Supply chain headwinds and disruptions may have been the talk of the retail industry in 2021, but that’s not stopping brands from trying to extend their global ambitions. Approximately 56 percent of brands plan to either ship or fulfill orders from new countries in 2022, according to a recent report from omnichannel fulfillment platform ShipBob.
The Chicago-based company’s 2022 State of Ecommerce Fulfillment report says that 32 percent of brands will start physically fulfilling orders in new countries in 2022. A smaller contingent of 28 percent says it still only ship within and fulfill orders from their home country, and will continue doing in the year ahead.
In general, most brands have a long way to go to expand their international customer base, with nearly 70 percent saying that less than 10 percent of their orders come from outside U.S. soil.
The report is based on insights from a ShipBob survey of 352 retail executives, along with proprietary data from the millions of orders it fulfills across the U.S., Canada, Australia, the U.K. and the European Union.
More than 70 percent of the brands surveyed say they will add new sales channels in 2022, with 73 percent saying they will be selling on two or more channels this year. Forty-eight percent of brands say they will sell on three or more channels, the report said.
And they are bullish about their future—despite the supply chain setbacks, more than 62 percent expect their revenue to grow by more than 25 percent in 2022. A smaller segment (21 percent of brands) are very confident, anticipating to double their revenue this year. More than 37 percent project growth between 1 percent and 25 percent, while only 0.6 percent would say they don’t expect a sales boost at all.
“In 2022, we are really seeing shopper expectations grow and mature,” said Dhruv Saxena, ShipBob co-founder and CEO, in a statement. “Now, more than ever before, it is crucial for brands to go above and beyond to delight their consumers who are now adamant about the high-level, nearly flawless execution of the shipping/fulfillment service they deserve. With this data report, we want to highlight these trends while also showing brands how to provide a personalized and effective purchase and post-purchase experience when utilizing best-in-class supply chain capabilities.”
Shipping times down from Covid highs
In tracking the major U.S. shipping firms, the fulfillment provider has discovered that transit times—covering the day the order is picked to the delivery date—have mostly shrunk down from the 2020 peak season despite 2021’s global supply chain issues such as port congestion and international factory closures. These carriers have major demands to fill, since 58 percent of brands have a target shipping speed of two (28 percent) or three (30 percent) days.
For example, UPS Standard Ground had an average transit time of 2.96 days in the weeks ahead of the Covid-19 pandemic, before rising to 4.96 days by the end of 2020. This rate since came back down to an average of two to 2.35 days, faster than pre-Covid levels.
Average pre-Covid transit numbers for FedEx Ground reached 3.24 days, hitting an all-time high of 4.98 days to close December 2020. During the 2021 peak season, these shipment times have ranged from 2.97 to 4.34 days.
DHL averaged a 2.85-day transit time pre-Covid, but experienced an all-time high of 5.21 days in the last week of April 2020. DHL had additional peaks in mid-December 2020 (4.51 days) and mid-February 2021 (4.69), but by the end of 2021 their transit time tapered back down to a range of 3.42 to 4.12 days.
The USPS had the biggest disparity between pre-Covid and pandemic-era transit times, with a 2.52 average transit time to start 2020 that shot all the way up to 6.58 days by years’ end. During the 2021 holiday, this total was more than halved as the transit time ranged between 1.65 and 3.31 days.
Combat shipping costs with more AOV, less cart abandonment
As brands seek to expand their fulfillment capabilities and maximize the potential of these new audiences, ShipBob recommended that they implement strategies addressing two goals: to minimize cart abandonment and boost average order value (AOV).
Some of these strategies include establishing free shipping messaging across the brand’s website and marketing channels such as email and social media, and incentivizing a minimum spend threshold that’s higher than the seller’s AOV in exchange for free shipping. In line with the threshold, ShipBob advises brands to showcase a progress bar at checkout to automatically calculate how much a visitor needs to spend to qualify for free shipping.
ShipBob also recommends businesses use bundles or upsell packages to encourage people to spend more and get a better value, and test offering free two-day shipping on domestic orders.
Twenty-five percent of brands always offer site-wide free shipping for domestic orders, the fulfillment provider says. As many as 35 percent of brands require customers to spend at least $50 to get free shipping, while 15 percent have the lofty spending minimum of $80.
For those who do charge for domestic shipping, 33 percent said it depends largely on product price, weight, destination, etc., while 14 percent charge real-time rates based on these factors. Another 28 percent say shoppers pay a flat-rate fee.
ShipBob says its brand clients see a 25 percent average cost-savings from using three of its U.S. fulfillment centers in different regions compared to just one. Additionally, the company noted there was a 15 percent reduction in average transit times from using the three fulfillment centers, as opposed to one.