Free shipping is a powerful ecommerce conversion tool, but its high costs can erode a retailer’s sales margin.

Many consumers now expect free shipping and fast delivery, but providing those services isn’t easy. To find out how retailers can address customers’ delivery expectations, Internet Retailer spoke with John Wisher, vice president of operations at OSM Worldwide, a shipping services company.

IR: What ecommerce fulfillment and delivery trends are emerging?

JW: While not new, “fast or free” is still one of the biggest questions ecommerce shippers face. Free shipping is a powerful ecommerce conversion tool, but its high costs can severely erode a retailer’s sales margin. That’s why we’re seeing more retailers seeking the right mix of “fast or free.” For example, offering free shipping with a slightly slower delivery time can help protect a retailer’s profitability. Retailers can continue to offer premium fulfillment solutions for customers who need speed.

John Wisher OSM

John Wisher, vice president of operations, OSM Worldwide

IR: What are some common fulfillment and delivery mistakes retailers make?

advertisement

JW: Retailers often overlook how fulfillment affects their bottom line. High fulfillment costs mean many shippers unintentionally sell items at a loss—and those sales make retailers’ problems worse. Retailers need to clearly define their margins and make business decisions that fulfill each product based on that individual product margin. Not everything has the margin to make free or fast shipping feasible.

IR: What are some strategies retailers can implement to overcome these challenges?

JW: Communicate effectively and keep customers informed of shipping statuses. Above all, be transparent about when products should arrive. Most customers will be patient if everything goes as planned. But if expectations aren’t set, customers will become confused and call for details, which can increase retailers’ customer service costs.

IR: How can technology help retailers address their fulfillment and delivery challenges?

JW: Order management systems, coupled with dynamic warehouse management systems, can improve the post-order fulfillment process. For example, retailers can integrate shipping platforms into their front-end website to offer shoppers specific fulfillment details before the order is placed. The process of routing orders to fulfillment locations is also automated using dynamically defined criteria—a huge improvement over manual shipping stations.

advertisement

Fulfillment decision-making has also become very data-intensive. The growing concept of business intelligence allows retailers to analyze and visualize data in a way that is easy for leaders to consume. It virtually eliminates the guesswork in product fulfillment, making it one of the most valuable investments a retailer can make. End-to-end analytics platforms and spanning procurement through fulfillment to delivery gives retailers the business intelligence tools to make the best decisions.

IR: What can retailers do to succeed at fulfillment and delivery?

  1. Use business intelligence solutions to turn the data they already collect into useful visualizations and insights. This will help leaders execute data-driven decision-making.
  2. Try new things and learn from your findings. If retailers have a plan to iterate on their strategies and measure its achievements, failure is only temporary.
  3. Make sure they understand their business, from procurement to the customer’s door.
  4. Decrease shipping costs to create new opportunities across the business.
  5. Keep the big picture in mind and seek out experts when planning your next change.
Favorite