The news that UPS plans to add surcharges during peak periods of the winter holiday season has retailers rattled—especially as the costs are likely to hit small- to mid-sized sellers hardest. But while these new charges are unavoidable to a degree, there’s still plenty sellers can do to shift the messaging spotlight to focus on less-costly alternatives.
In mid-June, UPS announced that charges ranging from 27 to 97 cents per package would be levied during the peak online sales period of Nov. 19- Dec. 2, which includes Black Friday and Cyber Monday, as well as for last-minute shipments Dec. 17-23; analysts expect Fedex to follow suit with extra fees of its own. UPS claims the fees will help it provide stepped-up service during the year’s busiest period, when shipments jump from 19 million to more than 30 million packages per day and on-time delivery rates drop.
The new fees put online merchants between a rock and a hard place. To cater to consumers’ expectations for fast and free shipping, sellers are under pressure to offer free shipping discounts and to use the fastest available carriers; with mass merchants such as Amazon and Wal-mart offering low free shipping thresholds, small- to mid-sized merchants risk losing online business if they don’t match rivals’ offers. But the new surcharges will only increase the degree to which shipping charges cut into margins, which are often already razor-thin thanks to holiday discounting.
With holiday plans already set, merchants may feel their hands are tied when it comes to swallowing increased shipping costs. But by tweaking their promotional calendars to emphasize less costly options, sellers – and especially retailers with brick-and-mortar locations – can provide shoppers with an array of flexible options that don’t break the bank.
Of course, sellers can only be as agile as their technology platforms allow, which is why unified platforms such as Kibo’s that connect order and inventory management, point-of-sale, and eCommerce are increasingly in demand. More than half of merchants now offer omnichannel fulfillment capabilities, according to technology researcher Forrester, and another 24% plan to launch such offerings by next year — a jump of some 42%.
Sellers who’ve invested in the right technology and training for store staff have the flexibility to pivot faster in response to last-minute changes such as the UPS surcharges. Among the shifts in promotional messaging they can make:
Position stores as the ultimate speedy solution using BOPIS. Buy online, pick up in-store (BOPIS) is already popular with consumers; fully 78% of shoppers report using it in the past six months, according to Kibo’s 2017 Consumer Trends Report, and 49% say they’re more likely to stay loyal to merchants who offer it.
During the holidays, BOPIS can be an enticing alternative to home delivery—if merchants position it as a convenient solution for same-day pickup and make good on that promise with flawless execution. Spotlighting the hassle-free element of BOPIS is essential, given that the top reasons shoppers avoid holiday shopping in stores are crowds and long lines, according to Deloitte’s 2016 holiday survey.
Indeed, “quick in and out experience” was the top benefit of using BOPIS for 56% of consumers, with “no waiting in line” coming in a distant second at 22%, according to a Bell and Howell study; more than half of study participants said they expected to wait less than 10 minutes to collect BOPIS orders. Curbside pickup, service desks dedicated to online order fulfillment at the front of the store, abundant signage, and extensive training for store staff are among the tactics retailers should incorporate to deliver on the promise of convenience and speed.
Offer incentives to shop early and often.While the majority of shoppers do tend to complete their gift purchases in December, they aren’t doing so because they expect better deals. Overall, 40% of shoppers said they planned to buy only items marked on sale during the holidays, according to the Deloitte study—but slightly more of them, 30%, thought the best deals appeared early in the season, while 27% thought last-minute discounts would reap the most savings.
To encourage shoppers to act on offers early, merchants should highlight messaging promising the best deals of the season. Popular promotions such as free shipping and free gift cards with purchase should be calendared to encourage early buying, and merchants should consider offering extra points for loyalty club members who complete gift purchases by a certain date. Retailers with physical store outlets can encourage shoppers to take advantage of the pre-holiday rush by promoting in-store services such as concierge gift recommendations and personal shopping assistance that offer convenience while capitalizing on early-season selection.
Promote e-gift cards for last-minute shoppers.
While promotions such as Free Shipping Day make late delivery cutoff dates a necessity, that doesn’t mean merchants can’t promote other fulfillment options just as prominently. In addition to showcasing store pickup options, merchants should be sure to highlight virtual gift cards as a perfect pick that always ships free.
Gift cards remain hugely popular, with 56% of consumers estimating they’d buy one for the 2016 holiday season, according to the National Retail Federation. And when it comes to fulfillment options, digital gift cards that are emailed or shared via social media are on the rise: e-gift card sales are growing 200% annually, compared with 6% for physical gift cards, according to CardCash.
With mobile devices providing a connector between online and offline sales, 48% of consumers say they want digital wallets on their phones to store gift card information, according to technology researcher Forrester. Merchants should serve this rising expectation with seamless digital gift card purchasing and redemption processes for mobile users, and sellers should promote that ease of use during the final runup to the holidays.
How are you planning to cope with peak-season shipping surcharges?
