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[Lightspeed] How To Win Customers Over With Fast and Free Shipping
The same day delivery market in the UK is booming. It shouldn’t come as any surprise either. People shop online for convenience and same day, or next day delivery, is the next step in offering a streamlined, convenient order fulfilment process.
The same day market is currently projected to grow at a compound annual growth rate (CAGR) of 7.20% between 2024 and 2032, and the number of eCommerce users in the UK is similarly expected to grow, reaching 58.4 million by 2025. Parcel delivery services are re-engineering their core operations to meet the oncoming demand for same-day delivery, and leading retailers like Amazon have invested over $2 billion in ‘Prime Air’ drones to deliver same-day delivery, expected to launch in the UK in late 2024.
All in all, this means that with more people shopping online and the same day delivery market growing year on year, your business is going to be expected to offer a similar service. We’ll run through how you can optimise your delivery service to ensure you’re offering as fast, and cost effective, a delivery experience as possible so that you don’t end up falling behind.
Benefits of Offering Fast Delivery
We imagine we won’t have to delve too deep into why offering fast delivery is a benefit to both your business and the consumer. But, here’s a few examples anyway.
Reduce Cart Abandonment
Your customer finds something they want to buy and adds it to their trolley. After browsing a bit more, they head to the checkout page, and then vanish into thin air. Working out why customers aren’t buying items they added to their trolley can be confusing, but it’s normally due to two things: expensive shipping costs and slow delivery speeds.
Speed of delivery is considered the second most important factor (26.5%) followed closely by the price of delivery (27.2%). 48% of consumers abandon their carts due to extra costs, including shipping and delivery, at checkout.
Offering a lower-cost (or free) express shipping option can encourage far more customers to complete their purchases. You have to remember, the majority of your customers wouldn’t have added something to their trolley if they had an issue with the price of the item itself. Giving your customers that added incentive of cost-effective, quick shipping (as long as you can maintain healthy profit margins) will appeal and nudge customers who might be tempted to disappear.
Meet Customer Expectations
As we’ve already covered, the same-day delivery market is growing quickly. In the next few years, you won’t be able to get away with not offering your customers a wide range of shipping options. And, unless you offer exclusive stock that your customers can’t find anywhere else, there’s a high chance they’ll just go somewhere else. Make sure you’re not losing customers because your competitors are offering more.
How to Offer Fast Delivery
There are a few ways you can offer your customers faster delivery. Some will be more appropriate for your business than others. Here are some ideas:
Optimise Your Inventory Management System
Seamless inventory management can be the difference between supercharging your sales and finding yourself without a customer in sight. You can normally manage inventory quite easily by investing in a point-of-sale system that can help you accurately track stock levels so you can prevent delays before they happen due to out-of-stock items. They can also help you make sure you’re not buying too much excess stock that doesn’t get sold.
Point-of-sale systems can synchronise data across all your sales channels into one source of truth, so you never have to worry about consolidating information from multiple sources. This can allow you to make informed decisions about what items need replenishing and which items are running low, so you can keep your sales funnel moving and your customers happy.
If you’re in the market for a new point-of-sale system that can help you streamline your inventory management process with ease, Lightspeed Retail has everything you need.
Partner with a 3PL
If you’re looking to make serious changes to your order fulfilment process, 3PLs are your knight in shining armour. 3PL, or Third-Party Logistics, refers to the outsourcing of eCommerce logistic processes to a third party who will help with warehousing, inventory management, and order fulfilment. Generally, partnering with a 3PL is considered common practice for any retailer looking to scale their fulfilment offering whilst doing less legwork.
When you use a 3PL, online retailers will send their inventory to the 3PL’s fulfilment centre(s), who will then pack your orders and hand them off to a shipping carrier. If you don’t own, or want to rent space in many warehouses, using a third party is a cost effective way of expanding your reach across the country without too much expense. Plus, 3PL’s will have relationships with all leading shipping couriers which is one less thing to worry about for you, and they may even be able to negotiate special bulk discounts to secure you better rates.
Offer Free Shipping
Free shipping used to be a perk that retailers offered during the holiday season, but customers today expect it year-round. Fast shipping is good, but free and fast shipping is better.
Merchants need to give customers what they want in terms of eCommerce order fulfilment. But, you must remember that free shipping can get costly if you don’t do the proper groundwork.
Know Your Free Shipping Threshold
If your merchandise leans towards the lighter side, like mobile phone cases or jewellery, for example, or if your profit margins are too generous, you might consider offering free shipping on any order value. However, for most businesses, setting a free shipping threshold is generally a good idea to maintain profitability. If you create a threshold, the profit margin from larger sales will help cover the costs of shipping.
You can find the threshold for your business by identifying your median order value: the number which 50% of your orders are above and 50% are below. While some merchants opt for the average order value, this figure might be distorted if you have a few high-priced items. You should aim to set your free shipping criteria just above your median order value, which can encourage customers to add more items to their cart to qualify.
Experimenting with various shipping methods can allow you to gauge which value performs best. For instance, observe how adjusting the minimum sale from £35 to £50 impacts your cart abandonment rate. If there’s no significant impact, having a higher threshold could improve your profits. Also, remember to review and adjust your free shipping threshold if your product lineup changes.
Showcase Your Shipping Policy Upfront
Once you work out your shipping policy, make sure you showcase it so it’s easy to find. Use a banner or a button at the top of your website that clearly communicates policy.
People abandon their carts due to extra costs, like shipping and excess unknown fees, which can be too high and misleading. Be transparent and upfront with your customers about your shipping policy and you’ll find your cart abandonment rate reduces, and you’ll gain some customer loyalty, too.
Try Loyalty Programmes
Free shipping can also be integrated into your loyalty programme (if you have one). 37.5% of shoppers joined loyalty programmes for the rewards, which free shipping could become a part of. There are two main ways to incorporate free shopping into your programme.
One method is to charge your customers a small annual fee to join your loyalty programme, with free shipping being one of the perks, similar to Amazon Prime. The other method can be to offer free shipping on online purchases once a customer reaches a specified sales threshold with your loyalty programme. For example, once a loyalty member has spent more £200 in a calendar year, you can offer them free shipping.
Consider Your Shipping Location
Another easy way to offer free shipping is shipping from more than one fulfilment centres spread across the country. Shipping is cheaper the less distance something has to travel so you’ll want to find fulfilment centres strategically located closer to your customers. If your customers are spread out across the country, it makes more sense to house your stock in different locations. Cheaper shipping for your business and your customers, and your customers get the stock quicker.
Fast and Free Shipping Isn’t Going Away
Fast and free shipping is here to stay and your customers are going to soon expect it as standard practice. So, the best thing your business can do is to be prepared. Trial and test the different strategies we’ve mentioned and see what works for you. You’ll likely find that, so long as you’re maintaining a healthy profit margin and keeping an eye on it, your card abandonment rate will go down, and you’ll build a healthy base of loyal customers for your business.
