Delivery promises impact buying decisions and brand loyalty. Amazon made delivery promise a key consideration when making online purchases. Consumers expect free and fast shipping for almost any purchase. In fact, 77% of consumers say free shipping makes them more likely to make another purchase with a retailer, while 60% of consumers decide not to make a purchase when delivery times are too slow.
eCommerce was already on the rise, but COVID-19 just accelerated it by years. When stores closed, sales moved online. In just 10 weeks, we saw the same amount of growth in eCommerce sales as we did in the previous 10 years combined.
But, the competition online is fierce. The barrier of entry is much lower when storefronts are digital and not physical. Advertising through social media is much more affordable than when TV and radio spots and print ads were the only options. Now, competitors are just a click away.
Watch the webinar, “Turn Browsing Shoppers into Buyers with the FLEXE Integration to Google Shopping Ads”, featuring Jared Sisk, Strategic Partnerships Manager at Google Shopping, and Meg Quintero, Senior Product Manager from FLEXE.
Increasing eCommerce volumes, rising consumer expectations
Prior to COVID-19, most retailers and brands had a level of eCommerce operations in place, but few were ready for the quick and massive transition to eCommerce retail when COVID-19 hit the U.S. It was impossible to find things like hand sanitizer and toilet paper, and people who had never shopped online before did in order to avoid going to the store.
Data in the FLEXE Technology Platform confirms the increase in eCommerce sales volumes:
- Year over year, there was a 57% increase in order volumes when comparing July 2020 to July 2019
- Relative to December 2019, one of our customers’ busiest months of the year, there was a 41% increase in eCommerce volumes in July 2020
COVID-19 didn’t change consumer expectations—it intensified them. A recent McKinsey report found that more than 75% of consumers tried new brands because of the pandemic, with the most important thing being product availability. If you didn’t have it, shoppers would find the product elsewhere.
More than 75% of consumers have tried new brands because of the pandemic.
Supply chains can’t deliver
As eCommerce sales and consumer expectations remain high, the logistics industry faces an uphill battle.
Ninety-four percent of industrial real estate is currently utilized, leaving very little capacity to expand operations. Piling on, the economic uncertainty resulting from COVID-19 caused nearly half (49%) of CFOs to suspend CAPEX investments.
Meanwhile, more eCommerce sales has meant more last-mile delivery and last-mile transportation costs are the highest cost in logistics (53% of total shipping costs and 41% of total supply chain costs). With increased eCommerce volumes, little capacity to expand into, and lack of investment, it’s incredibly difficult to provide free and fast delivery using traditional solutions for warehousing and fulfillment.
Where do we go from here?
As stores have begun to reopen, eCommerce volumes remain high, but have declined since May. In May, we saw a 78% increase in eCommerce sales YoY, but then in June those volumes dropped down to 76% and in July they dropped even further to 55%.
Still, 55% YoY growth is nothing to shy away from and what COVID-19 demonstrated is that rigid, traditional logistics solutions do not provide the flexibility and resilience required to act fast.
The industry is quickly learning that to compete you must offer compelling delivery promises to consumers, and to do that, you must have a logistics network that can power that experience.
The FLEXE integration to Google Shopping ads
Consumers place so much value on shipping options, which makes delivery promise one of the most compelling pieces of information you can provide. With the new FLEXE integration to Google Shopping ads you can do that—dynamically—right on the ad, right when consumers begin their search.
For an ad that has the shipping annotation versus one that doesn't, there's a 9% increase in the conversion rate for checkouts.Jared Sisk Strategic Partnerships Manager at Google Shopping
Last month, we announced the new FLEXE integration to Google Shopping ads. With the integration, FLEXE customers can include those shipping annotations like “Free 2-day” or “Free 3-Day” on Google Shopping ads, which is dynamically rendered based on three factors:
- Location of FLEXE facilities
- Inventory availability in the FLEXE network
- The consumer’s location
Those three pieces determine which delivery is dynamically shown on the shopping ad when the consumer begins their search. Now, retailers and brands can use their fulfillment networks to power better last-mile delivery options.
Connect demand & delivery: Logistics-powered customer experiences
With the new FLEXE integration to Google, you can facilitate a shorter last mile through FLEXE and then advertise those delivery promises on Google Shopping ads right when consumers begin their search.
Retailers can provide this information into Google Merchant Center to have it surface on the shopping ads. Of course, there's many benefits to working with their partners to do so. And that's why we're very excited that Flexe participated in our pilot.Jared Sisk Strategic Partnerships Manager at Google Shopping
To include the shipping annotations, retailers and brands must have a fulfillment center (FC) within the range of the target region being offered free and fast delivery. For example, to target the LA area, an FC must be located close enough to support three or fewer days shipping.
According to our network analysis, reaching 98% of the U.S. with free and fast delivery requires about 16 fulfillment centers. To add that many many facilities by way of traditional logistics solutions would be cost-prohibitive for most.
Instead, flexible logistics programs like on-demand warehousing and fulfillment enable retailers and brands to stand up facilities quickly and pay only for the capacity and services that are used. And, as the size of the fulfillment network grows, businesses can save on last-mile transportation.
Learn more about the FLEXE integration to Google Shopping ads
To learn more about the FLEXE integration to Google Shopping ads, you can:
- Watch the webinar, “Turn Browsing Shoppers into Buyers with the FLEXE Integration to Google Shopping Ads”, featuring Jared Sisk, Strategic Partnerships Manager at Google Shopping, and Meg Quintero, Senior Product Manager from FLEXE
- Visit the FLEXE Integration to Google Shopping ads page