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The New SaaS: Shipping as a Service

Posted by Sasha ViaSasha on September 6, 2016

Online retail is facing its greatest challenge. As ad buying becomes easier, more brands are crowding into the online/mobile ad space. The key to winning this intensely competitive fight for the consumer's attention is understanding millennials. For 71 percent of them, the best thing a brand can do is value their time.

This generation enjoys shopping online and spends over $170 billion every year in the US alone. They are the most influential audience type in terms of shopping behaviors that are driving market changes. Millennials want to build relationships with brands and tell their friends on social media about the user experience. 62 percent of millennials say that they are loyal customers of brands they engage with consistently.

They like to "click-and-collect," where they buy online and pick up the items at a favorite local store. The opposite side of this coin is "show-rooming," where they examine the physical qualities of items in the store, then order them online for better prices or wider options. The consumer path to purchase now is far more complex than just online or offline. The brand represents a single entity to them. Online, in-store and mobile are merely channels to reach that brand.

Adding up all of these facts will bring you to one counter-intuitive conclusion: maybe reducing the volume of returns is the wrong answer. An innovative online retailer could propel itself ahead of the competition by turning its shipping woes into a value proposition.

1. Shipping Plans Add Value for the Consumer

Returns tend to be perceived as a big hassle for consumers. This is one of the biggest drawbacks of shopping online for them. It doesn't have to be that way if you give them an alternative return process that is empowering, responsive and intuitive. As Amazon Prime demonstrates, many consumers are willing to pay for simplified shipping options. A shipping membership can give consumers a good reason to shop more often and not worry about sending back what doesn't work for them.

2. Shipping Plans Offer Greater Flexibility

One of the essential qualities of the in-store experience is trying on different outfits, touching materials and comparing options. A paid shipping/return membership brings that experience into the home. Many retailers try to compete on goods alone, using free shipping as an incentive in increase order sizes. Consumers enjoy taking advantage of promotions like these, but the result is that online retailers may be creating a cost center out of what should be a revenue stream.

3. Shipping Plans Are a Smarter Way to Compete

Most companies can't compete with the warehouses and shipping infrastructure of big retailers like Walmart. The solution is to not to compete on their terms. Let mega-corporations be the experts in free shipping while you offer a better shipping experience that frequent shoppers will pay for on a recurring basis. Content can make the case that simplified returns make it easier to for consumers, especially those shopping for clothes, to select more than one option and be sure to get the pieces that are perfect for them.

4. Shipping Plans Can Help Control Costs for Retailers

Many online businesses are frustrated with the variable costs of using multiple shipping vendors. In addition, handling returns tends to be an operational afterthought and a financial tangle for businesses. Large shipping and handling fees at check out cover the variability from the business end, but often lead to cart abandonment. The solution is packaging shipping as a service as an option before they get to check out.

Consumers are savvy enough today to see through the meaning of "handling" in "shipping and handling." To them it means extra fees to cover variable costs. Treat the customer with the respect they deserve and offer them the option to pay directly for variable costs through a shipping/return membership.

Topics: Amazon, Customer service, Ecommerce, operations, Retail, SaaS, shipping, Technology

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