E-commerce companies today face countless challenges on every front, from rising costs of raw materials, customer acquisition costs at an all-time high, and dizzying customer expectations.
But as long as e-commerce companies are agile and deeply knowledgeable about their industries, they can thrive despite the external circumstances, shattering sales records and penetrating new markets.
That’s why we put together this short guide to help you:
- understand what’s behind rising customer acquisition costs
- how shipping and fulfillment is key to driving sales and brand loyalty, and
- how 3PLs can help companies of all sizes reduce costs while becoming more efficient.
Let’s dive in!
Unpacking the Customer Acquisition Crisis
You’re probably already familiar with Customer Acquisition Cost, or CAC, which is a measure of how much a company spends to acquire new customers. The costs associated with acquiring new customers includes costs related to marketing, advertising, and more.
Though CAC varies across individual companies as well as product categories and even across industries… customer acquisition costs seem to be at an all-time high for all businesses… as much as 60% higher for B2C brands than six years ago. (A recent Forbes article goes so far as to call it the “Great Customer Acquisition Crisis”!)
But what exactly is driving the uptick in customer acquisition costs?
One big expense stems from the proliferation of channels! Customers now expect to interact with brands on multiple platforms, by chat, text, email, and even video. To remain competitive, e-commerce brands are forced to cultivate a presence on each of these channels, raising their marketing expenses.
Another big expense is the increase in competition from digitalization. According to Deliverr, digitalization has lessened barriers to entry for new brands: “What once required large sums of capital investments can be done using existing solutions and software.”
And the more competition, the more time and money that brands need to spend differentiating themselves, winning customers, and ensuring high retention rates.
Lastly, the economy itself is responsible for rising costs. With most countries experiencing post-pandemic inflation, e-commerce brands are faced with rising materials costs and increasingly budget-conscious consumers.
Despite these various challenges, some e-commerce brands are boosting sales and reducing costs… by working with third-party logistics providers (known as 3PLs).
It might seem counterintuitive to outsource part of your operation if you’re trying to cut costs, but top e-commerce brands know that 3PLs are essential to scaling their business, reaching new markets, boosting sales, and increasing customer loyalty.
This is How Shipping and Fulfillment Drives Sales
One of the most important factors of a consumer’s buying decision is shipping cost and speed.
It’s no secret that large online marketplaces like Amazon have changed the game. Consumers have grown to expect products at their doorsteps within a couple of days–if not hours–of placing their order… at no extra cost.
But the majority of e-commerce brands can’t provide the same expedited shipping without passing on the costs to the customer… and face the impossible dilemma of compromising their sales or their profit margins!
And customers don’t just prefer fast shipping… they demand it. According to research conducted by Forrester for Shopify’s 2022 Future of Commerce report,
- 90% of consumers say that free shipping influences whether they’ll purchase an order online
- 83% of consumers want a product shipped to them either by same-day or next-day delivery
- 87% of consumers look for a free returns option before they hit Buy
This is a tall task for any brand, but by understanding consumer attitudes around shipping and fulfillment, e-commerce companies can boost conversions and customer retention rates.
To meet the difficult demands of savvy consumers, e-commerce companies increasingly outsource shipping, fulfillment, and returns to trusted 3PLs. But the benefits don’t stop there…
The Other Benefits Unlocked by 3PLs
While 3PLs enable e-commerce companies to offer their customers seamless, speedy shipping, they also enable companies to focus their resources on growing the brand, experimenting with new products, and expanding to new markets.
Unfortunately, many e-commerce companies miss out on the potential to scale and save because of a common misconception that 3PLs are only for enterprise-sized businesses…
In reality, 3PLs can benefit all businesses because they provide custom-made solutions that help companies save costs no matter their size, industry, or clientele.
It’s a no-brainer.
3PLs are able to negotiate better rates with carriers, minimize costly shipping errors, and use automated processes to streamline order fulfillment processing.
If you’re curious about how working with a 3PL like ShipTop can help you scale your business, reduce customer acquisition costs, and boost conversion rates, click here to schedule a complimentary consultation with one of our dedicated reps.