Shipping And Return Shipping Policies Drive Online Purchase Decisions
by Tom Caporaso, CEO of Clarus Commerce
Online sales claim an ever-growing slice of the total U.S. retail pie every year. A recent eMarketer report projects that e-commerce will increase 38 percent over the next four years, considerably higher than the 11-percent overall sales growth predicted through 2018. To survive and thrive in the coming years, individual retailers will therefore need to keep testing their online offerings, learning from the results, and optimizing their efforts. They’ll also need to give consumers what they want: consistent savings; easy, convenient shopping experiences; free shipping; and hassle-free return policies.
Some people will search the far reaches of the Internet to find the lowest possible price on every purchase, but most folks can’t devote that much time to every shopping outing. Instead, to augment their infrequent hunts for the best deals, they sign up for text alerts and other communications from preferred and prospective stores, check out recommendations from friends, and occasionally click promising online ads.
Once these shoppers find an online outlet (or several) that reliably provides them competitive deals and/or year-round discount opportunities, they’ll keep coming back — particularly if they know they’ll get…
Easy, Convenient Shopping Experiences.
By September 2015, according to Nielsen, 80% of mobile subscribers owned smartphones, and they’re more and more comfortable with making online purchases with their gadgets. In fact, smartphone users increased their holiday purchases by 50% from 2014 to 2015, per MarketLive. Even in-store shoppers, who still make the overwhelming majority of purchases, go online first to research products, compare offers, and find the best deals.
By catering to this demographic, which will only grow as younger generations mature, retailers can expand their core audiences and build reputations as tech-savvy brands. Quite a few retailers, though, including large national chains, have been slow to create or enhance their mobile platforms. This offers smart upstarts a prime opportunity to attract and retain customers simply by meeting their needs and desires.
Speaking of consumer interests, the offer that online shoppers consider the most compelling deal has always been — and continues to be — free shipping. It brings more shoppers to the checkout line (per Retention Science, free shipping offers convert twice as many sales as percent-off deals), and it keeps them there (per comScore, shipping costs are the biggest reason why customers abandon online carts).
Of course, someone has to pay for shipping. If the customer doesn’t, it’s easy to assume that the store does, but that’s not necessarily the case. A minimum purchase threshold, for instance, can help cover at least a portion of the delivery cost, and participating in programs that offer free shipping can eliminate that cost altogether, at least on certain orders. It’s important to remember that even the biggest e-tailers operate on thin margins, so the increased volume created by a free shipping offer can make a vital difference.
The one drawback of generating more sales is that it runs the risk of generating more returns, particularly in the online space. The return rate for online orders is three times higher than for in-store purchases, according to The Wall Street Journal, and apparel stores can sometimes see 30 to 50 percent of their online orders sent back. Worse still, from retailers’ perspective, shoppers really don’t like paying for that privilege: In a Harris Interactive survey, 81 percent of respondents said they’d be less likely to place additional orders with e-tailers that charge for return shipping.
Fortunately, a customer-friendly return policy will help drive sales. FedEx found that 41 percent of shoppers are more likely to place an online order if the retailer offers free returns, and, per Endicia, 95 percent of online consumers say they’d shop again at a retail site after their return experience went well. Beyond paying for return shipping, retailers can give their audience easy access to return shipping labels; the ability to return items in stores; free exchanges; and a quick, convenient refund process.
The ongoing growth of e-commerce opens up all sorts of possibilities for long-established retailers, small, nimble stores, and insightful entrepreneurs. However, while retailers’ and shoppers’ sales and messaging platforms expand, the basic rule of retail still holds true: The customer is king. To succeed, retailers therefore need to continually satisfy their audience’s needs and expectations.
Tom Caporaso is the CEO of Clarus Commerce, a recognized leader in e-commerce and subscription commerce
This is an article contributed to Young Upstarts and published or republished here with permission. All rights of this work belong to the authors named in the article above.