Your consumers are ready for try before you buy, but is your business?
Thanks to Amazon, expedited shipping (2 days or less) has transitioned from a luxury to a consumer expectation on every transaction. Ever since Amazon’s Prime service launched in 2005, eCommerce companies have been forced to keep up by offering their own free, fast shipping options. Recently, Amazon made an announcement upping the ante by cutting Prime shipping times in half – free one-day shipping for all Amazon Prime members.
This move has sparked retailers to re-evaluate their shipping policies, with many hinting that they’ll be releasing a competitive feature soon. Walmart announced that free (and without a membership fee) one-day shipping will be available to 75% of their customers by end of year. While this is great news for consumers who have grown up in an era of instant gratification, we can’t help but wonder how this might impact consumer buying habits.
As window shopping is increasingly replaced with online browsing, will consumers use one-day shipping as an opportunity to “try” rather than buy? Could the convenience of one-day shipping increase the number of people who buy something in order to try and return it? Currently, 41% of eCommerce purchases are bought with the intent to return some or all of the items. Since free shipping and fast shipment times are one of the main drivers for consumers to shop online, it makes sense online shopping – and thus online returns – will increase.
Given the cost of online returns, this isn’t a good outlook for retailers. Operational costs tied to shipments, packaging, quality dispositions, and even wasted product will all rise in the age of the trial economy. While fast shipping can certainly help drive loyalty and sales, retailers need to do more to decrease return rates and make returns as efficient as possible.
This is where operations can shine. By having fast fulfillment centers that speed up reverse logistics, retailers can ensure that product gets back onto the shelf quickly. This is essential for companies that have product lines that change often, such as beauty and fast fashion. Pushing products back into the supply chain quickly saves the product from being wasted or sold at an off-price retailer.
There are also a lot of opportunities for brands to leverage eCommerce data to understand who their most and least profitable customers are by creating return profiles. Some brands have even started banning frequent returners from their websites. By understanding how profitable these shoppers are, brands and retailers are able to make educated decisions on how to handle each unique situation.
Data can also be used to create a more personalized experience for shoppers that can ultimately prevent returns from happening in the first place. By understanding a user’s preference, brands can cater their messaging to align with what the shopper likes and predict what they will be interested in. Pairing this data-driven personalization with accurate imagery and website descriptions will ensure that customers are ordering products that they want and, therefore, make them less likely to return.
In this era of instant gratification, brands and retailers are forced to evolve to stay relevant and meet consumer expectations. Adopting a culture that is fast-moving and data-driven is essential for this evolution.
Coauthor and contributions by Sam Ruiz