The Devil Is in the Details—or This Case, the Shipping

There was an interesting question in social media circles recently regarding bricks and mortar stores and shipping.

Here is the question: Does shipping from stores create a competitive advantage? And if not, how else can the brick-and-mortar channel be leveraged to move stale inventory?

While we will leave it to others to answer the second part of that question, we will talk about shipping as a competitive advantage today. As part of this discussion, we will turn to you—the procurement professional, to provide insights into how you approach securing the services of a shipping partner, i.e., supplier.

However, before we get to hear what you have to say, let’s create some context through an interesting response to the above post.

An Abandoning Reality

We will first share with you the following comment and then explain why we think it is noteworthy. By the way, we do not want to paraphrase what the comment’s author wrote for fear that something might get lost in the translation. So, here it is—the unabridged version:

“Instead of referencing various studies and articles - which are excellent sources, I will share my personal experiences as a consumer.

Does the term ‘abandoned shopping cart’ mean anything to anyone?

Over the past 15-months, I think it would be safe to say that we have all become more ‘experienced’ as online shoppers. While I have found that ordering through Amazon as a Prime member provides me with free shipping (and reliable delivery), I find that this consistency is absent in the general market. In other words, while some online vendors have provided a positive experience with reasonable shipping costs, others, while offering a low price for their goods, charge almost as much for shipping as they do for the product you are buying.

Regarding your question: Does shipping from a store create a competitive advantage?

The answer is at the shopping cart, and the percentage that are abandoned before a sale is completed.”??

Okay, we have shared with you the what by way of the comment, now the why, and why this response stood out to us.

When it comes to shipping, how many organizations include this cost as part of their “end product” price? Think about it for a moment.

A company selling a product to the public negotiates a reasonable price with the supplier so they, in turn, can sell it to the consumer at a competitive price while making a profit. It is pretty straightforward.

The problem is that while the price at which they can sell the product to an eager consumer market may be very competitive, all of that hard work is for naught if the end customer chokes on the shipping cost.

According to a December 2020 report, 88.05% of all online orders are abandoned at the shopping cart stage. While we are not suggesting that the cost of shipping is the only contributing factor to the high rate of order abandonment, we would bet that it is one of the top 2 or 3 reasons.?

Back to You

Now, you may suggest that most organizations base their pricing model in the retail world on customers shopping at an actual store where shipping is a non-factor. That is, of course, a valid point—before COVID-19.

That said, we all became online shoppers because of the pandemic, and it is safe to say that most like the convenience—when it works.?

Unfortunately, too many companies who thought they had a viable online model were surprised to discover that having a website does not make you an online business.

If you believe that more consumers will be doing their buying over the Internet, how would you—a procurement professional—address the shipping cost problem?