Peak shopping season is here, and while 2022 hasn’t been a banner year for online retailers, Adobe is still predicting a 2.5% increase on online sales. With more consumers shopping online than ever, that could mean ecommerce shipping delays.
Are you ready for the surge in shipping demand?
An increase in sales is certainly a good problem to have, but business owners need to be prepared with shipping strategies to handle the influx of seasonal orders. This post breaks down three important industry trends creating delivery challenges this holiday season, as well as what you can do to avoid shipping delays and preserve your customer retention rate.
Trend #1: More shipping delays
In 2021, COVID-19 wreaked havoc on the supply chain, resulting in ecommerce shipping delays across the board. This year, many of the pandemic’s most serious challenges are showing signs of improvement. For instance, shipping container shortages are easing, reducing delays in the shipping process related to labor shortages and congestion at ports.
Still, challenges remain. For instance, the time it takes a container to travel from China to the US West Coast has doubled since 2020. It’s no wonder that 59% of retailers, manufacturers, and wholesalers expect 2021’s holiday season to be more challenging than last year’s.
What consumers expect
Consumers aren’t supply chain experts, nor do they care to be. Most customers don’t have any expectations about the issues you might be facing. What they do expect is a seamless buying experience with a minimum of delivery delays. This can be hard on businesses trying to provide that positive click-to-deliver experience while dealing with a global crisis behind the scenes.
- An Oracle survey found that 45% of Americans never thought about the supply chain, or about how products were delivered, before the pandemic.
- 82% of people in that same survey are scared that supply chain disruptions will ruin their life plans.
If there’s one saving grace to all of this, it’s that consumers worldwide have been experiencing the impact of the global shipping crisis for more than two years, and they’re starting to adjust their behaviors in order to avoid frustrations around delivery delays.
- An impressive 91% of Oracle survey respondents said they would change their buying behavior, including buying in bulk and pre-ordering.
- A survey of more than 1,000 consumers found that 27% had started their holiday shopping in or before September.
Despite all of this, the holiday season isn’t going anywhere.
How to prepare your business
Proactively connect with manufacturers and suppliers
Manufacturers and suppliers may be short staffed or have facilities impacted by COVID-19 or natural disasters. To avoid delivery delays over the holidays, you should be reaching out to them to determine inventory readiness and get estimates for shipping your products as soon as possible.
Triple check your order details to ensure both parties are on the same page about the shipping process. Use shipment tracking to monitor product movements so you’re aware of any issues as they arise. All of this should also allow you to set more realistic expectations with customers.
Enter supplier conversations with a clear view on how much inventory you need. To do so, you’ll want to forecast demand well ahead of the selling season. Based on your marketing efforts, what product volume are you expecting to sell?
Use Shopify sales performance reports to help you forecast demand. This will also help you determine whether you need more warehouse capacity, more packaging, and more staff to support your ecommerce shipping needs this season.
Prepare your order fulfillment operations
Merchants need to keep a finger on the pulse of global supply chains in order to prepare for an influx in sales. This means looking at shipping times domestically and internationally across the supply chain—from sourcing to warehousing to delivering products—and padding in extra time along the way.
Businesses that manufacture overseas should plan for extended shipping delays, additional processing time for customs clearance, and fluctuations in costs. With costs of containers, materials, and labor increasing, businesses need to do thorough homework and continuously monitor transit times from supplier origins to where you stock your inventory.
As your inventory leaves your manufacturer or supplier, regularly check its shipping status and prepare your team to receive the products. With international and domestic ports backlogged, reports of long delays of products arriving from ocean freight are becoming more common. If your products are arriving from overseas, ensure your products’ Harmonized Commodity Description and Coding System codes are up to date to avoid potential customs delays.
Encourage your customers to buy early
Some retailers are listing their holiday items weeks ahead of schedule to try and spread out the seasonal surge and overcome inventory shortages. If you’re concerned about having enough inventory during peak periods, creating campaigns or deals to encourage purchasing earlier in the season is one way to potentially increase profits while keeping customers happy. Don’t leave your loyal buyers scrambling for last-minute gifts when things go out of stock.
Trend #2: Shifting delivery expectations
A shipping delay at the start of the supply chain inevitably leads to a shipping delay at the end of the supply chain. Businesses are struggling not only to source inventory, but also to fulfill their delivery promises to consumers cheaply and efficiently.
To make matters worse, shipping companies have kept their rates extremely high due to lingering COVID restrictions, historic inflation, and the war in Ukraine. Those costs represent major roadblocks for merchants hoping to fulfill online orders and delight potential customers this holiday season.
What consumers expect
Customer delivery expectations have never been higher. People expect fast and free delivery and they want to be able to track their items from the time they leave the warehouse until they arrive at their front door.
- 67% of US consumers expect a same-day delivery, next-day delivery, or two-day delivery option.
- When asked why they didn’t follow through on an online purchase, 35% of customers said the delivery time was too long.
- If delivery takes longer than expected because of supply chain issues, 13% of customers will never return.
- The average shopper checks the status of their order 4.6 times before it’s delivered.
How to prepare your business
Build out your shipping offering
Merchants have many shipping options to consider, but a good ecommerce shipping strategy doesn’t mean you need to offer every shipping option possible. It’s about finding a balance between the options that are affordable, are aligned with customers’ needs, and are realistic when it comes to your ecommerce logistics. Offering too many options can put a lot of cognitive load on the buyer and actually deter them from buying.
