In 2017, sales by small business owners accounted for over half of the purchases made on Amazon. Unfortunately, 45 percent of them report that find it tough to keep up their margins as they sell more on marketplaces like Amazon in order to compete with other vendors.
How can you drive more sales this holiday season while keeping your margins? Start with order fulfillment.
Order fulfillment is not just your backroom operations, it impacts your conversion and cart abandonment rates, how competitive you are against similar businesses, and it can impact the your customer support overhead. Shipping charges are actually the number one reason for cart abandonment. Here are five ways you can use order fulfillment to win the hearts of customers this holiday season and beyond.
1. Surface delivery information on the product page
Amazon has defined online shopping expectations, beginning an evolution towards transparency and a customer-focused checkout experience.
According to Shippo's survey reports, two other pieces of information items are key: the expected arrival date and exact shipping cost. However, only 33 percent of merchants include the expected delivery date and only 64 percent show the item's shipping cost right on the product page.
Amazon doesn't let the customer wonder about anything when they are looking at the product page. They don't say "Two-Day Shipping" and let the customer guess when it actually arrives. Instead, they provide the expected delivery date and cost. Having all the appropriate information available on the product page has allowed them to be successful with the one-click shopping experience.
2. Use free shipping to convert visitors
Never let the cost of shipping be an obstacle. According to research by UPS, 81percent of shoppers cite free shipping as the most important thing they care about when going through the checkout process.
Consider providing customers with a free shipping option even if the delivery time is longer. 93 percent of those surveyed would take actions to qualify for free shipping, 58 percent of whom add items to their cart specifically to qualify for free shipping.
By offering free shipping with a minimum purchase value, your customers will add at least one more item to the cart in order to qualify.
One way to determine your customers' spending threshold is by calculating your current average order value and setting the free shipping minimum slightly above it. Be careful not to set your threshold too high. If your average order value is $20 and you set your free shipping minimum at $200, you're not offering enough savings to offset the increased spend.
3. Don't put all your eggs in one carrier
While offering "free shipping" is easy to say on the product page, financially, it's can be difficult to balance. Amazon solves this by diversifying their carrier mix.
If you're only relying on one carrier right now, such as UPS or FedEx, consider adding a few additional carriers today, before the holiday rush. Working with multiple carriers can help you optimize costs and provide more delivery options for customers.
By being prepared with multiple carriers, your team can better control costs, exceptions, and delivery expectations.
4. Insure high-value shipments
Not only will there be more orders over the holidays, but the value of each order is generally higher (especially if you're incentivize them with promotions like free shipping).
For these high-value orders, consider purchasing shipping insurance. A single loss or damage of a high-value shipment can set you back significantly. Not only have you lost the original shipment, but typically you would have to send the customer a replacement and pay for the cost of shipping again.
Each domestic FedEx and UPS parcel is covered automatically up to a value of $100 against loss or damage. The U.S. Postal Service provides an automatic $100 of coverage on Express services like Priority Mail Express and Priority Mail Express International. If the value of your package is less than $100 you may not need to purchase additional insurance.
For shipments valued over $100, you can purchase additional insurance provided by the carriers or from a third-party insurer, which can usually be found through your shipping label platform of choice.
5. Prepare for post-holiday returns
For ecommerce companies, returns are simply part of doing business, and you can still minimize costs and operational impact.
A good place to start is to outline what your customers can expect, whether it's an exchange, store credit, or a full refund. Every ecommerce store has its own preference, so don't feel pressured to conform. Many people will be shopping with you for the first time, so be as clear as possible.
When it comes to the actual return procedure, include the specifics for your customers. Set expectations by making it clear who needs to ship what and by what date. Who pays for shipping--you or your customers? Should your customers use your packaging or their own?
If you sell internationally, you should create a separate policy for international customers. While not as customer friendly, you might consider limiting which items can be returned and who pays for shipping.
Remember that there are many reasons for returning products, ranging from the unavoidable to the entirely avoidable (e.g. human error on the company's side, bad descriptions, poor product quality). Use this opportunity to understand why customers return items to help you lower returns throughout the year.
Getting ready for holidays is an ever evolving task. It's impossible to have everything perfected, but the better prepared you are, the easier and more successful it will be for your customers and you.