Tag Archives: parcel shipping software

Is Your Shipping Approach Contributing to Online Shopping Cart Abandonment?

Shipping Costs and Return Fees Are Among Top Reasons Online Shoppers Abandon Their Cart by Paula Heikell An astounding 75% of online shopping carts are abandoned by shoppers, leaving a vast number of potential sales just lingering at the final stage. Imagine the potential revenue spike if organizations could correct the issues causing shoppers to walk away right […]

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Shipping Costs and Return Fees Are Among Top Reasons Online Shoppers Abandon Their Cart

by Paula Heikell

An astounding 75% of online shopping carts are abandoned by shoppers, leaving a vast number of potential sales just lingering at the final stage. Imagine the potential revenue spike if organizations could correct the issues causing shoppers to walk away right before making a purchase.

ecommerce shopping and shipping image

To do so, it’s important to understand the primary drivers of shopping cart abandonment.

Why customers abandon their shopping carts

There are a variety of reasons why a customer might fill up their cart and then ditch it at the last moment. Among the most popular: they’re doing research. When they’re shopping, consumers do a lot of research on cost-related factors as they seek the best available deals.

Research Before Buying

According to ChannelAdvisor, 81% of shoppers conduct online research before making big purchases, with Amazon (55%) and Google (28%) the most frequent starting points. Seventy-nine percent of shoppers look for free return shipping and 71% of shoppers use online carts to evaluate shipping fees and return policies.

High or Invisible Shipping Costs

The Baymard Institute found shoppers abandoned their carts because extra costs were too high, including shipping, taxes and fees (60%) and they “couldn’t see/calculate total order costs up front (23%).

Shoppers abandon their carts for many other reasons, like forcing customers to register to make a purchase, unnecessary coupon forms, complicated checkout processes, stock availability issues and the demand for price-match guarantees. But with the majority of shoppers abandoning carts over concerns with shipping costs and options, a smart approach is to leverage smart shipping technology to help close more sales.

Preventing shopping cart abandonment with flexible shipping options

“Free shipping” is often the top reason why shoppers choose certain e-commerce stores, but is it the only reason? Not according to Fulfillment Service which reports free shipping is important, but not as important as low prices.

The Importance of Choice

Fifty-eight percent of those surveyed want free and discounted shipping, while 28% want a choice of shipping options.  A good portion of shoppers are willing to accept longer delivery windows for free shipping and it’s still important to provide expedited shipping as an option.

Essentially, both fast and free shipping options create incredible incentives for customers and can dramatically increase sales. The question is, do they increase sales enough to be worth it? Shipping costs typically account for 5% or more of the total cost, which can eat into profits.

Jerry Storch, CEO of Hudson’s Bay Company, a brick-and-mortar retailer that includes Canada’s The Bay department store, Lord & Taylor, and Saks Fifth Avenue, claims it’s more expensive for retailers to deliver products to a customer’s home than to have them shop in the store. “The economics are clear,” Storch stated at a Shoptalk e-commerce conference. “Direct-to-home has a supply chain cost three times higher than a store-based model.”1

Right-Sizing Your Free Shipping Program for Profitability

Still, over 46.5% of small to mid-sized businesses say that offering free shipping increases their profits. The key to correctly utilizing this kind of promotion is to find the sweet spot between costs and increased sales.

software to compare shipping costs

How? Many companies are embracing free or expedited shipping to gain a competitive advantage but getting creative to address those situations where either option is simply too cost-prohibitive. For example, they:

  • Offer free shipping on standard delivery, but charge a premium for premier services such as expedited or time-specific deliveries
  • Charge for shipping on low-value products or orders and offer free shipping on high-value purchases
  • Provide free shipping options if certain carriers are used
  • Consider using lower-cost regional carriers, as well as the postal service

Leverage Technology to Handle the Added Shipping Burden

Companies may be able to convert shippers into buyers by offering plentiful and creative shipping options that may satisfy customers’ needs, but it can also increase the burden on an organization. To do so, a seller must be committed to handling a wider mix of shipping speeds and carriers, which impacts profitability.

The best way to create more profitable free or expedited shipping offers is to increase the profit per item shipped, and the simplest way to do this is by reducing shipping costs. Cue: technology.

Regardless of company size or industry, there are numerous shipping software options to automate the shipping process and achieve savings in any fulfillment operation. Options range from barcode scanning shipping software that streamlines processing for warehouse workers to fully automated transportation execution systems that eliminate the need for staff to process shipments.

At their core, these solutions enable companies to automate shipping decisions for each parcel they ship, considering delivery deadlines, carrier rates, performance and other factors. In addition, the data analytics that are derived can provide significant insights that translate into negotiating power with your carriers.

Logistyx shipping software showing carrier rates and transit comparisons.
Logistyx shipping software showing carrier rates and transit comparisons.

