Shipping and Delivery: How to Get it Right
Thanks to the rise of e-commerce and heightening customer expectations, shipping and delivery have become key drivers of overall customer satisfaction. An e-commerce company’s ability to meet customer expectations can be a source of competitive differentiation.
Executing against the wrong strategy—or not having a strategy at all—is a recipe for higher costs and lower customer satisfaction levels. Research shows that 37 percent of consumers who have a bad shipping experience will never shop with that merchant again. On the upside, 87 percent of consumers report that a positive delivery experience makes them more likely to shop with a merchant again.
Here’s what you need to do in order to get e-commerce right:
- Know your limitations. Use Amazon as a blueprint, but don’t expect to beat its delivery experience. "I don’t have to beat Amazon," said Stefan Weitz, chief product and strategy officer at Radial, in a Wall Street Journal article. "I just have to get close enough to provide a service level to my customers."
- Know where you are. What services are you using? What are they costing you? What are the actual service levels being delivered to your customers (not just carrier SLAs) by service, mode, and key markets?
- Know your market and customer base. What is the service level you need to provide to your customers? Make the hard decisions about what you will—and won’t—do for customers. What is the cost/delivery time trade- off that will maximize customer satisfaction levels? This may vary by product and by market.
- Know your shipping cost constraints. What can you afford to spend while still keeping margins in an acceptable range?
- Ask critical what-if questions. Detailed modeling of what-if alternatives helps you examine where better is possible. How much would it cost to speed delivery in a key market by one day? Are there markets or products where you can exchange a slower delivery time for lower costs? Do you need to open a new DC to better serve a fast-growing market? Do you have the right carrier and service mix to reach your cost and service goals?
- Know your sources of power with your carriers. Shipping volume, service mix, and market concentration can afford you preferential treatment.
- Invest in yourself and your business. Getting the right shipping and fulfillment capabilities in place can require some initial investment, but it will pay off in higher shopping cart conversion rates and more efficient operations.
- Don’t fall asleep at the wheel. Constantly monitor what is happening in your shipping network so you can course-correct as needed.
- Focus maniacally on your customers’ experience. The Net Promoter Score key performance indicator has evolved to being a metric for logistics and operations professionals, especially in e-commerce companies.
Providing an ideal shipping and delivery experience will increase customer satisfaction and return business, as well as help differentiate your company from its competitors.