Shippo released its 2021 State of Shipping Report, giving sellers perspective as consumer behavior continues to shift with the Covid-19 pandemic hanging around.
But it’s not just about consumers. It is also about how online merchants have adopted to meeting consumer demands for faster shipping, more transparent tracking, and simplified return policies and procedures.
First, let’s take a look at a few top-line stats from the report.
- US eCommerce spending could top $1 trillion in 2022.
- 54% of consumers prefer browsing for new products online rather than visiting a store.
- During this year’s peak holiday season, parcel volumes may rise 10.7%.
- With inventory shortages continuing, 80% of shoppers surveyed said they are buying a different brand than they did in the summer of 2021.
Confidence in Shipping Industry
The shipping delays from last year are still on the minds of many merchants as confidence in the industry has sunk slightly over 2020.
Given that parcel volume could rise by over 10% this year during peak season, that will put a lot of pressure on logistics carriers to do better than last year.
And shippers are concerned with only 18% feeling very confident about the shipping industry’s ability to manage the volume, while 31% feel not so confident about what lays ahead.
Still, that leaves a significant number of merchants in the middle that are hopeful carriers have learned from last year and are prepared better to deliver a better delivery experience versus 2020.
Shoppers Stay Online
One of the interesting findings of the Shippo survey is that consumers are still shopping online despite supply chain challenges causing out-of-stock messages.
Over 50% of consumers said they are continuing to shop more online with 16% saying that almost all of their shopping is now online.
Speed, Cost and Transparency
Of course, online merchants have other concerns besides timely delivery and shipping costs ranking on top with over 50% saying this represents their biggest challenge to their business.
With Amazon engraining shoppers’ minds that orders should arrive within 1 to 2 days, many small independent merchants have been looking at what they can do to battle this expectation.
One would think that merchants started to use more 3PL fulfillment solutions (Amazon FBA is such a solution) to have products located closer to customers to improve delivery speed, but that is not the case.
Of the merchants surveyed, only 1% use third-party fulfillment services (3PL), while 64% fulfill orders from home and 20% percent from their office. In addition, only 10% of merchants operate a warehouse.
That doesn’t mean merchants are standing still and ignoring that shoppers want reliable and fast delivery, but apparently, they are finding slightly longer times work as long as the expected delivery times are met.
Actually, the survey somewhat confirmed this when it found that 49% of shoppers said low-cost shipping matters over getting the order fast.
83% of consumers place more importance on free shipping than fast shipping, but that doesn’t mean sellers can just ship with the cheapest and least reliable service.
That is highlighted by another data point with 44% of consumers saying in the survey an accurate expected delivery date is very important on a product page.
This means consumers are delivery speed conscious and don’t want to go through a multi-step process to find out how long it takes to get an item.
While shoppers may be okay with waiting beyond two days for delivery, they want to know how long it takes before making their buying decision.
Putting this information up-front and center builds trust and should aid in sales conversion based on the responses in this survey.
Mixing it Up
To meet shipping time goals provided to consumers, merchants appear to have expanded to using a larger mix of carriers.
Especially small businesses often relied on USPS exclusively because the Postal Service was convenient and significantly cheaper than UPS and FedEx.
But prices increases and continued reliability concerns are driving merchants to embrace other carriers besides USPS.
In 2020, 42% of sellers used one carrier while in 2021, the number shrank to 25% with a corresponding increase in the 2-4 carriers range from 58% (2020) to 74% (2021). The use of 5 or more carriers effectively remained the same at around 1% for both years.
While not every merchant can easily diversify to other carriers, a significant number of them have to meet the delivery expectations of their buyers.
This is another angst for many sellers, but one that is high in the buying decision process for online shoppers and cannot be ignored by merchants.
50% of shoppers consider free returns most important while 31% consider the ease of the returns process most important.
These two may go hand-in-hand, but they clearly show that sellers must have a consumer-friendly returns strategy to grow their business.
Still, the survey found that 26% of merchants said they don’t accept returns which is baffling because many of their peers (32%) are offering free returns now. How much longer can these sellers keep this up without losing out to competitors?
Shippo – TL;DR
The bottom line from this Shippo shipping report is that a great number of sellers continue to fulfill their own orders and many have made changes to meet customer expectations.
Consumers perceive free shipping and free returns as important buying decision factors and merchants will need to figure out how to deal with the costs of these “free” services.
It could be time to eliminate low-margin items and concentrate on higher margins products where it’s easier for sellers to absorb the cost of free.
The 2021 State of Shipping Report by Shippo includes a lot more comprehensive information for merchants and is available for free here.
Merchant data is based on survey responses collected through email from 814 eCommerce merchants spanning multiple retail categories, including apparel, food products, jewelry, and electronics. Consumer data is based on responses from 1,001 US-based eCommerce shoppers and was gathered by a third-party survey platform. Both sets of data were collected from September 14-October 6, 2021, and published by Shippo in its 2021 State of Shipping Report.
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