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In world of 5-star reviews, too many e-commerce brands earn a 3

Customers continue to ding merchants for logistics-related problems

Ignoring logistics leads to negative feedback from customers, harming the ability of e-commerce merchants to grow their businesses. (Photo: Jim Allen/FreightWaves)

The digital world has ushered in a new era of ranking businesses. Today, everyone is looking for that five-star review that reinforces that, yes, it is the gold standard by which competitors will be compared. Five-star companies retain more of their customers, they attract more new customers, and they see sales rise as a result.

Yet in 2022, too often e-commerce brands are missing out on that five-star review, and it has nothing to do with the product they are selling. It has to do with their logistics.

“Three out of four consumers had a negative delivery experience in the past three months,” Johannes Panzer, head of industry solutions for e-commerce at Descartes, told Modern Shipper. “Obviously, there is still something wrong in the market. This is a no-go for merchants because customer acquisition costs have never been as high as they are these days. The merchants are investing a ton of money in acquiring the customer, but on the fulfillment side they are failing.”

Last week, Descartes (NASDAQ: DSGX) released a report on fulfillment. Is Retailer Fulfillment and Delivery Performance Keeping Up with Sales Growth found several themes that have been permeating the consumer side of e-commerce, but none is bigger than convenience, and that includes the ability of merchants to deliver — figurately and literally.

The survey found that 23% of consumers did not order from a retailer again after a poor delivery experience, with 21% citing a loss in trust as a result and 16% saying they passed along their negative experience to families and friends.

Watch: Challenges in logistics

Expectations vary, naturally, but a significant portion of consumers (32%) cited security as a key part of their expectations. Proof of delivery (30%) and tracking (27%) also ranked high. Cost of delivery varied based on the value of the item, with only 23% saying shipping cost was most important for lower-priced goods.

Panzer said it was clear that e-commerce is not going away, with 48% of consumers saying they planned to make more purchases in the future — up 13% from a survey conducted prior to the pandemic — and that merchants need to heed the lessons learned from consumers.

“Everyone is looking for the five-star reviews, which makes people come back and is what you need to aim for because it is simply too expensive [to obtain new customers],” Panzer said. “If you have a growing, repeatable customer base that you can grow a community around, [it lowers costs while driving revenue].”

Shipping and fulfillment are a big part of that but remain areas that many merchants don’t think about or integrate into the customer journey.

“There can always be a delivery issue, but you want to reduce that as much as you can,” Panzer said. “You want to make a [good] experience for your customer.”

It starts with shipping on time, he noted, which given the current global supply chain is a challenge. Many of Descartes’ e-commerce customers are small and midsized brands, so their access to technology and data is more limited than the larger global players, but it doesn’t have to be.

“All the data on rates, ETAs — when is your order going to arrive — customers can take that data and integrate it into the checkout process,” Panzer said. “That is where we see this increased need for [transparency and integration]. It’s not just a cost factor, but also a differentiator, and this goes to communication in transit as well.”

Descartes is taking steps to help improve these processes. It recently announced an integration of its ShipRush multi-carrier parcel and less-than-truckload shipping solution with its e-commerce warehouse management systems. The integration allows customers to view their warehouse and shipping performances in a single dashboard.

For small businesses, though, cost is a concern, and Panzer said Descartes is working to democratize offerings to ensure businesses of any size can compete. Working with a third-party logistics provider is also a way to gain access to the data and insights necessary to compete, he added.

“There is a great benefit where we have this, we call it the small to medium-sized shipping platform, and we have this knowledge in-house and we have e-commerce knowledge in-house, so we can [do this internally],” Panzer noted, adding that Descartes also has scale to be able to find partners that fill in gaps. “You can always make it one step easier, but you can’t meet all the requirements alone.”

Click for more articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]