ECommerce: The Shipping Dilemma
Wed, 22 Jun 2005
Ecommerce is one of the best marketing channels for small to medium-sized businesses. The cost of establishing a viable ecommerce site is far less than a traditional brick-and-mortar retail outlet. There are however many issues that can cause an ecommerce site to fail miserably. One of the issues that we see reguarly is shipping.
What Does Bad Ecommerce Shipping Look Like?
An ecommerce site can have the best products, the lowest prices and the best built site, but if they cannot accurately and effeciently fulfill orders it is all for nothing. One of the greatest examples of this was the launch of the first Toys-R-Us ecommerce site. They are a huge company with substantial resources, but they undersetimated when it came to their ability to get orders shipped to customers on time. In a nutshell, their launch sales were great, but because they failed to ship on time, they recieved an embarassingly huge "black-eye" with the public and it cost them millions in restitution to angry customers.
The lesson to be learned from this is that planning and experience are vital. Most ecommerce sites will not face the shipping and fulfillment dilemma to the degree as mega retailers. At the same time, smaller retailers do not have the clout or resources to recover from such failures. You need to have as many cards stacked in your favor as possible.
The "Test Order" Phenomenon
From the marketing side of the equation, the cost to acquire a new customer is high and burning customers gets expensive fast. There is a phenomenon that we have tracked for years with our ecommerce clients. We call this the "test order" phenomenon. When we track the sales and customer data for a site, we see that with repeat customers, their initial orders are relatively small. Over time their order averages tend to increase as they complete more and more purchases without major customer service issues. The goal is to get customers and maintain those relationships with reliable shipping and fulfillment. These issues are part of the larger role of customer service.
Realistic Ecommerce Shipping Strategy
In a perfect world you would have time to individually calculate the shipping for each order with great accuracy and the most efficient cost. Customers are much more satisfied when the performance of the site meets or exceed their expectation. So don't create expectations that are not realistic.
Ecommerce Shipping Can Be Data Overload
The problem is that many ecommerce retailers face is that the labor and data
required to operate with the highest level of effeciency when shipping
is not practical early on. To increase efficiency the retailer may need to choose a general method for handling shipping. There are many factor that need to be addressed in developing a shipping methodology, but we have created a list of some of the most common ecommerce shipping strategies which may be a start in addressing some common shipping problems.
Common Ecommerce Shipping Methods
- Shipping Service Calculator: UPS, USPS and FedEx
- Weight Based Shipping
- Quantity Based Shipping
- Price Table Based Shipping
- Flat Rate Shipping
- Minimum or Weight Shipping
- Base + Weight Shipping
These are a few of the common options which can allow an ecommerce site to match their shipping method with their shipping capabilities. Remember be honest about where you are now and work towards where you want to be in the future, your customers will thank you for it.