Every year, shoppers increasingly head online to cross items off their holiday gift lists, and every year, this trend seems to catch a few retailers flat-footed. The 2015 holiday season was no different: From October 31 through January 4, as total U.S. retail sales went up 3.3% year-over-year, e-commerce sales grew 13%. Narrowing the dates to the “traditional” holiday season doesn’t change the pattern: Retail sales from Black Friday through Christmas Eve increas 7.9% overall but rose 20% online.
This is the seventh straight year that e-commerce sales have gone up over the holidays, and this year’s double-digit increase was widely predicted before the season even began in full. Nevertheless, several retail sites were unable to guarantee delivery of online orders by Christmas Eve. Jet.com, for instance, began warning customers on December 15 that, unless an order qualified for two-day shipping, it might not arrive by December 25.
Holiday shipping issues aren’t exactly new. In 2013, weather problems and an unanticipated surge in online orders caused well-publicized delays during the holiday season. This year, retailers noted that shipping companies didn’t match their usual on-time delivery rates. Shipping companies attributed that to the unexpected, record number of orders they were handling. (Holiday expectations, of course, are based on discussions between retailers and their contracted delivery firms.)
Regardless of the cause, order delivery glitches can cause significant problems for retailers. Trust is a critical element of the relationship between retailers and their audiences. If a retail site promises delivery by a specific, drop-dead date, and that promise isn’t kept, its customers will remember that. Just as crucially, if customers were attracted to that site by a free shipping offer — a popular holiday promotion among online retailers, due to its ability to close sales — the retailer’s promotional and operational credibility can also take a hit.
It’s common knowledge that retaining customers is less expensive than gaining their business in the first place. Winning back disgruntled customers is likely to be even more expensive. In response to the 2013 holiday delays, for example, Amazon gave $20 gift cards and shipping refunds to every customer who didn’t receive an expected delivery by Christmas. While Amazon has enjoyed impressive growth since then, it also has deeper pockets than practically any other retailer and could therefore more easily cover those outlays.
Amazon could also rely on a pretty deep well of trust with its core customers. That’s due, in no small part, to Amazon Prime’s pre-paid 2-day shipping benefit, as well as to Amazon’s offer of free shipping on most purchases of $35 or more to non-Prime members. Free shipping, as noted earlier, is the ultimate online deal-closer, but Amazon’s size is further proof that consistently offering free delivery is a great way to attract and retain customers.
A hassle-free return policy is another way for retailers to develop and keep loyal customers. Retailers are often reluctant to offer easy returns; return fraud is a legitimate concern, and return shipping costs can be hard to absorb. A customer-friendly policy, though, demonstrates that a retailer stands behind the products it sells. That in turn gives shoppers greater confidence and peace of mind, resulting in purchases that the retailer might not otherwise get:
· 82% of consumers will place an online order if the retailer offers free return shipping or in-store returns.
· Customers who received free return shipping from a retail site increased their spending there by 58-357%.
· On the other hand, 81% of shoppers are less likely to place repeat orders at sites that charge them for return shipping.
Given its growth potential, online sales (and competition in the e-commerce space) will only increase, during holiday seasons and year-round. To succeed, retailers will need to deliver on their promises — especially their delivery promises, on time, again and again. They can start by catering to online shoppers, accurately gauging their customers’ willingness to shop online, and then taking the necessary steps to ensure that they’re prepared to meet everyone’s expectations.