A good multi-carrier shipping software makes it easy to process domestic and international shipments in seconds by:

  • Managing local, regional, national and international shipping carriers on a single shipping system
  • Auto-comparing rates/services for small parcel, postal, LTL and other carriers to identify lower-cost options
  • Providing a user-configurable business rule engine to apply customer-specific shipping rules
  • Auto-generating carrier-compliant shipping labels, export shipping documents and more

Eliminate cart abandonment with best-of-breed shipping solutions

While retailers consider the impact of free or expedited shipping offers on their bottom line, it’s also critical to remember the financial loss that results when potential sales walk out the virtual door – carts full but abandoned – as shoppers seek another vendor who will provide the same products with the shipping options they desire.

Retailers who recognize the high cost of a lost customer are investing time and resources into providing a variety of shipping options to keep these shoppers on their site. The best way to achieve this is to choose a multi-carrier shipping software platform that is scalable and flexible and makes it easy to respond quickly to rapid changes in shopping behaviors.

Paula Heikell is Vice President of Product Marketing at Logistyx

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Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. Contact us today. 

Copyright © Logistyx Technologies. All rights reserved.

How to Offset Rising Distribution Costs

How a Multi-Carrier Parcel Shipping System Can Help You Combat Rising Distribution Costs: Net landed cost of goods, the total cost associated with getting goods into customers’ hands, consists of cost of distribution (CoD) and cost of manufacturing (CoM). For years, manufacturers and brands have worked to reduce CoM as the means to reducing their […]

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How a Multi-Carrier Parcel Shipping System Can Help You Combat Rising Distribution Costs:

Net landed cost of goods, the total cost associated with getting goods into customers’ hands, consists of cost of distribution (CoD) and cost of manufacturing (CoM). For years, manufacturers and brands have worked to reduce CoM as the means to reducing their net landed cost of goods to compete and succeed in increasingly competitive marketplaces.

However, this strategy is reaching its limits, and therefore companies are increasingly turning to the often more rewarding, yet complex, opportunity to reduce CoD.

The Complexities of Cost of Distribution

Parcel shipping is experiencing strong – and accelerating – growth worldwide. Global package shipping grew by 48% between 2015 and 2017, and according to FedEx Corp. chairman and founder Fred Smith, B2C e-commerce sales are expected to reach $3.2 trillion by 2020. Global e-commerce sales are predicted to be even higher. This will translate into never-before-seen shipping volumes over the next couple of years.

Adding another layer of complexity: same-day delivery. As of 2017, 51% of retailers offered same-day delivery service to their customers, and the same-day delivery market is expected to grow significantly. While same-day delivery is a big opportunity for all retailers to improve their service level, it requires a high degree of order fulfillment and logistics sophistication. Major challenges, such as very short fulfillment lead-times and flexible last-mile delivery have to be overcome while bringing cost down to a level that consumers are willing to digest.

Put it all together, and the result is carriers are facing unprecedented demand for their services, which in turn forces them to invest in labor, technology and facilities to control volumes and maintain service agreements. Not surprisingly, the carriers have passed these costs on to manufacturers and brands.

UPS and FedEx have both increased published rate tariffs by a minimum of 4.9% per year since 2010, in addition to introducing oversize and handling surcharges as well as dimensional pricing for lightweight and bulky packaging. DHL Express also employed a similar strategy, raising rates by 3.9% in Germany in 2017 to boost services and prepare for future demand.

Achieve Efficiencies in your Distribution Model with Parcel Shipping Systems

For manufacturers and brands that haven’t already, it’s time to examine the impact these trends will continue to make. Any efficiencies achieved in the distribution model can help to offset these rising costs.

The mounting delivery capacity shortage and increasing e-commerce volumes further raise the stakes; shippers who can invest in parcel shipping systems that quickly determine the most efficient shipping option for each parcel they ship – considering delivery deadlines, carrier rates, performance and other factors – stand a better chance of keeping costs in check.

In fact, the right kind of parcel shipping system enables companies to reduce landed costs in four critical areas:

  • Dynamic carrier portfolio management for optimal rate and service selection
  • Carrier-compliant shipment processing that prevents fines due to shipping errors
  • Labor savings by eliminating manual, labor-intensive processes
  • Visibility to audit shipping history and recoup incorrect delivery charges

For businesses with large parcel shipment volumes, the importance of these outcomes cannot be understated. In a recent study by F. Curtis Barry & Company, the cost of shipping for these companies is by far the number-one fulfillment expense, often exceeding the sum of wages, benefits, facilities, utilities and supplies.

Profit is directly linked to how much – or how little – they are able to successfully reduce landed costs, making parcel shipping systems with low barriers to entry and easy scalability an attractive ROI for many.

Parcel Shipping Systems: A Lifeline for those who Want to Compete

As ecommerce continues its breakneck growth and the likes of Amazon keep pushing the boundaries of fulfillment, parcel shipping systems provide a lifeline for those who want to compete.

To learn more about how you can achieve efficiencies in distribution and reduce your net landed cost of goods by leveraging parcel shipping system technology, download our new white paper: The Other Half of your Net Landed Cost of Goods.

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Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. Contact us today. 

Copyright © Logistyx Technologies. All rights reserved.