Support Services: Free or Fast? Or Both1 Jul, 2012 By: Ayal Latz Response
When Deion Sanders joined the Dallas Cowboys in the mid-1990s, owner Jerry Jones asked him, “Do you want $10 million to play offense or $10 million to play defense?” Deion famously answered, “Both.”
This pretty much sums up the evolving state of the consumer when it comes to shipping charges and speed of delivery. There are increasing signs of this today, especially driven by the millennial generation. Its mantra is, “My way, right away. And I don’t want to pay!”
This trend is happening now in the E-commerce world. The consumer wants free and fast shipping, and in many cases they are getting it. Will DR follow suit? This can happen only if DR marketers pay attention to operating costs, employ best fulfillment practices and ship from strategic locations near their customers.
Conventionally in E-commerce, and most certainly in DR, offers are structured as product price plus a separate charge for shipping and handling (S&H). Sometimes S&H is reasonable; other times, not so much. Either way, there is a danger to this model. The consumer is provided with two data points to assess. One, is the price for the product fair? And two, is the S&H price fair? If the answer is no to either question, it may kill the sale. Now there is a third question: “Why am I being charged for shipping and handling at all?”
Today, E-commerce is moving dramatically toward free shipping. Is it because online marketers recognize the dangers of the “plus shipping” model, or is it because they’ve tried free shipping and seen that their conversion rates are higher? It’s probably more of the latter but likely a bit of both. The end result is that most DR consumers are also online shoppers. As free shipping becomes the norm online, DR campaigns, which also have a large and ever-growing online presence, will need to adapt and consider including S&H costs in the product price.
Making things even more complicated, there is now more attention focused on faster delivery. The consumer wants it fast because they are excited about their order. They want to experience the product and share the experience via social media. And — just like any transaction — the buyer’s remorse clock starts ticking.
The good news is that fast shipping has its advantages for the marketer, too! Faster shipping reduces backend customer service costs, as the customer worries less about the order. It also minimizes buyer’s remorse. Quick delivery creates a positive impression on the consumer, which results in positive social media and referrals to friends, which translates into more sales. And for continuity programs, it accelerates the timing for the next cycle. So don’t just focus on the immediate costs — look at the big picture.
There are several ways to accomplish fast fulfillment. The most obvious is by choosing the right shipping method. But that choice may not be obvious to all marketers. For example, a marketer can simply ship everything via expedited methods, such as two-day air, but the costs will be unnecessarily high. Instead, by employing shipping tools that analyze the time in transit of each shipment before choosing the shipping method, many packages can be sent for two-day delivery via ground service if within the proper range from the fulfillment center. This accomplishes the overall goal but at a dramatically lower expense. Furthermore, shipping from a strategic location that is closer to your customers will translate into more packages being able to ship via ground service while still delivering quickly.
Remember, though, not all ground services are equal! Choose a discounted carrier option that does not rely heavily on a consolidator model. This may cost a little more, but it will yield similar in-transit times to standard ground services at a lower cost.
Lastly, process orders faster. The strategic location of your fulfillment center’s warehouse or the shipping method that you choose don’t mean anything if it takes too long to process the order. Same-day shipping goes a long way with the customer, and it’s becoming the expectation. Choose a fulfillment provider that shares this philosophy and has built their processes around same-day shipping. Combine this with right carrier method and strategic location, and you will be able to wow your customers at an affordable cost.