The changing shopping habits of today’s e-consumers have focused a new light on shipping costs. It’s a requirement for buying online that has evolved into an expected perk. Yet, the cost for companies continues to skyrocket as ecommerce grows. As purchasing evolves, so must delivery – just how much – depends on the overall willingness to change the paradigm.
A 2014 UPS Study revealed that a majority of U.S. online shoppers abandoned their shopping carts because, after shipping costs, the total purchase price was more than expected. Other reasons for abandoning purchases included e-consumers getting estimates of shipping costs, to comparative shop, as well as waiting until minimum purchase requirements are met to qualify for free shipping.
In fact, many consumers look at free shipping as a requirement for purchase, originally promised by many businesses to entice online purchases. However, e-commerce is quickly maturing into a core business, or healthy corporate division, and absorbing shipping costs is no longer viable. In 2013, Amazon spent approximately $6.64 billion on shipping, yet only brought in about $3.1 billion in payments for shipping (WSJ, 10/22/14).
Many companies have been more creative in reducing shipping costs, primarily by offering slower shipping times for less money and increasing the minimum purchase amount to qualify for free shipping. In April, Amazon received FAA approval to test delivery drones in certain areas. Department stores such as Macy’s and Nordstrom allow online purchasers the option of picking up their items in-store, in addition to the standard shipping options typically offered.
Yet there is a new generation of shipping alternatives. The June 2014 UPS Study, referenced prior, also showed that 26 percent of online shoppers preferred receiving their packages at alternative locations (such as work, an authorized pickup location or other, local retailer). According to the Study “urban dwellers are less likely to ship to their homes and more likely to take advantage of alternative delivery locations.” The Study analysis cited this as convenience for an ‘on-the-go’ lifestyle. Alternative shipping locations also offer the safety, and convenience, of not having packages left on the front porch or delivery notices stuck on the front door – signs that notify everybody that no one is currently at home.
Delivering packages to an alternative address can also save companies money as well. Rather than paying for the additional expense of a residential delivery, where convenience is not guaranteed, companies can find significant savings shipping to a commercial alternative location.
PUDO (Pick it Up; Drop it Off), a Canadian company, is taking alternative-location shipping to a new level that has the potential to benefit everyone involved in the shipping process. The Company offers local businesses the opportunity to become certified PUDO locations. Shippers benefit from the lower cost of a commercial delivery. PUDO certified businesses receive a new revenue stream, as well as increased foot traffic. For some small, local establishments, this service can offer an open door to the global economy. Participating consumers get the shipping convenience of having packages delivered to a location of choice; one that does not compromise privacy.
The creative approach of PUDO has the potential to allow companies to earnestly market the service as “giving back to the community”, as well as providing a better customer experience while cutting costs. It’s an area where marketing, corporate communications and operations can easily collaborate for an overall “win” – along with customers.
The key to success of achieving all-around satisfactory shipping costs depends on the willingness of businesses and consumers to be flexible and open to the possibilities that this evolving economy offers.