so shipping costs are covered.
WWD: How can companies minimize the cost of returns?
J.S.: Of course, all goods should be returnable, but don’t make returns too easy. By including return labels in the box you make it far too easy for customers to return an item. You want a bit of friction, just like if they bought it at a store, they’d have to go back and take it in. A formal process will also allow you to actually get feedback from customers when they request a return.
WWD: What else can companies do to improve their e-commerce business?
J.S.: Give yourself a test run. It’s surprising how many companies don’t test their fulfillment. Whether you’re fulfilling goods in-house or through a 3PL, it’s imperative to test regularly. How else will you know how your goods are getting to customers?
By secret shopping your company’s fulfillment, you’ll be able to gain intelligence on internal and outsourced processes. See how long it takes to receive tracking information. Keep track of how long it takes to ship the item. Review how much air is in the box (if there’s a lot, you’re paying for it). These are the types of questions you want to be asking of any fulfillment services, internal or external. And the best way to receive the data is candidly, through first-hand experiments.