White Paper. Shipping and return as marketing tools for B2C e-commerce

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1 White Paper Shipping and return as marketing tools for B2C e-commerce

2 Shipping and return as marketing tools for B2C e-commerce 2 The inexorable rise of e-commerce Contents The inexorable rise of e-commerce 2 The e-commerce customer journey: the importance of shipping and return 3 Consumers make publicity 5 Free shipping: more loyal customers spending more money 6 User-friendly return options: a must for 9 out of 10 consumers 7 Conclusion: the power of shipping and return as marketing tools 8 The postal sector is getting ready 9 Solutions from Landmark Global 10 The success of e-commerce shows no signs of stopping. According to emarketer 1, the revenues generated by global B2C e-commerce are set to reach around a trillion euro in 2014! emarketer predicts revenues of billion in APAC this year versus billion in the US. In third place is Western Europe with expected online sales of billion euro in the B2C market. This spectacular global growth is largely due to Asian growth markets such as China and India, but markets such as Argentina, Mexico, Brazil, Canada, Russia and Italy are also showing healthy growth figures. The mature Western European market continues to provide attractive opportunities. This is largely thanks to a host of new innovations and trends, including the ever growing use of smartphones and tablets for online shopping. The importance of cross-border e-commerce is also rapidly increasing. With a worldwide share of 3.9 billion euro in 2013, it is expected that this share will increase to be worth 6.8 billion by An impressive increase of 75%! 2 The inexorable rise of e-commerce offers many opportunities to e-tailers across the globe. However, with every opportunity comes a challenge, not least when it comes to shipping and return. As such, with this white paper we aim to clarify how a smart shipping and return strategy can contribute to an optimal e-commerce journey for the customer. Indispensable knowledge for every e-tailer! billion billion billion emarketer B2C e-commerce estimate in 2014.

3 Shipping and return as marketing tools for B2C e-commerce 3 The e-commerce customer journey: the importance of shipping and return When it comes to e-commerce, there are certain steps that consumers follow. The importance of shipping in this process becomes strikingly apparent from early on. When the consumer realises that he needs something (trigger), he first informs himself via social media, mass media and his peers (search and evaluation). The more definite his need becomes, the more definitely he will go in search of information, e.g., on comparison sites and e-shops. The average consumer consults 10.4 different sources before making a decision. 3 82% of consumers also check customer reviews. 4 A GfK study 5 has shown that customers are looking mainly at the price, product information and shipping costs. This is the perfect opportunity to convert visitors into customers by offering free shipping. Let s not forget that 75% of online shoppers first look at the shipping costs before deciding to go ahead with their purchase. 6 After the purchase comes the shipping of the item (delivery). The customer has certain expectations that have to be met in this regard: track and trace, the option to pick up the item, etc. But providing an optimal service extends beyond the moment the customer receives and opens their parcel (consumption). What if the customer is unsatisfied and would like to make use of the option to return their order (Return)? It s up to the e-tailer to provide the customer with the required options and to clearly communicate the steps to be followed. The customer can only be satisfied when the entire shipping and return process functions optimally. An overall feeling of satisfaction will also lead to positive reviews that encourage even more customers to make a purchase (the snowball effect). This interactive dynamic is of critical importance for every e-tailer. The shared experience of satisfied customers, based on an optimal shipping and return policy, is the best advertising an e-tailer can hope for. In this way, every satisfied customer becomes an ambassador of the e-shop and a billboard to attract future customers! 75 % of online shoppers first look at the shipping costs before deciding to go ahead with their purchase. Convert

4 Shipping and return as marketing tools for B2C e-commerce 4 Illustration of the customer s e-commerce journey 1 Trigger I need a new pair of shoes! Products corresponding to the needs of the target customer and frequent communication of new products ensure that a company remains in touch with its customer base. Convert 2 Search & evaluate I am going to decide which pair of shoes I want to purchase by browsing on the web. A good online reputation and clear communication of shipping conditions arouses the interest of the target customer and inspires confidence. 3 Buy I buy the pair of shoes that I want online. Highlighting free delivery increases the visitor conversion rate of a webshop. 4 Delivery service I receive my new pair of shoes. Delivery options corresponding to the customers needs, a transparent tracking service and meeting promised delivery times, optimise the e-commerce shopping experience. Deliver 5 Consume I open my package, which is exactly what I ordered, and I try on my new pair of shoes. An optimal fulfilment service is essential for a webshop. 6 Return In the end, I change my mind. I no longer want this pair of shoes. An efficient return policy ensures customer satisfaction, even when the purchase itself proves not to be definitive. Feedback 7 Promote & recommend I have appreciated my shopping experience and I share it with my friends and family. Fulfilling offline the promises made online converts customers into ambassadors.

