E-commerce companies compete across many parameters, including product variety, price and delivery options. While online shoppers ultimately make decisions based on all of these factors, research consistently indicates that free shipping is a critical incentive.
Low total delivered price, fast shipping and order accuracy are essential to winning and retaining customers, especially with competitors a mere click away.
According to the 2016 UPS Pulse of the Online Shopper study, of the more than 90 percent of buyers who reported abandoning shopping carts, at least half cited unexpectedly high shipping costs as the reason for doing so.
Whether or not the true cost of shipping is visible to buyers, finding ways to reduce shipping costs is key to profitability and customer retention.
This is more difficult than ever, as operations face dimensional weight (DIM) and other pricing pressures from parcel carriers.
While some answers may lie in evaluating current transportation and logistics costs, operations should rethink the efficiency of all operations throughout its supply chain network, including thirdparty parcel carriers.
Implementing a sortation strategy known as zone skipping allows fulfillment centers to assume some of the handling steps typically required of carriers.
The more sorting done at the fulfillment center, the less handling and sorting required of the parcel carrier – thereby reducing shipping costs and increasing delivery speed.