eCommerce: Who pays the price of free shipping?
Free shipping, offered by leading pure e-commerce players to dominate the market, forces others to align with this model to stay in the competition.
Delivery, which has no name for free, loses its value to the consumer and without rapid strategic repositioning, distributors may suffer seriously.
While Europe already has one of the cheapest shipments in the world, consumers have become accustomed to free.
Hunting for discounts, codes, and promotions, all means are good. These springs are psychological and in many cases, the strategy of adding an item to one's basket to avoid paying the shipping costs is actually more expensive than the delivery itself.
Yet the feeling of having made an economy dominates. And when the delivery method is not appropriate, 60% of consumers simply renounce their intention to purchase.
The artificial nature of the "free" delivery
The great illusion to be dispelled is that there are free deliveries. When a delivery is said to be "free", it is actually "offered" by the merchant, who bears the full cost of shipping instead of the customer.
But there are so many sites that present the delivery as "free", that the idea is rooted in the mind of the consumer. The origin is the battle that the giants of the online distribution are engaged to capture the customers, by breaking the prices.
In the ready-to-wear sector, for example, free deliveries and returns have now become the norm , on which all players must align in order not to lose in the face of competition that has already massively adopted it.
Faced with e-customers - 83% of Internet users in 2017 - accustomed to a "free" delivery, merchants seek to reduce at any price abandonment basket and maximize the conversion rate. Because generating qualified traffic on their site is expensive in marketing and advertising.
Once the customer is picked up, he must be retained on the site until he orders, and if the delivery price is an obstacle, it must be eliminated. The customers are not aware of the industrial hell caused by this pressure on prices: huge warehouses, trucks that plow the roads to maximize mass and reduce costs.
This large-scale delivery model also increases the risk of package damage or loss. For the customer, the inevitable consequence of this model is the increased risk of poor quality delivery.
A deadly model for small distributors
Starting from the assumption that the delivery is "free", the consumer does not want to pay for it anymore. However, employees who carry millions of parcels every day - including 1 million Colissimos - must be paid.
How are distributors doing this 100%? By a very expensive strategy. Some have set up an annual subscription to benefit from free shipping, like Amazon with Prime or Cdiscount with "Cdiscount at will".
This model is deficient: if the delivery is offered, especially for expensive products to transport - such as furniture, or TV screens - the residual margin is too low to be profitable. Just on its shipping costs, Amazon is charged a loss of $ 7 billion because of the delivery offered to its premium subscribers.
But this is the price that distributors are willing to pay to retain their customers and eliminate competition. This price can obviously be assumed only by the giants of the distribution. Small brands, which are not specialists in e-commerce, will not be able to withstand these colossal losses if they line up on a free delivery.
Focus on quality delivery to stand out
Unchanged, this model will eventually break small e-traders, unable to cope with the pure-play compressor rollers that pull prices down by offering delivery. But this inevitability can be avoided by a repositioning of small distributors.
Faced with "generalist" behemoths, children must exploit or develop their uniqueness, create a true "lovebrand" with an endearing brand image generating a community, to conquer the specific market of "exclusive" or personalized products - some have chosen the wine, others lingerie - which are different from those sold by the mass market.
A careful UX and a customer service and listening, capable of providing concrete help, will also make a difference. If new consumers are more volatile, they are also more sensitive to the quality of service.
The brands must be able to set up an end-to-end brand experience, even after the act of purchase: real-time tracking of the package, geolocation, SMS alerts, from departure to delivery. own hand to the customer, against signature.
Real flexibility in delivery will also make all the difference: the customer must be able to be delivered the same day, even in the evening and on weekends, choose his place and his delivery schedule in a short time slot - one to two hours - and be free to change your mind or change these settings.
To survive, the distributors have to come out of the "convenience" delivery race and position themselves on qualitative delivery. Valuing the "post-purchase" customer experience, right down to the door, in the continuity of the brand experience, is the key to customer loyalty.
This move upmarket will see customers willing to pay more for products, and ready to pay anyway for delivery, which will find its full value ...