Mar 17, 2021
ineCommerce Marketing Tips
Improving eCommerce Conversions with 2-Day Shipping Guarantees
This article isn't extensive, but can be useful for a couple of fresh thoughts. It covers shipping efficiency and provides suggestions.
Fulfillment and delivery may not always be an e-commerce seller’s first thought when it comes to improving their conversion rate, but studies show that the delivery experience is important to both customer retention and attracting and winning new customers. As e-commerce sales become more and more competitive, customers expect fast and accurate shipping from merchants of all sizes, and today’s standard for fast e-commerce shipping is unquestionably 1 to 2-day delivery. Read ahead to learn more about how 2-day delivery drives e-commerce conversions and how e-commerce sellers of all sizes can build an optimized 2-day delivery network.
Measurable Results for eCommerce Sellers
- 56% of merchants responded that offering free shipping at checkout significantly reduced their shopping cart abandonment rates.
- 52% responded that offering 1 to 2-day shipping at checkout reduced shopping cart abandonment rates.
- Of those who saw improved conversions from 2-day shipping guarantees, most indicated improved cart conversions of up to 25%.
Beyond shopping cart conversions, offering 2-day shipping has been shown to produce long-term positive business outcomes. The same merchant survey showed measurable improvements in customer retention and brand preference:
- 59% reported more repeat customers
- 39% reported better online reviews
- 22% reported that they beat out their competitors
All of these outcomes, when factored together add up to lower customer acquisition costs (CAC), better return on investment for CPC marketing spend, and ultimately more profit per sale. These bottom-line results, paired with higher conversion rates, can really move the needle when it comes to sustainable growth for your e-commerce business.
These merchant findings are clearly driven by consumer preference. Due to “The Amazon Effect” e-commerce shoppers have become accustomed to free 1 to 2-day delivery and know that if the current site they’re browsing does not offer it, they can likely find another retailer that does.
In fact, 79% of respondents to a survey by Retail Wire indicated that free 2-day shipping is important to them when deciding where to make a purchase online. While many small to mid-sized e-commerce sellers may think that a 2-day shipping guarantee is an expectation shoppers reserve for major retailers, studies show that shoppers may actually have higher service level expectations when shopping small. A 2020 consumer survey revealed that 37% of consumers expect faster shipping from small to mid-sized businesses compared to their big-box competitors.
Top of Funnel Conversion Rates
Not only do 2-day shipping guarantees drive shopping cart conversions, but they can also be shown to convert top-of-funnel shoppers when they are advertised on the search results page or in a CPC marketing campaign. In 2020, Google Shopping introduced its Free & Fast Shipping annotations, allowing merchants to display their shipping promises on the Google Shopping results page. In early testing, Google found that listings with the annotations saw a 9% higher overall conversion rate. This shows that fast shipping promises are eye-catching early in the consumers’ shopping journey and can make them more likely to navigate to your page in the first place.
Improving top-of-funnel conversions gives you more bang for your buck on CPC ads, allowing you to do more with less in terms of your marketing spend. If you’ve already optimized your fulfillment network to offer free 1 to 2-day delivery, advertise your shipping guarantees early and often.
- Use Google Shopping Fast & Free annotations. A fulfillment partner like Ware2Go will offer seamless integrations between your Shopify store and Google shopping. The integration will automatically show the Fast & Free annotation to qualifying shoppers based on their geographic location and your warehouse locations and inventory availability.
- Display free 2-day shipping guarantees on your home page. If there are qualifications, like a minimum spend threshold, advertise those details upfront as well. Surprise price add-ons at checkout can negatively impact e-commerce conversion rates.
How to Achieve Nationwide 2-day Shipping
Obviously, shipping isn’t free and Shopify shipping app will be the choice in our case. E-commerce sellers must decide how to offer competitive shipping guarantees without depleting their margins. Most merchants choose one of the following 4 pricing models for e-commerce shipping.
- Flat rate: This pricing model takes an average of delivery costs of all delivery costs to apply the same shipping charge on all deliveries, regardless of the customer's location. For example, a company with a single distribution center on the East Coast may find that their average shipment costs $10, so they will charge a $10 flat rate shipping fee whether the customer is ordering from New York or California. This method is a bit of a gamble. It risks alienating customers in your closest vicinity and doesn’t account for an influx in demand in more expensive markets.
- Incorporate shipping costs into product pricing: This model is also based on average shipping costs, and its greatest risk is pricing you out of competition with other sellers with optimized fulfillment networks.
- Offer free shipping after a spend threshold: This model is a great way to increase the Average Order Value (AOV) and offset your fulfillment costs per shipment. It could, however, be a deterrent to first-time customers who want to try out your product at a perceived lower risk. Customers trying a new product may want to start with a smaller order size but don’t want to be treated differently than customers making a large purchase. In fact, 72% of e-commerce shoppers expect to receive the same delivery experience regardless of the size of their purchase
- Offer free shipping for any purchase: This is the e-commerce standard, and with the high perceived value to customers, has the most potential to convert sales. Free 2-day delivery may seem out of reach for SMB’s but can be achieved by partnering with a flexible fulfillment partner like an on-demand warehousing provider.
The most cost-effective way for small to mid-sized e-commerce businesses to achieve free nationwide delivery is through a distributed warehouse network. In this fulfillment model, inventory is distributed in strategic locations closest to a merchants’ greatest areas of demand. Positioning your products closest to your largest customer base enables 2-day ground shipping to all of your customers. This not only enables you to make better delivery promises but also lowers your delivery costs by cutting out next-day air and long-zone shipments.
Knowing where to position warehouses is often the most difficult aspect of building a distributed warehouse network. Ware2Go’s free network optimization tool, NetworkVu, offers an in-depth analysis of your current fulfillment network and side-by-side comparisons with 2 optimized models. The models are based on your data, either uploaded via the native application or through direct integration with your e-commerce shopping cart found in the app store.
Finding the Right Fulfillment Partner
Small to mid-sized e-commerce sellers who want to give their business a competitive edge with free 2-day delivery is likely looking for an outsourced fulfillment partner with a distributed warehouse network. Here are a few qualities to look for in a qualified fulfillment partner:
- Competitive SLA’s: When vetting potential partners, the key SLAs (Service Level Agreements) to ask about are on-time fulfillment, dock-to-stock time, cycle count accuracy. On-time fulfillment guarantees should be at 99%; dock-to-stock time should be guaranteed within 48 hours, and cycle count accuracy should be supported by both a qualified warehouse staff and top-tier fulfillment technology.
- Integrated Warehouse Management System (WMS): Find a partner that prioritizes technology to simplify rather than complicate your internal processes. A top-tier WMS will offer near-time inventory counts, automatic order processing, order and fulfillment status reporting, and delivery tracking. It should integrate directly with your e-commerce shopping cart to enable full automation and visibility into your fulfillment statuses.
- Dedicated Customer Support: Prioritize finding a partner that is invested in your success, with a highly responsive and knowledgeable customer support team. Ask about support ticketing, methods of communication, and guaranteed response times when vetting potential partners.
If you’re looking for an outsourced fulfillment provider to help you build a nationwide 2-day delivery network to increase your e-commerce conversion rate and grow your business, reach out to one of the e-commerce fulfillment experts at Ware2Go, or leverage your own data to get a free, custom analysis with NetworkVu.
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