Guest post: The importance of diversifying your eCommerce shipping
Today we have a guest post from our partners at Parcelhub talking about why shipping should be on the agenda of all sellers in the eCommerce industry. Delivery and postage should be at the forefront the minds of all sellers, but in the busy quarter four, sellers need every advantage they can get. The guidance that Parcelhub have provided here is spot on, and if you’re reconsidering your shipping options, we highly recommend having a discussion with the team at Parcelhub to understand how their solution can benefit your business.
Anyone involved in online retail will know that their business lives or dies by its shipping. And with more people than ever now shopping online, getting the shipping right – both for the customer and for your bottom line – is vital. But eCommerce has changed in the past few months and what you need from your eCommerce shipping strategy has also changed. Now is the time to look at how to diversify.
Before the coronavirus pandemic, online shopping was in the ascendancy. The lockdown in early 2020 accelerated the uptake of these service by some five years in just a few months . Now, the vast majority of consumers worldwide are doing at least some of their retail therapy online.
Research by Whistl outlines just how prevalent it has become. It found that, across the world, more than 70% of consumers had purchased online within the past month, with more than 80% in the UK, the US and Germany, rising to more than 90% within the past two to three months.
More significantly, some 30% of shoppers across all these countries have purchased from overseas online.
This has obvious implications for shipping: more goods sold online means more shipping is needed – both domestically and internationally. What also lurks behind these figures, however, is that consumer demand for how they want those deliveries to be made has also changed – and that means retailers need to look closely at their shipping strategy.
What do shoppers want?
It is tempting to think that what shoppers want is free delivery, but in the new eCommerce world, what they really want is flexible delivery. As we move to a world where eCommerce is the prevalent way of shopping, being able to dictate when, where and how deliveries are made – along with being able to change all or any of those parameters on the fly – is top of the consumer wish list.
It’s nothing new. Research as far back as 2018 by Retail Week found that 70% of consumers wanted delivery to be more flexible, with options that are agile and allow the shopper to change where their package is going and when it will be delivered while in transit.
Consumers also want to be able to easily track their deliveries, be notified about their whereabouts and ETAs, as well as being given safe delivery locations and re-delivery options.
The international angle
Interestingly, the development of ecommerce has seen more consumers than ever tap into the borderless structure of the internet and looking to foreign sites to purchase items.
Whistl’s research finds that international shopping was on the up, with 64% of them saying that better prices and 60% better choice being key to their decision to buy. A surprising 39% said that it was because shipping costs were lower of free.
Taken together, this all adds up to shipping needing to be made as agile as possible – but how do you get there?
What is on offer today?
The majority of retailers today get this and already offer a wide array of delivery options. Research from Parcelhub’s white paper Setting the innovation agenda with proactive delivery at the tail-end of 2019 found that 61% of retailers in the UK offered next day delivery, 65% within 48 hours, 42% within 72 hours and 20% to parcel shops.
This pre-pandemic research shows just how important flexible shipping was already becoming to consumers and how retailers were rising to the challenge. This is likely to be even more pronounced post-lockdown.
Interestingly, 33% also offered tracked international delivery, tapping into the groundswell of shoppers who are looking to buy cross-border to get a better price and wider choice.
These international shoppers accept that there can be higher shipping costs and longer delivery times, but as many as 40% actually see that overseas sites are offering free or cheaper delivery.
The same applies the other way, with shoppers outside the UK coming to your site to buy because the shipping may well be cheaper for them.
All this adds pressure to how eCommerce players manage their shipping.
Meeting these delivery demands
Meeting these demands has turned shipping into a competitive advantage. Where once retailers largely competed on price, now they also have to face-off on delivery.
According to Parcelhub’s research this has seen 46% of retailers giving a free first delivery, 22% free international delivery and 56% free returns.
To do all this has required a rethink for many as to how they operate the processes around shipping, with some 35% of retailers looking to invest in additional shipping options, with 27% investing in tracking options.
What is really interesting however, is that 13% of the Parcelhub survey are looking to invest is third-party and outsourced fulfilment.
Time to diversify?
This diversification is at the heart of creating a new shipping standard for many retailers. Working with third-parties to create not only the kinds of shipping services and options needed, but also to do so economically is now essential.
It is also vital to handling everything from better customer service to opening up new markets and even selling new products and lines.
The advantages of diversifying shipping are myriad and bring the kinds of benefits that the new eCommerce boom has made essential. And there are a few ways to make it happen.
One key tenet of that is to take a multi-carrier approach, which allows the retailer or brand to be able to mix and match their carriers with the increasingly varied delivery and returns demands of their customers.
Research by Accenture shows that 70% of online retailers use more than one parcel provider, 73% of which do this to ensure they get the best price and 68% of which do this to ‘mitigate risk’.
The importance of a multi-carrier strategy can’t be overstated. It not only allows for multiple delivery options to be put in place, it also goes a long way to minimise service degradation, covering the merchant against one or more carriers having issues, it allows deliveries to be tailored to suit product ranges. It can also increase checkout conversion and reduce cart abandonment.
With a growing number of consumers buying from overseas – not least China – the need to create an international shipping model is vital.
Shoppers from China and, for now, the EU are increasing the amount they buy from UK retailers. Servicing these guys is becoming part of the competitive business model.
Where it gets interesting is, that businesses that offer both UK and international delivery, become better placed to offer more delivery services to all their customers, including 48-hour delivery and next day delivery, compared to those who only offer UK delivery. Those offering UK and international delivery are also more likely to offer free returns.
DropShipping is quickly becoming one of the most effective ways to sell online. DropShipping involves the seller of the product never actually having the product, instead processing orders that then get shipped from a third-party.
This can be a really effective way of managing not just shipping, but also stock holding, inventory management and more. It also helps you as a retailer open up new markets overseas – by using DropShippers in the countries you are entering – as well as offering new lines and products.
The challenge has always been how to set it up. Conventionally, DropShipping been something that’s tricky to start and has a high failure rate as users struggle with complicated workflows and inadequate support.
Third-parties like Avasam are different. It offers an intuitive platform that allows merchants to DropShip new products from new suppliers, increasing ‘their’ product range. Avasam also helps manufacturers and brands find new resellers, closing the circle between merchants, shipping and retailers.
Multi-channel order management systems
Pulling all this together are order management systems. At the heart of all eCommerce logistics, these systems are proving a boon to managing the diversification of eCommerce shipping.
According to Parcelhub’s research, of those using order management systems, 95% consider their order processing to be an efficient process. Those who currently use a multi-channel order management system are more likely (69%) to think their order processing is very/extremely efficient compared to those who don’t (49%).
Shipping was already becoming a competitive edge for many online sellers and the coronavirus pandemic has accelerated that. It has also taken shipping in some new directions – cross-border is now more prevalent than ever – and retailers and brands need to rethink how they manage their eCommerce shipping.
Outsourcing all or some facets of your operations is now vital to offering the kind of delivery consumers demand at a cost that is sustainable.
Where a year ago that would have meant looking at maybe having a few carriers on standby, now it makes handing over as much as you can to third-parties the ideal way to develop your eCommerce business.
DropShipping has always been useful, but now can transform your business to rapidly meet the needs of your customers. It hands off inventory, fulfilment, delivery and returns to someone else – allowing you to rapidly expand into other countries, offer new lines and to meet the growing demand of customers for more online goods.
Coupled with multi-carrier management and order management systems, it is creating a powerful and diversified offering to help you create and maintain a leading-edge position in your market.