A Look at Shipping Trends for the 2011 Holiday Season

September 30th, 2011 @ Newgistics  -  No Comments

With the economy still in a state of uncertainty, consumers are grasping at any possible way to save money. Especially with the holidays approaching, consumers are likely to make purchases and buy gifts from brands that understand the need to save while maintaining quality of merchandise and service.

What does that mean for merchants? For one, it means they must be flexible to meet these consumer demands during the most critical season of the year by providing a variety of options and promotions for shipping. In a 2010 survey of online retailers from Stamps.com, 64 percent of respondents stated that “some type of free shipping promotion” (with or without minimum spend) is the most effective promotion they can offer to drive sales during the holidays, with “discounted shipping” a distant second at 26 percent.

When executed well, shipping promotions consistently translate into increased sales: A comScore survey of fourth-quarter spending in 2010 revealed that the average order value on free-shipping purchases was $110, compared with $95 for non-free-shipping purchases. Of course, there is no such thing as “free” since the merchant must absorb these costs – but even aside from a significant jump in sales, the question on many merchants’ minds is whether they can afford not to offer shipping promotions. In another comScore report, 75 percent of consumers surveyed said they would shift to another retailer at checkout if shipping was not free.

So without a doubt, consumers love free shipping – but what other shipping promotions can attract business and help maintain long-term loyalty? Merchants will rely on a variety of strategies this holiday season, such as monthly shipping clubs, conditional free or discounted shipping (such as limited time, minimum purchase, or eligible products), and optional upgrades to increase visibility and control over the delivery or ensure ease of returns. Upgrades can seem counterintuitive when consumers are looking to save, so they may not be the best strategy;  nevertheless, some carriers will try to sell merchants and consumers on these services for the peak season.

At no extra cost, Newgistics’ Transit Triggers service provides optimum visibility into parcel movements that can trigger actions to help merchants improve customer service and streamline operations. Included with all Newgistics services, Transit Triggers begins with a dynamic barcode on delivery and Newgistics SmartLabel® return shipping labels, embedded with extraordinarily rich tracking data and order-specific details. Then once an order ships, parcel scan events can trigger customer specific notifications even sooner than other carriers, since we provide visibility on outbound parcels as soon as they enter the Newgistics network. This helps reduce inbound call-center volume and improve customer service, and also provides an opportunity to include targeted marketing messages in customer communications. Additionally, as the market leader in returns, Newgistics has a reputation for offering a seamless returns service that’s just as easy for the merchant as it is for the consumer. Also with the Transit Triggers notifications, customers can receive alerts acknowledging that their returns process has been initiated, easing the universal worry that the return will get lost and their account won’t be credited. By offering shipping benefits like these and making consumers’ shipping expectations clear up front with a well-defined shipping policy, loyal customers will take note – especially if the merchant is also offering them a special deal on shipping during the cash-strapped holidays.

Because the holiday season is the most critical time of year for most merchants, any mishaps or misunderstandings during this period have the potential to be that much more damaging to your brand. We all remember the time that we ordered that perfect gift for Mom or a close friend just in time for the holidays, only to discover at the last minute that the merchant was unprepared to handle the influx of deliveries and the gift wouldn’t make it on time. It is imperative for merchants to thoroughly examine service requirements around their carriers’ delivery capabilities during the holiday season to ensure that the customer’s expectations are met every time.

While free shipping will continue to be a strong driver in each shopper’s choice of merchants this holiday season, it’s important not to discount the impact of the carriers in this process – namely, their ability to meet consumer expectations consistently and at a reasonable cost to the merchant. Newgistics is currently engaged in an intensive consumer study with a globally renowned research firm to more precisely identify key considerations, and we look forward to sharing the results and   potential impact on value creation when the study is concluded. Stay tuned!

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