5 Shipping and return as marketing tools for B2C e-commerce 5 Consumers make publicity Social media has for most of us become a part of our live. It is a blessing and a curse, regardless of the size of a company or the sector in which one works. This is because, thanks to social media, the consumer now has more power and influence than ever before. This new level of customer empowerment cannot be ignored, not least by e-tailers. The increasing popularity of e-commerce is not only causing growth with respect to the available offer, but also with respect to competition. Online shoppers make sure they are thoroughly informed before placing their order, they are more demanding and compare the products and services offered by different e-tailers. Simple but true: if an e-tailer does what it promises, customers will come back and spread the word about its business. Not only with friends and acquaintances, but also on social media such as Facebook, Twitter, Pinterest... Accordingly, 71% of consumers are quicker to place an order if they find positive reviews for the item online. 7 But as already mentioned, it cuts both ways: reviews on social media can contain both positive and negative comments. A large portion of the negative comments are related to the offline, logistical side of the e-commerce journey. Which is one reason to focus more effort on a qualitative shipping process. An e-shop may be visually impressive, but if the quality of the shipping process is subpar, the customer will be left with a bad experience... which he could mention on social media. There is also the possibility/certainty that he won t return to the webshop for future purchases. In other words, an optimal shipping process results in satisfied customers, who in turn provide the best publicity for a webshop. For this reason, shipping can be considered a vital tool to be part of every marketing strategy. 71 % of consumers are quicker to place an order if they find positive reviews for the item online.

6 Shipping and return as marketing tools for B2C e-commerce 6 Free shipping: more loyal customers spending more money Converting visitors into loyal customers is one of the greatest challenge for online shops. According to some studies, 75% of online shoppers first look at the shipping costs before going ahead with their purchase. 8 If the total amount gets too high, or if the shipping costs are mentioned too late in the transaction, this can be a reason for many to abandon their shopping carts. Research by Forrester 9 even shows that the addition of shipping costs is the most common reason (44%) for abandoning a filled shopping cart. Free shipping is one of the strongest USPs in e-commerce. It results in... more customers larger orders This is something that more and more e-tailers are catching onto. According to the study Logistics for webshops by Simtrec (2013), free shipping is slowly becoming an international standard although not all countries are yet on the same page % of British webshops offer free shipping as standard, versus barely 7% of French webshops. What is striking is that French webshops very often (41%) offer free shipping above a certain amount. Germany comes in a good second place after the UK with respect to free shopping. Belgium by contrast is still a little behind, with free shipping being offered in less than 20% of the cases. If the free shipping goes without a hitch, as promised by the e-tailer, the number of purchases made by the customer will rise and rise. What s more, satisfied customers are willing to share their experiences within their network which leads to new customers visiting the online shop. To put it another way: free shipping is free marketing! How can shipping policy be utilised in converting visitors into clients? clarity: all information must be communicated in a clear and organised way freedom of choice: customers want to choose for themselves when and where to receive their parcel free shipping: this is the most decisive factor 21 % - than 20 % 7 % Percentage of webshops that offer free delivery. United Kingdom France Belgium

7 Shipping and return as marketing tools for B2C e-commerce 7 User-friendly return options: a must for 9 out of 10 consumers So we ve clarified that free shipping leads to more customers, greater interest in the webshop, and if correctly implemented greater customer loyalty. Some 85 to 90% of online shoppers claim that this has a large influence on their decision to visit the same webshop again, according to a study carried out for the European Commission. 11 Which makes sense: most consumers still see e-commerce as an alternative to physical shops. For the same reason, a good return policy is extremely important. In the same study, online consumers were asked which specific features or aspects of shipping they considered important when deciding whether they would shop at the same e-shop again. Some 90% of respondents mentioned a user-friendly return procedure. Offering free shipping and free return is also strongly recommended in a study from 2012 by Forrester Research 12 that came to the conclusion that offering free return can increase sales by five times over two years. Where free shipping and return are not (yet) available options, clear communication is especially important. And this is where many e-tailers get caught out. Almost 15% of Belgian and French webshops do not offer general information about shipping costs, according to the Simtrec Study Logistics for webshops (2013) 13. This is a relatively large amount. What information should webshops be sure to mention? This is a relatively large amount. What information should webshops be sure to mention? clarity: where and how delivery takes place and what are the costs freedom of choice: what are the options when it comes to returning orders Offering free return can increase sales by five times over two years.