People want fast shipping, but “fast” is a relative term that depends on factors like location and buyer expectations. Fast could include same-day delivery, overnight delivery, or two-day shipping. According to one survey, 52% of merchants believe one- to two-day shipping commitments at checkout increased their conversions up to 25%.
And when it comes to shipping fees, you’ll want to at least consider free shipping. This requires evaluating your margins to see how and where you can offer this option. Not all orders need to come with free shipping; you can consider free shipping with a minimum purchase amount or as a promotional or marketing tool during peak periods.
A Harvard study found that shoppers spend 9.4% more on average when they’re incentivized to hit a threshold for free shipping. It might seem counterintuitive, but with the right strategy, offering free shipping can actually increase your profit margins while maximizing customer satisfaction.
Offer local delivery and in-store pickup
Both buy online, pickup in-store (BOPIS) and local delivery provide merchants with effective ways to skip the shipping delay and get products to nearby customers.
Leveraging your store or warehouses as pickup locations is a cost-effective option for buyers and is essentially free for merchants. This strategy also allows you to extend the holiday shopping season beyond shipping carrier holiday deadlines.
As brick-and-mortar retailers have leaned into building their online presence, local delivery options have become another default delivery method. Business owners can define delivery zones and multiple pricing conditions for each zone, prepare orders for delivery, and create optimized routes for drivers. This is one way to offer “free shipping” and fulfill customers’ expectations without dealing with carrier costs.
Shopify’s local delivery tools allow businesses to offer a customizable local delivery service at checkout. Check out Shopify’s buy online, pickup in-store and local delivery tools, which merchants can use to connect with new customers locally.
Outsource your fulfillment to third-party logistics provider (3PL)
Managing fulfillment is a huge time suck during the holidays, when you typically won’t have much time to spare. On top of the usual drain, de-risking your customer experience means exploring a variety of shipping carriers to ensure you’re offering fast and affordable shipping to your customers.
A better option for minimizing ecommerce shipping delays might be to outsource fulfillment to a third-party logistics provider (3PL). In addition to handling fulfillment during your busiest time of year, a 3PL often unlocks access to carrier diversification, expert guidance on fulfillment, and seasoned operators who can get orders out of the warehouse and to their final destination quickly. An experienced 3PL can help you avoid shipping delays, reduce shipping costs, and meet those increasing customer expectations.
Over-communicate on delivery
Being proactive with customer communications is never a bad idea. When it comes to delayed deliveries, customers expect a heads up—especially on high-value orders, where establishing trust is essential for customer loyalty. This starts with calling out shipping speeds at checkout. Then, you’ll want to let buyers know when an order has been processed, shipped, and delivered. This can be done on your Shipping and Returns page, using emails, or with order notifications.
This requires business owners to be in close contact with carriers and third-party logistics providers. As you revisit your carriers’ holiday shipping speeds, ensure they’re providing customers with all the information they need, like tracking information and support.
Shopify Shipping takes on the complexity of negotiating the best rates and services from carriers so our merchants can offer simplified shipping options to their customers. We’re also integrating national and international carriers so our merchants can access a variety of partners to ensure optimal package delivery.
Trend #3: More flexible return policies
In the midst of dealing with a surge of orders, businesses are also forced to deal with a corresponding surge in returns. Cross-industry return rates vary but have been cited as 30% or more during the holiday shopping season, with the highest volume of returns coming during the first week of January. And the cost of these seasonal returns? An estimated $101 billion in the US alone
Add in the current global shipping struggles and ongoing challenges with return fraud, and you can see why returns represent quite a challenge for businesses.
What customers expect
- Returns have become an essential part of the buying experience, and many shoppers won’t even purchase from your ecommerce store unless your return policy meets their expectations. What are those expectations? Fast, free, and easy returns.
- 68% of shoppers check the returns page before making a purchase.
- 52% of consumers have left a shopping cart out of fear of a difficult return process.
- Retail returns increased 6% in 2021 compared to the previous year.
How to prepare your business
See returns as an opportunity, not a problem
In an ideal world, nobody would return anything they buy from you. But in the real world, returns are inevitable.
Instead of looking at returns as a problem, shift your thinking. Treat returns as an opportunity to build customer loyalty and maximize profits at checkout. A remarkable 92% of consumers said they would buy again if the return process was easy. Once you shift that mindset, you can focus on proactive organization versus reactive mitigation.
Adjust your holiday return policy
Put together a holiday-specific return policy. This might mean making a return free or more affordable for the customer and extending the window in which they are able to return the product. Most buyers expect to be able return a product 30-90 days after purchase. You’ll also want to make sure your return policy is communicated early and that it’s clear and easy to find.
Consider promoting your shipping and return policy with a dedicated page on your online store. You can also add a banner to your product pages, put it in your FAQ page, and remind customers of the policy in order notification emails. Allowing people to edit an order prior to fulfillment is another great way to reduce return rates.
Prepare for the surge in returns
You’ll want to have the right people, processes, and tools in place to handle an influx of returns. Hire seasonal staff to ensure you have the resources required to communicate with customers about their returns, email return labels, track and restock returned items, and manage refunds.
Start making your list, checking it twice
While nobody wants to be listening to holiday music in October, it’s never too early to prepare your business for peak season—especially in the midst of a pandemic. By taking concrete steps to mitigate the global shipping crisis and meet customer expectations around delivery and returns, you put yourself in a position to maximize holiday profits, avoid late deliveries, and win loyal customers for years to come.