Consumers are spending more time shopping online than ever before, and that’s driving sales growth at a time when global adoption of e-commerce has peaked in major markets, according to a report from Pitney Bowes Inc. But that same trend is contributing to growing frustration among customers.
Pitney Bowes found 61% of global shoppers were “let down” by e-retailers during the last holiday season, up from 47% in 2017. In the United States, 56% reported being let down, up 20 percentage points from a year earlier. The disappointed consumers say they experienced problems such as later-than-expected deliveries, or receiving the wrong items.
The Pitney Bowes report was based on responses from more than 13,000 consumers in 12 countries conducted in late August 2018 and combined with surveys of 650 retailers in the U.S., U.K. and Australia. It finds that e-commerce adoption has peaked in those markets, but consumers are buying online more often.
Almost all consumers in the surveyed countries buy online at least some of the time, Pitney Bowes found. That means sales growth is not coming from new e-commerce adoption. However, e-commerce growth continues because shoppers are buying online more frequently.
30% of U.S. consumers make an online purchase at least once a week—up 11 percentage points from 19% a year ago, according to the report. Millennials (47%) are the group most likely to shop online on a weekly basis, followed by households with children (46%). Baby boomers (18%) are the group least likely to buy something online at least once per week.
As volumes rise, retailers are struggling to keep up with the demand and manage it effectively, says Lila Snyder, president of Pitney Bowes Commerce Services. In many cases, retailers’ technology and physical infrastructure do not keep pace with growth, she says, but the sheer number of transactions creates more chances for things to go wrong.
Snyder says that, as consumers order online more often, that gives retailers more opportunities “to delight consumers.” But, statistically, it also gives merchants to make mistakes. She says the best retailers realize that a certain number of mistakes are inevitable and plan ahead with strategies for making things right.
“All consumers are hard to please,” she says, and most become frustrated by the same, basic things, such as late shipping or shipping costs that are too high.
The most-cited causes for consumer dissatisfaction among online shoppers, Snyder says, happen after the customer clicks the Buy button. For example, when U.S. consumers were asked to name their top challenges last year, 15% cited shipments arriving late, while 12% said shipping was too expensive.
“Consumers are telling us loud and clear that they care about the post-purchase experience,” Snyder says. That includes fast and free shipping offers that meet their expectations.
When retailers disappoint customers, they don’t like to stay quiet about it. 90% of U.S. online shoppers will respond to a bad purchase experience by taking actions—such as sharing their frustrations on social media to never purchasing from the offending site again—that could hurt a retailer’s brand, according to the survey.
If consumers anticipate a disappointing post-purchase experience, they will go elsewhere. Pitney Bowes found 91% of online shoppers in the U.S. will leave a retail website if critical services like “fast and free shipping” are not available. And only 47% consider two-day free shipping to be “fast,” while 48% listed that kind of service as merely “acceptable.”
What this indicates, Snyder says, is that shipping policies can make a real difference to sales and should be seen as an integral part of a retailer’s marketing strategy. “The [chief marketing officer] has to get more involved in shipping” at many e-retailers, she says.
Consumers still rank “free shipping” as more important than “fast shipping.” Globally, 76% of consumers prefer “free” over “fast.” In the U.S., that number is 79%, down from 86% in 2017.
Among U.S. online shoppers who abandon a retail website because of high shipping costs or inadequate options, Pitney Bowes found 43% move on to purchase from an online marketplace, 34% buy from another retailer and 14% choose not to make a purchase.
More than 70% of U.S. consumers are willing to accept slower shipping times—three to four days instead of two—if they can get free shipping, which is good news for retailers looking for ways to trim costs and boost profit margins, Snyder says. “That gives you a bit of leeway on the speed if you can offer it for free,” she says.
But consumer patience starts to wear thin after four days. 59% of U.S. consumers listed shipping times of five or more days as “slow,” while 35% called that acceptable and 6% referred to that delivery speed as fast.
Among U.S. millennials, Pitney Bowes found 30% will go public about their poor experience, complaining in an online review or social media post, potentially affecting the buying decisions of their entire social networks.
To the extent Americans are warming up to fast (but not free) shipping, that change is being driven by millennials. Among that age group, with 35% now say they’re willing to pay for faster shipping, up from 20% in 2017.
But even when they don’t use it, consumers like to have a fast-shipping option. Among U.S. online shoppers, free shipping (80%) and fast shipping (66%) as the two most important criteria in determining where to shop online. Two-thirds of online shoppers in the United States think it is acceptable to have a minimum purchase requirement of $25 or higher to trigger free shipping.