E-commerce shipping logistics company ShipStation released a national consumer study detailing consumer buying tendencies and the impact of delivery fulfillment on brand perception. The COVID-19 pandemic has largely been a positive for e-commerce companies, as people turned to buying online when cities shut down to tackle the virus spread.
The report specifies that North American consumers increased shopping by 33% over the course of this year, with nearly two-thirds mentioning that most of their shopping is done online due to the pandemic. Increasing consumer expectations on shipping experiences continue to put pressure on e-retailers. While consumers expect expedited shipping for their products, they also ask for free or negligible shipping costs.
ShipStation’s survey respondents make this clear, with 97% saying shipping costs are a primary factor and 92% saying shipping speed also is a primary factor while making an online purchase decision.
Still, expectations on expedited shipping have relented a bit over this year, courtesy of the pandemic. While consumers expected to receive their online purchases within five days in 2019, they were content with receiving them within eight days this year. But this has taken a toll on the shipping costs parameter, with two out of three respondents expecting free shipping due to slower-than-normal shipping speeds.
“Free shipping is a consumer expectation born before COVID — which is why that particular data set skews so highly; it’s an industry standard at this point,” observed Krish Iyer, the director of strategic partnerships at ShipStation. “When it comes to investing in fast versus free shipping, businesses have typically put their dollars toward offering free shipments with average delivery timelines to keep up with the likes of Amazon and other e-commerce companies that made free shipping a customer expectation versus a nice-to-have.”
But since the pandemic, expectations over on-time deliveries have decreased exponentially. Iyer explained that ShipStation saw a new trend in which consumers were more willing to pay a premium on enhanced delivery experience — anticipating the supply chain bottlenecks over pandemic-induced restrictions. Consumers staying indoors are ordering more online and, with certain items, are willing to pay a premium for on-time arrival.
“Our advice to retailers this holiday season would be to continue offering free shipping to uphold an industry standard. But with premium delivery, be warned that customer expectations will be high. If you offer premium options, make sure you can deliver on your fulfillment promise or risk losing customers for good,” said Iyer.
Another interesting observation from the consumer survey was that people had begun their holiday shopping well in advance — as early as August or September in some cases. About 62% of shoppers said they would start their shopping by October, slightly up from the 58% last year. This year’s rise might be attributed to delivery delays around COVID-19, aside from inventory and product availability concerns.
The impact of such nontraditional holiday shopping schedules can go beyond just the retailer’s sales and hit the entire inventory lifecycle. Consumers are stockpiling goods early on, which would likely increase returns during the prime holiday season rather than in January. Iyer contended that this could lead to retailers running out of inventory before the actual holiday climb, while inventory gets back to stores via returns during prime time.
“Depending on when certain retailers measure their quarterly sales cycles, early shopping will absolutely impact their bottom-line revenue. However, I think inventory management and how consumer behavior will impact returns cycles is the metric that they should be paying attention to as we inch toward the holidays,” said Iyer.
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