8 Shipping and return as marketing tools for B2C e-commerce 8 Conclusion: the power of shipping and return as marketing tools The policy with respect to shipping and return is of critical importance to customers when choosing an e-shop. 75% of consumers are guided by this factor. 14 The key to success is free shipping and return according to the research by Forrester 15, in which it appears that the addition of shipping costs is the most common reason (44%) that customers abandon a filled shopping cart. Shipping and return options are therefore equally as important for an e-shop as the website, the marketing and the products themselves. This makes them perfect marketing tools. The greatest benefit of a smart shipping and return policy lies in the value it adds to each unique customer journey. More important than the results in the area of shipping is the total impact on the whole process. By utilising shipping as a marketing tool in a targeted manner, an e-shop could significantly improve on three levels: 1 Increased traffic A carefully considered shipping and return policy leads to satisfied customers. They become ambassadors of the e-shop and convince other consumers of the shop s value. Thus more traffic flows to the e-shop, and many more visitors are converted into customers and, from there, perhaps even to ambassadors. 2 Lower CPA A crucially important factor for marketers is CPA (Cost Per Acquisition), which indicates the budget they must set aside for attracting clients. This will be a relatively high figure for e-shops that are just starting out, but eventually the rule the lower, the better will become more relevant. This will leave an e-tailer with more of its budget to put into other investments. Once a good shipping and return policy is in place, the CPA can be lowered to a minimum. 3 Increased CLV An optimal shipping and return policy results not only in more customers for a smaller investment of funds; the quality of customers will also increase. They will start to spend more per order and they will return to the webshop more often. This is expressed as a higher CLV (Customer Lifetime Value). In an ideal scenario, the impact of a customer-friendly shipping and return policy is so great that marketeers are able to significantly drive down their traditional marketing budget without encroaching on earnings. This opens up a number of opportunities to test an e-tailer s mettle. And herein lies the real power of shipping and return as marketing tools!

9 Shipping and return as marketing tools for B2C e-commerce 9 The postal sector is getting ready It is clear that a good shipping and return policy is crucial to the marketing strategy of every online shop. But aren t e-tailers dependent on the existing delivery options in the market? Absolutely. This is why the logistics sector is already preparing for increased demand for services from both e-tailers and e-shoppers. The more e-commerce develops in a country, the more options become available and the competition increases. If e-tailers want to grow, one option is to go international. In contrast with physical shops, a website can, with few resources, be adapted to meet local needs. But it is of course important that postal services pave the way for this evolution. Initiatives are being developed in two different areas. For example, the European Commission recently published a roadmap 16 setting out guidelines for the more efficient delivery of parcels within Europe. The Commission has set short-term objectives for tackling the obstacles that hinder the development of e-commerce. However, the European Commission has left the sector to come up with practical solutionsitself. An answer has now arisen from this discussion. A year ago, the International Post Corporation a partnership between 24 postal operators from Europe, North America and Asia (territories together representing 80% of the global volume of mail) launched a number of initiatives. These are based on the needs of the consumer and provide an answer to the increasing demand for services. What improvements are being made? improvement of end-to-end tracking, including by the use of RFID technology a cross-border return solution consistent options for cross-border shipments harmonised processes reliable service consistent consumer service By optimising the quality of their services and offering consumers different shipping options, postal operators not only stand to strengthen their own position, but also that of many SMEs with an online business. This should pave the way for further growth in e-commerce.

10 Shipping and return as marketing tools for B2C e-commerce 10 Solutions from Landmark Global In the digital age, the customer is becoming more and more powerful and demanding. If e-tailers want satisfied customers, they have to offer sufficient delivery options. This is where Landmark Global comes in. We are the cross-border parcel logistics leader for multi-channel B2C organizations which utilize an e-commerce, direct response, direct marketing or other direct to consumer strategies. Our wide range of parcels shipping, return and fulfillment solutions, as well as our experience and know-how of worldwide distribution, make us your ideal logistic partner. With our network of local postal operators and alternative local delivery providers, we take the local preferences of international customers into account, which, needless to say, can only be of benefit to your customers satisfaction. This local presence combined with our customer focused solutions allow us to further grow on the European market, as well as on the Asia-Pacific and North-American continents. We operate out of multiple worldwide locations including 12 facilities strategically located in the USA and Canada; London (UK); Groningen (Netherlands); Brussels (Belgium); Beijing, Shanghai, and Guangzhou (China); Hong Kong; Singapore; and Sydney (Australia).

11 1 2 IPC e-commerce Interconnect brochure DMC Survey Intomart gfk research, november DMC Survey DMC Survey Rapport Free Shipping Continues To Be Every Retailer s Frenemy, Forrester, October E-commerce and delivery. Copenhagen Economics, 2013; 12 Rapport Boost Marketing Returns With Model-Driven Insights, Forrester, December DMC Survey Rapport Free Shipping Continues To Be Every Retailer s Frenemy, Forrester, October R.E.: Dave Mays, Centre Monnaie, 1000 Brussels. Belgium sales@landmarkglobal.com